Compare and Contrast Theory and Practices of Competitive Model for Identifying Competitive Advantage and Failure

This report compares and contrasts different theories and practices of competitive advantage in order to identify the factors that contribute to success or failure in the competitive market. The analysis is based on the case of Marks and Spencer, a British multinational retailer.

Strategic management
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Compare and contrast theory and practices of competitive model for identifying competitive
advantage and failure...................................................................................................................3
CONCLUSION..............................................................................................................................10
RECOMMENDATIONS...............................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Strategic management is the ongoing process of planning, monitoring, analysing and
assessment of the important which organization has needed to meet goals and objectives of
company in effective manner. Changes in business environment will require organization to
constantly assess strategies for success of company. The present report is based on Marks and
Spencer which is British multinational retailer. The company is specialized into various products
and services like clothing, home product and food products. An objective of company strives to
achieve and one is survival as well as development in long run within the industry. In the
organizational setting, a strategy entails long term plan of organization firm to ensure about their
competitive advantage. In that company requires to analysis competitive advantage for
improving and maintaining its market share. For that report will compare and contrast different
theories and practices of competitive advantage in effective manner.
MAIN BODY
Compare and contrast theory and practices of competitive model for identifying competitive
advantage and failure.
For the success of company, it is very important and effective to analysis competitive
advantage. This help to make effective and valuable strategies for company in order to get
effective and higher success at competitive era. For that selected company is Marks and Spencer.
Background of Marks and Spencer:
Marks and Spencer is British multinational retailer with specialise into selling clothing,
home product and food products. The company is listed into London stock exchange. The
company has 80000 numbers of employees with 1463 numbers of locations. Company has
various brand per una, autograph, limited, etc. company is first British retailer to make a pre tax
profit over the billion. The company sets vision, mission and objectives which are help to get
effective success at market place in effective and respective manner. A mission statement is
reflect the organization business is and purpose (Marks and Spencer mission, vision and values,
2019). Company have mission to make inspirational quality of accessible to others. On the other
side, vision statement of company is help to working in goal congruence. It comes from within as
well as outside and it is accomplished by the future decision making strategy. This create a
successful platform with same purpose behaviour guideline inspire emotions reflects values
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Marks and Spencer vision is to be the standard against which others are measured performance
through benchmarking. There are various values which are used by companies for attracting
more customers such as quality, services, innovation and trust. Those are help to create positive
success at market place in respective and in effective manner.
Porter five force analysis:
Porter five forces model is widely used by organization for analysis their business and its
environment. With the help of this, businesses are able to analysis their actual sales at market
place in effective manner. This refers with the overall attraction of the retails markets. This
model is help to compare the general environment of company and have ability to earn money
and profit from the market activities. The profit of company is analysis as well as determines the
market value of company in effective manner. This is model is includes various factors and
concept such as bargaining power of customers and suppliers, threat from substitute and new
entrants as well as competitive rivalry (Ansoff and et.al., 2018). This serves to make sure that
business maintain strength and improve weaknesses in order to avoid mistakes. Therefore, it can
be said which the five force model is providing a framework to the organization for analysing
profitability within industry. The presences of different competitive force affected to the
company performance. Porter five force analyses for Marks and Spencer are as follows:
Threat of new entrants:
This forces which is determine easy it is to enter a particular industry. Industry is
profitable and there are few barriers are entered into workplace very soon. Analysis of this factor
is very important for company to analysis the actual threat for Marks and Spencer. This create a
higher barriers to enter deter new entrants. Company have high threat from new entrants like
when amount of capital is low, existing companies do little to retailers, higher customer
switching cost, no government regulations, existing firm do not passes patent. The threat of new
entrants is low because it takes enormous capital investment to set the successful chain of stores.
The market is mature and an entrant has needed to offer new product and services, which is
rather difficult to do in food and apparel retailing (Porter five force analyses of marks and
Spencer, 2017).
