Strategic Management: Theory and Practice in Retail Sector

This report explores the theory and practice of strategic management in the retail sector, focusing on the case study of Marks and Spencer Company. It discusses the business environment analysis, competitor analysis, and the impact of factors like political, economic, social, technological, environmental, and legal on the company's operations. The report also highlights the importance of online retailing and the competitive landscape in the industry.

STATEGIC
MANAGEMENT

Table of Contents
INTRODUCTION.................................................................................................................................3
MAIN BODY........................................................................................................................................3
Compare theory and practice.............................................................................................................3
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 Tesco Company. Henceforth, report will emphasis on the comparative theory and
practices in respect to the Tesco Company. Competitive analysis of Tesco 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 one of the most emerging sectors in business environment across the
globe. Demand in the sector gaining comprehensive hikes every year. The sector is associated
with both online and offline mode of trade that has further transformed the growth potentials
of the sector. With the support of various analytical tools like business environment analysis,
competitive analysis and comparative analysis positions of the company in target market can
be projected.
Business environment analysis
Business environment is a sum of different external and internal factors that can
influence the competitiveness of the company. Retail sector is an orthodox sector in business
environment as the sector deals in basic products requires for living in the society. As the
products of the sector belongs to basic human requirements for living such as food, clothes
and other the demands of the sector is high in compare to the other sectors part of the
business environment. Analysis of business environment can be summarises with the support
of PESTEL Analysis tool. This is a tool comprises with all external factors of business
environment that influences the company’s operations. Factors like political, economical,
social, technological, environment and legal factors influences the business operations of
company are a part of the PESTEL Analysis tool.

PESTEL Analysis
PESTEL Analysis is one of the analytical tool projects about the influences business
environment made over the company’s operation. PESTEL Analysis is a well diversified
analytical tool covers all external factors influence the business of company. Business
environment is volatile in nature which allows new forces to influence market. Due to its
volatility new challenges and factors that offer increasing level of competition also becomes
part of the 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 involve all policies formed by government in United
Kingdom related to the retail sector. Policies frame by government associated with the
corporate sector directly influences the company operations. Corporate sector play a huge
role in the economic growth of the country. Contribution of the corporate sector in economic
growth of country allows government to frame supportive polices and strategies that can also
result into more profitable business environment. Retail sector comprises with basis products
requires for the peoples which also attracts special interest of government in the growth and
development of the retail sector. Retail sector contributes aggressively in the tax reforms of
the government due to heavy demands of different retail products on a 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 class people and all
human belongs to any culture, religion and any social factor. Government all across the globe
take special interest in enhancing the growth of the sector. Government restriction also
impact over the business operations of the Marks and Spencer Company. 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 (Al Shobaki, Amuna and Naser,
2017). BREXIT offered restrictions over the business operations of Marks and Spencer
Company that also resulted into reduced demands of the retail products of the 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 sustain its policies for the
long time which further drives companies to form long term business development and
growth strategies. In United Kingdom government has a very stable political situation and

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
the company’s sales and growth potential in market. Economic factor is among the key
business environment factor influences the business operations of company. Taxation policy
of government also influences the business of company. Taxation directly creates impact over
the prices of products offer by company. Government stability also impact over the business
as it allows government to frame flexible taxation policies that can suits to the company’s
objectives. In case the government charges more tax than it will directly create a price hike
overall retail products of company. Marks and Spencer Company operate its business
operation in more than 1400 location all across the globe that involves economic position of
all such countries company hold its outlets (Barros, Hernangómez and Martin-Cruz, 2016).
All such economies that are associated with the business of Marks and Spencer Company put
an impact over the business operation of company. Inflation is also a dominating factor
influences the business of company. Inflation has a direct relation with the prices of product
in retail sector. Inflation directly increases the prices of products and also to restrict the
purchasing capacity of the customers. Government in United Kingdom give huge priorities to
control inflation in economy which has also resulted into the economy of United Kingdom do
not offer aggressive impact in form of inflation in the economy. Inflation also reduces the
value of currency that also impact many factors associated with the business of company.
Marks and Spencer Company needs to assess the economic stability of all countries part of
the business operations of company.
Social Factor: Social factor is among the key external business environment factor influence
the business of company. Social factor involve different social elements part of the society.
Social factor create a huge domination over the business operations of company. Social factor
comprises with different elements which influence the decision making process of the
potential customer of company. 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 decisions made by

