Strategic Management: Analysis and Recommendations for Marks & Spencer

This assignment discusses the strategic management process and tactics used by Marks & Spencer to achieve high advantage and benefits in the business environment. It includes a PESTLE analysis to evaluate the impact of macro factors on the company's current situation and a comparison of Bowman's strategy clock to identify the right business strategies.

STRATEGIC
MANAGEMENT

EXECUTIVE SUMMARY
Strategic management is defined as the process and tactics that benefits a company to
achieve high advantage and benefits in business environment. This assignment discusses about
Marks & Spencer which is one of the largest retailer of cloth, food and home products in global
market. This company has recently faced decline in profits. Purpose of report is to acknowledge
the issue of business firm. In this context, PESTLE analysis is mentioned so that issue of
company can be evaluated properly. Other than this, report has the purpose to suggest a
modification theory so that organisation can achieve expected outcomes. In this context,
Bowman's strategy was used to compare with PESTLE so that right business strategic can be
framed.

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
PESTLE Analysis in context with business organisation.......................................................1
Bowman's strategic clock to analyse strategic direction for company...................................4
RECOMMENDATIONS.................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Strategic management is referred as a continuous procedure in which a company carried
out observations and planning so that expected objectives of firm can be attained in a timely
manner. With the help of this procedure, a business firm can analyse their financial situations as
per the present scenario along with evaluation of marketing strategies in deep manner. Strategic
management helps in providing appropriate knowledge about the vision, mission, targets and
objective of company so that future needs can be identified (Aguinis, Edwards and Bradley,
2017).
This assignment is prepared in context with Marks & Spencer that is a Britain based
global retailer in the field of food, clothing and home décor. This company is established in 1884
and headquartered in Westminster, London. This organisation have some in-house brands like
Per Una, Blue Harbour, Rosie, Limited etc. At present, organisation is facing reduction in profits
as people consider their cloths as non trendy and old fashioned. In this context, organisation has
adopted two strategies i.e. PESTLE and Bowman's strategy clock analysis so that competitive
edge of organisation can be identified and right kind of business strategies can be formed to
resolve emerging issues.
MAIN BODY
PESTLE Analysis in context with business organisation
PESTLE analysis is identified as a strategic approach which helps an organisation in
scanning the external factors of strategical management. In this report, PESTLE analysis is
implemented on M&S which is facing a profit related issue. This issue has impacted the revenues
and profits of organisation in a negative manner. This framework will help the concerned
organisation in evaluating the impact of macro factors on the current business situation of M&S.
Main objective behind using this framework is that it will help the manager of company
to achieve deep insight about the current business performance and situation. Other than this,
PESTLE framework will helps in identifying those factors that are responsible for influencing
the decisions of M&S. In relation to M&S, organisation is providing services and products at a
high range than their competitors. Also, as company offering multiple products, its competitive
advantage is contrasted by those organisations which have low product portfolio and sell their
products in less price (Baumgartner and Rauter, 2017).
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This organisation operates in multiple segments one of which is clothing segment. People
believes that cloths of M&S are non trendy and very expensive due to which sales of
organisation has decreased. In order to analyse and resolve this issue, PESTLE analysis is used
here. By using this tool, political interference, economical aspects, technological advancement,
social norms, legal aspects and environmental concerned can be identified. If all these factors
will be in favour of M&S, then concerned organisation can solve their issue in a proper manner
and organisation can achieve high sales and productivity (Bichou, 2015).
Political Factors: Political stability in UK is treated as one of the biggest strength of the
nation. Also, UK is treated as most developed and successful country in case of legal laws,
corruption, government effectiveness and regulatory quality. These elements impacts the
working of M&S in a positive manner. But, Brexit has leads to various changes in the political
scenario of UK due to which SMEs have became more popular. SMEs offer high quality
products in genuine price due to which customer are tilted toward them. High price of M&S is
due to use of traditional production method along with import of resources and materials from
other nations. M&S has adopted different initiatives to prevent them from negative impact of
Brexit like opening more outlets and warehouses in UK, this has further enhanced the price of
their products due to increased operational costs.
