Strategic Management of Marks and Spencer: A Study on Porter's Five Forces, SWOT, PESTLE and Value Chain Analysis

This study focuses on the strategic management process of Marks and Spencer, including Porter's Five Forces, SWOT, PESTLE and Value Chain Analysis. It evaluates the existing situation of the workplace, potential risks, and strategies to solve issues.

STRATEGIC MANAGEMENT
Students ID:
Name of the University
Authors’ Note

Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
a) Porter’s five forces model..................................................................................................3
b) SWOT Analysis.................................................................................................................6
c) PESTLE Analysis...............................................................................................................6
d) Value chain analysis...........................................................................................................8
e) Business corporate strategy................................................................................................9
Conclusion................................................................................................................................10
Reference list............................................................................................................................11
2

Introduction
Strategic management refers to the consistent planning, supervision and evaluation of all the
required things of the organisation to fulfil the objectives. It is the changing fast-growing
innovation of the organisation and expectation of the clients that force the companies to take
decisions for making strategic improvements. In this context, it is important for the company
to apply the essentials of strategic management as it helps the leaders of the company to
evaluate the existing situation of the workplace the potential risk present within the company
and thereby sort out strategies to solve the issues. Therefore, the study deals with the strategic
management process of Marks and Spencer that involves the evaluation of cross operations
decisions of business before applying them. In this context, the study highlights the
competitive edge of the company thereby portraying the companies' existing internal and
external situation in the market. Based on this factors the study discusses on the existing
business model of M&S through porter’s analysis followed by environmental evaluation
through PESTLE.
Discussion
a) Porter’s five forces model
Porter’s model of five forces will help in analysing the growing competition within a specific
industry. It is equipment that helps to demonstrate the position of the existing organisation in
accordance with the rival enterprises (Lasserre 2017). Therefore, the model of five forces in
this study will offer the information about the organisation's present condition and the ways
that are necessary for the future success within the organisation. Apart from these, the model
will help in recognising the attractiveness of the sectors thereby implying the progressive
profitability of the industry. Generally, it provides the idea of the average prediction earned
by the company.
The threat of the new entrant
The retail market has a high barrier of entry due to the presence of high capital investment
within the market to accomplish cost-effectiveness and scaled economic retailer of M&S are
very poor for which it is difficult to obtain a new player. Apart from this, it is evident the
market on which Marks and Spencer is investing is an growing market that would attract the
new entrant to offer customers with new business strategy that may become hard to conduct
dress retailing (Secundo et al. 2015) All the major potential industries have string
3

development names of trade that becomes relatively important for the import within the
homogenous market. Their attempt accumulates within the local market may pose the
problem for the company due to the growth of new entrants in the market (Karadag 2015).
More specifically, the lack of experience and recognition for operating in this market there
would be problems for any new entrants within the location.
The threat of the substitutes
Looking at the international and overall condition of the market, there are no major
replacements that can overgrow the company. However, there is a marked possibility that
M&S nutrient products and clothing can be easily replaced by the other merchandise retailers.
Seemingly, most of the direct challenges in case nutrient products are probably, Waitrose,
John Lewis and Peter Jones that delivers standards quality clothing’s within the international
market as well as other markets in different currencies (Bolden 2016). In China the company
considerably failed due to the presence of merchandise that offers chides touch in their
products.
Power of the buyers
In China, with such a demographic profile Mark and Spencer cannot sustain their business
amongst the customers for a long period of time. Therefore, it is evident, that in China the
power of the buyers are stronger since the customers present there have many retailers to
select from ranging from a variety of markets such as Tesco, Carrefour and other
merchandise such as Zara for clothing (Christopher 2016). Buyers in this context can make a
demand to get products on a cheaper process that may reduce down the profitability of the
company.
4

Figure 1: Porters Five forces
(Source: Christopher, 2016, p.144)
Power of suppliers
On the other hand, the power of the suppliers of the company is low in China and India, since
customers have various choices including the local brands. Suppliers have lowered the power
from the quality, cost and system of delivery (Nolan, Ciara and Thomas 2016). It is through
the use of internet customers can easily; compare the cost of the items from various suppliers
that may easily limit the power of the suppliers.
Stiff competition
External competition for the company is high on all the aspects of business coming from the
high process, high activities of promotion in the different market and falling down as well as
growing of sales (Fernie, John and Leigh 2014). There is a stiff competition for the company
that is coming from international brands such as Zara that has almost operations processed in
their in-house location. The uncompetitive pricing strategy of the M&S in the market of
China and India declined the sales of the company while increasing competition.
b) SWOT Analysis
Strength Weakness
5
Potential
Entrants
Powers
Of
Consum
ers
Power
Of
Supplier
s
Therat
Of
Substitut
ion
Competi
tion