customers. Marks and Spencer Company deals in clothing which is highly depends upon the
fashion and current trend of the market (Certo and et.al., 2020). Fashion and trend is directly
influences the sales of company. Marketing team of the Marks and Spencer Company form
different strategies and policies with the support of 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. Fashion and trend associated
with the social factor is an important social factor influences the business of company. Marks
and Spencer Company offers clothing range for all peoples irrespective to any gender or age
group. Clothing segment of company is highly depends upon the fashion and trend part of the
social factors. Company launches different products and brand by analysing all the social
factors.
Technological Factor: Technological factor involve all technological advancement and
development. Technological factor is among the key business environment factor influences
the operations of the Marks and Spencer Company. Technology has created transformation in
the business environment. Technological advancement has guides Marks and Spencer
Company to enter into online retailing. This segment of market has expanded the sales
potentials of companies like Marks and Spencer. Technology supported different functional
activities of company along with the sales of company. Functions of company like customer
relationship management, public relation, research, marketing, sales and other key operations
are directly associated with the technologies (Flotemersch and et.al.,2016). 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 people and society is keener towards online retailing. As per
the recent statistic projected that online retailing in United Kingdom is growing at the rate of
approximately 25% every year. This is an impressive statistics that projects that how well the
peoples in United Kingdom are active over internet. All the above analysis has projected that
technological factors are among the most significant business environment factors influences
the business of company.
Environment Factor: Environment factor is also the key business environment factor
associated with PESTEL Analysis tool. This is the recent development of business

environment after the emergence of social awareness towards environment protection. People
are keener to utilise eco friendly products that can support environment protection as well.
Marks and Spencer Company channelizes its brand promotion with the support of different
social activities like plantation. Company deals in high quality clothing, food products and
home products which contains the eco friendly nature that has further channelized into sales
of the company in market. Marks and Spencer Company also engaged in different kinds of
social activities like plantation, water harvesting, energy saving, green energy and other
forms of social activities as a part of the corporate sector responsibility. Corporate social
responsibility allows company to improve the awareness in social in respect to conservation
of natural resources (Denning, 2017). The campaign related to corporate social responsibility
also drives company to improve the brand image of company in market. Management of
Marks and Spencer Company also make the campaigns public so that potential customers of
company can also participate in the campaign. Social activities under corporate social
responsibility also channelized into effective brand image which further transforms into the
sales of company. Environment factor also involve government restrictions over corporate
organisation as per the environment protection guidelines. Environment analysis also guides
Marks and Spencer Company in regards to all such guidelines issues by government and its
related all latest developments.
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. Companies need to deal with all such legal elements in order to operate its
business operations (Grant and Baden-Fuller, 2018). Different laws like equality, data
protection, minimum wage payment and other legislations are applicable on Marks and
Spencer Company. Company has to meet all guidelines part of different laws applicable over
the company. Legal factor also indicate the different legislative requirements company needs
to fulfil in case of globalisation of business. 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

Marks and Spencer Company is a part of retail sector associate with business
environment. The sector is among the key business environment sector. Retail sector is more
like a traditional market sector as the sector offers basic products for living like food, cloth
and other basic needs (Heath, 2018). Product portfolio involves basic needs of human beings
which also transforms into effective growth rate of sector. Impressive demand and growth
rate of retail sector also offers aggressive competition in market to Marks and Spencer
Company. Growth rate of retail sector is United Kingdom is approximately 5% every year.
(Lange and Bundy, 2018)
Marks and Spencer Company is one of the top brand associated with the retail sector.
Irrespective to strong presence in the market company receives aggressive competition from
other companies like Asda, Wall Mart, Tesco and other retail companies. Asda Company is
considered as the top retail sector organisation all across the globe. Along with the aggressive
nature of competition in market Marks and Spencer Company has gained a growth rate of
approximately 16% in its sales turnover in the last financial year (Lapsley and Rekers, 2017).
The statistics shows how well company is able to cope up with the market competition and
demands of the retail sector all across the globe.