Economical Factors: This factor is associated with income and purchasing power of
people living in a region. Economic situation of UK is robust as most of the people do services
and due to this their purchasing power is very high. Also, areas like South East and London
generates huge amount of revenues which stabilise the UK economy. Labour cost in UK is high
which can impact M&S and other organisations in a considerable manner. Annual wages bill in
UK is amounted to 4.5 billions and in 2018, wage rate of employees have seen a hike of 4.4% in
comparison with last year (Cook, 2015). Due to this, expenses of M&S has increased in
millions and profits of company has considerably reduced. To compete with rivals, in some
situation M&S reduces the price of their products due to which overall profits of company gets
compromised. This cost leadership strategy has impacted organisational profits in negative way.
But, as purchasing power of people is high, loyal customers of company prefers to purchase their
products on regular basis.
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Social Factors: These factors posses a high impact on the processes, strategies and
functioning of M&S. As people in UK are very modern and their Preference and taste changes
on regular basis, M&S is needed to upgrade their offerings on regular period. For example, As
people in UK earns disposable income, they prefer to buy trendy and modern products which can
help them in showing off their status. But there are certain people which feels that M&S offers
non trendy products due to which they have stopped doing shopping from their outlets. To
change the perception of consumers, concerned company can do two things, first is to update
their production machine so that products can be produced in less price and second is to
eliminate those processes which do not add value to the organisation. By this, profits can be
maintained (Goldfarb and King, 2016).
Technological factors: UK is one of the most developed and technologically advanced
nation which posses a positive influence on the working of company. As this business
organisation provides best facilities to their clients through online application of company, this
help M&S in gaining numerous benefits. To further increase the revenues of company, M&S can
adopt innovative solutions like AI and automation to resolve certain problems and queries of
clients. These technologies can operate without human efforts due to which their work
processing power is very high. This opportunity will help the concerned company in enhancing
the overall experience of customers in a positive manner. By this, overall profitability and
productivity will be increase due to which issue of reduced profit can be solved.
Legal factors: These factors are related to the legal norms and regulations of the country
in which an organisation is operating. In recent time, M&S has announced that they have faced
reduction in their profits. Market share of company is near about 0.5% and customers believes
that organisation is not offering modern products in their clothing section due to which sales of
company are uncertain (Helfat and Martin, 2015). Supply chain of company do not matches with
the supply chain regulations of EU. This is the reason overall legal stability of company is
reduced. In this context, M&S is needed to change their legal laws and regulations so that
company can operate in a profitable manner. There are different kind of legal policies and
regulations for customer and employees that impacts financial performance of organisation in
negative way. Due to Brexit, regulations to deal with suppliers have also changed. This has
increased the cost for company due to which profit margins reduce considerably.
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Environmental factors: In today's time, environment is degrading on fast rate due to
which government has formulated strict norms so that no organisation can impacts ecology and
environment by their business activities. Due to loss of profits, company is doing every possible
work so that overall cost of firm can reduce and profits can be achieved. In this context,
corporate social responsibilities of M&S also get compromised in some situations. When facing
these loss of profits, company has decided to adopt green and clean lining scheme under which
ways to deals with environmental issues like carbon footprints are discussed. As SMEs and
competitor of M&S provides products at cheap rates, company is force to use fossil fuels and
other non recycle resources to support their production. This is one of the reason, people are not
favouring products of M&S and profits of organisation are compromised (Honggowati and et.
al., 2017).
Bowman's strategic clock to analyse strategic direction for company
Bowman's Strategic Clock is defined as a strategic theory which helps an organisation in
gaining strategic direction so that high competitive advantage can be gained. Beside it, this
theory will help a business organisation in evaluating different directions so that overall
condition of organisation can be improved. Main purpose behind using this framework is that it
will allow the concerned organisation to position their products in a proper manner. In this
context, this framework will give emphasis on two aspects only which is value and price. In
comparison with PESTLE framework that allow a company to acknowledge its current condition
in market, this strategic analysis will help the organisation in future positioning their offerings so
that high profits can be earned easily (Kasemsap, 2017).