 Superior and trusted retail brand with
a long-term performance reputation
with a delivery of high-quality
products.
 M&S has huge store channels with
successful international penetration of
the market with almost 1253 stores in
55 different territories.
 Growing online and e-commerce
store with several trained employee.
 Uncompetitive price of products and
improper merchandise specifically
when the company started in China.
 The poor style of the clothes on the
Indian boundary where the shirts did
not have pockets to keep their pens.
 It was comparatively slow to adjust
in the highly competitive and
dynamic market.
Opportunities
 Increasing demand of the customers
for fashion apparel amongst the
different countries with almost more
than 30million customers.
 The overseas market of the company
in China and India is expanding
intensively with healthy clothing and
healthy food habits.
Threats
 The company has faced high
competitions from low cost reputed
companies.
 There is a huge threat that may occur
from the sale of substituted products
due to the increase (Fernie, John and
Leigh 2015).
 Increase in the use of the internet that
can provide the customer with better
information.
c) PESTLE Analysis
Aspects Opportunities / challenges
Political
 The European Union and free trade
agreements will help the company to
provide suitable sources of goods
from different international
boundaries at a lower rate for the
products (Hingley et al. 2015).
 These policies can even challenge
M&S since it places the competitors
in appropriate position compete with
the other companies on the process
since they are able to obtain better
products at better rates of the price.
Economic
 Competitive pricing in the emerging
6

 The economy of the UK is slowly
overcoming from the period of
recession. As a result of which there
are emerging markets in boundaries
of Russia, India, and China and
Middle East economies.
market can provide them with the
opportunity of being creative with
increased promotions of sales
(Chimhundu 2015).
 Expanded opportunities for the global
market and trade for outsourcing the
products.
Social
 The price of nutrients and funds are
falling down in the market. as a result
of which there is an increasing
demand for fashion retail clothing
within the market (Karadag 2015).
 Diversification into a broader
selection of market such as delivery
of quality food service, online home
delivery.
 They have the opportunities to grow
innovative styles and designs for
responding to the enhanced segments.
Technological
 Growing number of consumers in the
online e-commerce market.
 Customers in the market are
increasingly changing in to more
technologically friendly.
 They have the opportunities to
minimise the cost of capital
investment for the building of
physical stores and expand the areas
of geographic accessibility through
the use of the internet.
 Increase in the online stores can
increase the amount of competition
and decline the entire production of
M&S since the consumers have the
opportunity to compare the price
(Karadag 2015).
Environmental
 Increasing social awareness
associated with environmental factors
and the essential requirement of eco-
friendly business.
 Opportunities are present with the
launch of several environmental
programs in China, India, and other
countries such as encouraging healthy
eating habits, eco-friendly clothing's
for consumers with the sustainable
use of materials.
7

d) Value chain analysis
Porter’s value chain analysis helps to review the primary and secondary activities of the
company while recognising the areas of the organisation's achievements of the important
value. Thereafter, they focus on the areas of the value that will help them to achieve
competitive benefits in the market. The primary purpose of the value chain is to demonstrate
the state of production and the process of delivery of the company (Teller et al. 2016). The
secondary activities are those that are not directly related to value chain rather it helps to
enhance the effective delivery of initial activities.
Figure 2: Value Chain analysis of M&S
(Source: Karadag, 2015, p.42)
In M&S the areas of most important value are its supply chain which is represented as
outbound logistics while delivering customers with high-end products related to
infrastructure. In this aspect, the company has almost 798 stores that are highly available in
street UK. The company’s infrastructure is also assisted by technology that is expanding itself
with the growing set of e-commerce in business. In this context, the suppliers of M&S and
their value chain are known as the part of M&S internal sources that are necessary for the
entire system of value for the industry (Witherow 2018).
At the stage of internal logistic M&S maintains absolute transparency about starting of the
input employees as well as retailed products. In this context, the organisation begins to
develop its supply chain by taking reliable suppliers that will help them to provide quality
production during the stock list control. Moreover, in the case of operation M&S has the
8