(Rok, 2019)
Marks and Spencer Company also engaged in selling its products over internet.
Online retailing has been seen as the transformation in the entire retail sector. As per the
statistics of online retailing growth rate of online retail market is approximately 8% every
year. It is also registered that the online retail business is contributing in the entire retail
sector turnover of approximately 25%. Marks and Spencer Company sales its products over
internet with the support of company’s website. Company also get tough competition from
online retail brands like Currys PC World, John Lewis & Partners, Next, Screwfix, Asda,
Tesco, Argos, e Bay and other online retail brands. It is projected that in coming years online
retailing with achieve the contribution in the sales turnover of United Kingdom is
approximately a rate of 33%.
Porter Five Forces Model
Porter Five Forces is a competitive analysis model projects about the market
competition company are engaged with. This model project different element that provide an
edge to the company in order to take competitive gain out of the business operations.
Competition in industry (High): Retail sector is among the highly demanding market
sector. Due to huge demands of all retail products the sector offers aggressive level of
competition to all companies. This force is high as the sector offers huge competition from
other key brand s part of the retail sector. Marks and Spencer Company face competition
from all top brands like Asda, Wall Mart, Big Bazaar and other brands along with many e-

commerce brands. Due to heavy competition it becomes more challenging for the company to
improve its growth potentials. Retail sector is growing at the rate of approximately 5% in
United Kingdom (Simandan, 2019). Effective growth rate also transforms into increased
number of market competitors for the company. Marks and Spencer Company also face
aggressive competition from small stores that involve in selling retail products. In United
Kingdom small stores also provide services of free delivery that also improve the market
competition for the Marks and Spencer Company in its food product segment.
Potential of new entrants in market (High): Potential of new entrants is also the key
competitive fore company face. This force is also high for the Marks and Spencer Company.
Retail sector is among the highly demanding sector due to its product portfolio. Industry also
offering an effective growth rate which also attracts stakeholders to invest in the sector and
improve the competition in retail market. New entrants always increase competition for all
companies.
Power of supplier (Medium): Power of suppliers in medium in nature as per the competitive
analysis model. Marks and Spencer Company is a top brand part of the retail sector.
Company’s product portfolio is comprises with all top brands associated with retail sector. As
the company offers all top brand sin retail market the dependency of suppliers is more based
on the company rather than company’s dependency over its suppliers (Smit and Trigeorgis,
2017). As the company is a top brand of retail market it also contains plenty of options of
other supplier networks. This force is medium in nature on the basis of the competitive
analysis model.
Power of customer (High): Customer is among the most significant stakeholder part of the
business. Customers play huge role in company’s sustainability along with it offers growth to
the organisation. Company also form its strategies and policies on the basis of its customer
base (Tonelli and Cristoni, 2018). It can also be projected that the involvement of customers
in each and every functional activity planned by the company. Due to huge involvement of
customers in company’s business it can be projected that this force is relatively high as
compare to any other force associated with the competitive analysis model.
Threat of substitute products (Medium): Threat of substitute product is also important
elements involve in Porter Five Forces analysis. This force is medium in nature for the
company. Marks and Spencer Company deals in retail sector products like clothing, food
product and home products. The innovation plays a very limited role in product development

especially in retail sector. This force is medium in nature as the substitute product threat is
low for the company. This force can impact the company in case of clothing line of Marks
and Spence Company. For other product segment of company this force is irrelevant for the
company.
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.

REFERENCES
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