In context with M&S, which is facing a reduction in profits from past some time, one
strategy to regain their profits are offering modern products to the customers by reducing their
product portfolio. Due to improved products, demands of customers will be satisfied and
organisation will be able to achieve expected profits and sales. Improvements in products will
help the organisation in getting a forward position in marketplace. This theory in relation with
strategy of improving products is discussed below:
Low Value Added and Low Price:
With the help of this positioning, a business firm can achieve high advantage over rivals
on the basis of price only. But, along with reduced price customers will be given reduced value
as product portfolio of company will be reduced. Thus, the only way by which concerned
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company can maintain their profits in market is through offering modern and trendy product to
their customers (Massa, Tucci and Afuah, 2017).
Low Price:
In this kind of strategy, a business firm offers its products to the customers in less price,
without compromising with the value of the product. In this situation, a company is needed to
manufacture and produce their products in huge quantity so that reducing price will not impact
overall profits of company. Hence, this mass production will help M&S in maintaining very high
profits in market place even if company will shorten their product portfolio. Also, due to less
price and mass production, M&S will also achieve economies of scale in an appropriate way.
Hybrid:
This aspect of Bowman's strategic clock involves combination of above mentioned
strategies. In this approach, M&S can offer its wider product portfolio to the customers but to
gain attention of maximum customers, organisation can reduce the prices of products. This
means that if value added organisational products will be given to the customers in low rates, this
will helps M&S is regaining their lost profits in a competitive manner (Moutinho and Vargas-
Sanchez, 2018).
Differentiation:
This is one of the best strategy by which M&S can achieve their reduced profits in a
considerable manner. In this strategy, not only the quality of offered products will be given
emphasis but their branding will also be influential so that maximum number of customers can
be attracted towards the differentiated products and high revenues can be achieved. Also, of the
product will be unique, customers will not mine to pay extra price for it. This will benefits M&S
in achieving high sales and profits without compromise with quality or value of product.
Focused Differentiation:
In this kind of strategic direction, a business firm tries to expand themselves by
increasing the exclusiveness of their products. For example, M&S can reduce their product
portfolio and consider on a specific brand like Per Una or Rosie so that interest of customers in
these brands can be maximised. Also, if the offered products will be standardised customers will
not disfavour a slight high price. But because of economic recession of 2018 and Brexit,
purchasing power of people have reduced and they do not prefers to buy those products which
are costly. Hence, this strategy is not very suitable in accordance to the current situation of M&S.
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Risky High Margins:
In this strategy, a company offer their services and profits at a slightly high price but do
not provide any extra value or complementary benefits to the clients. Due to it, this kind of
strategy has a limited scope as M&S is already using it due to which their overall profits are
impacted in a negative manner. Also, the present situation of UK in context with legal norms and
politics are not so favourable due to which taking this risk further will reduce the profitability of
company. Hence, M&S is not advised to use this strategy to increase their profitability (Noe and
et. al., 2017).
Monopoly Pricing:
Within this strategy, there exist only a single business which provides the products and
services to their consumers in entire market. This benefits an organisation in sustaining a
monopoly in the market due to which earning of wide profits and revenues became very easier.
One instance in this context is that M&S can introduce a new product in market which is very
trendy and modern. Company can use rare material to produce it which is not imitable by the
competitors. In that situation, M&S can monopoly the market and charge as high as they want
for their product But, competition in retailing sector is very high and getting rare materials is not
so easy. Also, rivals can buy the same raw material from suppliers in either same price or slight
higher price. Hence, this strategy is not very suitable for M&S.
Market Share Loss:
It is the worst strategy in which standard price will be charged for the products. Due to
this, sales will be good but earning profits is not possible. This will reduce the profits and market
shares of M&S in a considerable manner. Hence, this strategy is not useful for company.
Out of all the strategies, company is recommended to use Differentiation strategy to
improve their profitability. By providing unique products to their customers in slight high price,
concerned organisation will achieve high competitive edge in their market and their profits will
achieve an exponential hike (Steiss, 2019).