smart system of packaging experts that help them to continue offering quality and safe
distribution of products (Teller et al. 2016). A smart system of packaging operations provides
the customer with reputed trade awareness and convenience.
Again, in the case of outsources logistics the company tends to use multiple user systems of
the warehouse that is the most essential system of mainframe base that helps in finding the
direction for M&S. This process allows the company to handle and bringing the trials to be
communicated to the different parts of shops thereby increasing the value of products.
After opening in China the company started sourcing its products from cheap markets that
hampered the quality of the products thereby exploiting the USP of the company. However,
Marks and Spencer do not have a sufficient number of outsourcing agents for maintaining
supply chain and internet for maintaining the worldwide stores. The company has only 110
warehouses in the UK. Currently, M&S is following Zara, a model of the value chain for
developing the source of distribution. They have, therefore, started a renewed website for the
potential customer's involvement. This version of the business supply chain model aims to
provide service to various markets through websites but the company has the faulty chain of
supply that may be problematic.
e) Business corporate strategy
In the case of business corporate strategy, M&S accumulated the business strategy used by
Zara. Therefore, the company has planned to expand their distribution market with the
emergence of 250 new international stores. In the present scenario, the company has 450
international stores. Currently, they are focusing on delivering food, beauty and lingerie
products. It has been estimated that through the plan of expansion the company is about to
bring almost 40% expansion in the production (Witherow 2018).
Through the strategy of diversification of corporate and business strategy, they are
developing new products for the merging markets as a challenging option. However, the
growing economies of Russia, India and another western economy can offer them
opportunities for building innovative products to the market. In this context, M&S focus on
the achievements of the market expansion with the close philosophy with different product
lines.
9

Conclusion
As a sustainable business in the UK, Marks and Spencer's maintains a strategy of
differentiation that emphasises the quality as well as the value at the current state at an
affordable price. However, from the above study, it is evident that the company ignored the
major aspects of value and innovation. Therefore, for getting back is popularity the company
needs to focus on conducting innovative and customer-oriented service thereby focus on
developing innovative products with the existing features of the products. They are required
to bring new ways to enhance the uncompetitive prices to bring value to their products in
markets like China and India.
Since the market is the current situation for fashionable and quality clothes, M&S has to
make efforts for the meeting the demands of the customers through a development of joint
venture and strategic collaboration to obtain a competitive edge in the diverse market.
Moreover, the company has the ability to provide appropriate product therefore, they are
required to invest more in the building promotion to support innovation a supply value in
fashion.
10

Reference list
Bolden, Richard. "Leadership, management and organisational development." In Gower
handbook of leadership and management development, pp. 143-158. Routledge, 2016.
Chimhundu, Ranga, Eric Kong, and Raj Gururajan. "Category captain arrangements in
grocery retail marketing." Asia Pacific Journal of Marketing and Logistics 27, no. 3 (2015):
368-384.
Christopher, Martin. Logistics & supply chain management. Pearson UK, 2016.
Fernie, John, and Leigh Sparks. Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers, 2014.
Hingley, Martin, Adam Lindgreen, and David B. Grant. "Intermediaries in power-laden retail
supply chains: An opportunity to improve buyer–supplier relationships and
collaboration." Industrial Marketing Management 50 (2015): 78-84.
Karadag, Hande. "Financial management challenges in small and medium-sized enterprises:
A strategic management approach." EMAJ: Emerging Markets Journal 5, no. 1 (2015): 26-
40.
Karadag, Hande. "Financial management challenges in small and medium-sized enterprises:
A strategic management approach." EMAJ: Emerging Markets Journal 5, no. 1 (2015): 26-
40.
Lasserre, Philippe. Global strategic management. Macmillan International Higher Education,
2017.
Nolan, Ciara T., and Thomas N. Garavan. "Human resource development in SMEs: a
systematic review of the literature." International Journal of Management Reviews 18, no. 1
(2016): 85-107.
Secundo, Giustina, Susana Elena-Perez, Žilvinas Martinaitis, and Karl-Heinz Leitner. "An
intellectual capital maturity model (ICMM) to improve strategic management in European
universities: A dynamic approach." Journal of Intellectual Capital 16, no. 2 (2015): 419-442.
11

Teller, Christoph, Andrew Alexander, and Arne Floh. "The impact of competition and
cooperation on the performance of a retail agglomeration and its stores." Industrial Marketing
Management 52 (2016): 6-17.
Witherow, T. (2018). Marks & Spencer boss warns high street chain has 'no God-given right
to exist'. Mail Online. [online] Available at: http://www.dailymail.co.uk/news/article-
5940479/We-no-God-given-right-exist-Marks-Spencer-boss-warns-chain-burning-
platform.html [Accessed 29 Jul. 2018].
12