RECOMMENDATIONS
After analysing and evaluating the different factors of marketplace and shortcoming of
M&S like offering products in high price or providing non trendy products to the customers,
there are some recommendations which can be given to the manager of organisation. These
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recommendations will benefits the concerned organisation to resolve their issue of low profits. In
this context, some recommendations are stated below:
 M&S is recommended to analyse their external factors and variations associated with
them in a proper manner so that they can acknowledge which forces are in their favour
and which aspects can harm their businesses. Analysis of external environment will help
M&S in reducing their risks related with change in trend and choice of customers. By
this, one of the main issue which limits the profits of company i.e. offering non trendy
products to customers can be resolved properly.
 Company is recommended to update their technology by adopting AI and automation so
that customers base of company can be served and retained in a proper manner.
 Also, M&S is recommended to update their production machines so that their manual
work will be reduced and overall production cost of products can be decreased. Due to
this, they will be able to provide more offers and discounts to their customers. By this,
earning more profits will became easier for the company (Yay, 2015).
 Other than this, manager in M&S is recommended to identify the taste, perception,
opinion and choice of customers before producing their products so that right kind of
products can be given to customers. This will help M&S in achieving high sales and
revenues which will further leads to improved profitability.
CONCLUSION
In accordance to the above discussed report, this has been concluded that strategic
management is essential for a business organisation to assure that adopted strategies will benefits
them in earning maximised revenues and profits. By this, gaining competitive advantage over
competitors will be very easy. In this context, comparing among two framework or theories is
very essential as it will help the concerned company to acknowledge different ways by which
current issue faced by a firm can be resolved efficiently. In this context, Bowman's strategic
clock and PESTLE analysis is used and contrasted so that issues related with reduced profits can
be overcome in a proper manner. PESTLE allows a firm to acknowledge their current situation
whereas latter framework helps in selecting a right strategy so that existing issue can be resolved
properly.
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REFERENCES
Books and Journals
Aguinis, H., Edwards, J. R. and Bradley, K. J., 2017. Improving our understanding of
moderation and mediation in strategic management research. Organizational Research
Methods. 20(4). pp.665-685.
Baumgartner, R. J. and Rauter, R., 2017. Strategic perspectives of corporate sustainability
management to develop a sustainable organization. Journal of Cleaner Production. 140.
pp.81-92.
Bichou, K., 2015. The ISPS code and the cost of port compliance: an initial logistics and supply
chain framework for port security assessment and management. In Port
Management (pp. 109-137). Palgrave Macmillan, London.
Cook, N. D., 2015. Crisis management strategy: Competition and change in modern enterprises.
Routledge.
Goldfarb, B. and King, A. A., 2016. Scientific apophenia in strategic management research:
Significance tests & mistaken inference. Strategic Management Journal. 37(1). pp.167-
176.
Helfat, C. E. and Martin, J. A., 2015. Dynamic managerial capabilities: Review and assessment
of managerial impact on strategic change. Journal of management. 41(5). pp.1281-
1312.
Honggowati, S. and et. al., 2017. Corporate governance and strategic management accounting
disclosure. Indonesian Journal of Sustainability Accounting and Management. 1(1).
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Kasemsap, K., 2017. Strategic innovation management: An integrative framework and causal
model of knowledge management, strategic orientation, organizational innovation, and
organizational performance. In Organizational Culture and Behavior: Concepts,
Methodologies, Tools, and Applications(pp. 86-101). IGI Global.
Massa, L., Tucci, C. L. and Afuah, A., 2017. A critical assessment of business model
research. Academy of Management Annals. 11(1). pp.73-104.
Moutinho, L. and Vargas-Sanchez, A. eds., 2018. Strategic Management in Tourism, CABI
Tourism Texts. Cabi.
Noe, R.A. and et. al., 2017. Human resource management: Gaining a competitive advantage.
New York, NY: McGraw-Hill Education.
Steiss, A. W., 2019. Strategic management for public and nonprofit organizations. Routledge.
Yay, A. S. E., 2015. Application of life cycle assessment (LCA) for municipal solid waste
management: a case study of Sakarya. Journal of Cleaner Production. 94. pp.284-293 .
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