This is very weak force for Marks and Spencer because company have effective capital
investment. As per that, this is very weak force for company because new entrants are also
required higher and strong capital investment for managing business in successive manner. this
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creates easier for company because company have not any fear with new entrant. The product
differentiation is the strong within the industry, where company in the industry sell differentiated
product rather a standardised product and services in effective manner. Company have string
product differentiation strategy which is help to attract more customers towards company in
order to manage their threat from new entrants within the company.
Bargaining power of customers:
Bargaining power of customers is the significant and customer price sensitivity can force
the hand of retailers. The bargaining power of customer is higher forces because customers are
high and they are highly dictated their rules and regulations in respective manner. In the industry
customers are more plenty of alternative and switching cost is lower. For example; if customer is
get best quality of product from another company as well as with lower price than it is affect to
business in negative manner. This is very strong force for marks and Spencer which can affect to
business and its profit margin ratio (Baumgartner and Rauter, 2017). In that customers have low
switching costs and have the many of alternatives available. In that management have needed to
build up loyalty and offer customers’ unmatched values to negative shifts in customer
perception.
Any move towards disloyalty of British products is likely have a significant effect on the
overall company and its outlook. Company competitors is also focusing on customers
relationship so that marks and Spencer need to be protect that form those negative effect. This
strategy of competitor is able to affect company and its working environment in negative manner
(Trigeorgis and Reuer, 2017). This creates another various options for customers to select
product and services from company. For that company need to make proper focus on innovation
and differentiation in product is help to attract more customers. Product differentiation and
quality of product is more important for customers within the industry.
Bargaining power of supplier:
Bargaining power of supplier is the lower force. Company has huge listed with the
massive turnover and suppliers want their goods on retailers’ shelves to reach large customers
base. The company is not depended on the suppliers as other stores are mainly sell own branded
products. In that companies are buying raw material not finishes goods which are completely
favourable for margins. There are ample numbers of suppliers into the industry in that company
marks and Spencer operates a lot compared to buyer and customers. this have specific means that
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the supplier has the less control over prices and that is make bargaining power of supplier lower
and weaker forces for marks and Spencer.
Product supplier provide fairly standardised, less differentiated as well as have lower
switching costs. This makes easier for customers like marks and Spencer is the weaker force for
company (David, and David, 2016). On the other side, suppliers are not provide the creditable
threat for forward integrating within the industry where company is operates and manage their
business and its policies in respective and in effective manner. This is also make bargaining
power of supplier is weaker force for marks and Spencer. As per that, suppliers are more
important for company, who are make higher profits and benefits from developing close
relationship with its suppliers. That is help to create more benefits for company in effective and
valuable manner.
Threat from substitute product and services:
Threat from substitute product and services is strong force for company because at the
market place having various substitute products through those customers has ability to move
towards those. This creates issues and challenges for marks and Spencer. Most of the time
substitute products are with attractive price and better quality is influence customers. This can
creates more negative impact on businesses. Substitute product and services which can be used
in place of company products pose of a threat. This can create negative impact on business where
company operates. In that company need to make proper focus on innovation for attracting
customers as well as quality of product (Engert, Rauter and Baumgartner, 2016). This gives
effective result on the customers in order to select best quality of product and services from
company.
On the other side, there are ample product and services with higher price into industry
that is good for company marks and Spencer. The reason behind this is to customer have higher
switching cost at lower price into the industry. As per that customers are ready to move from
company for buying products with another businesses (Zhao and et.al., 2017). Threat of
substitute product is high like the company is offer higher value proposition that is very unique
within the industry. as per that management need to become a more services oriented as compare
with product oriented is help to understand the needs and wants of customers not only buying
product need. Additionally, company need to increase switching cost of customer. That is a
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serious issue but honest branding marketing communication strategies rebuild the customers trust
on company in effective and valuable manner.
Competitive rivalry:
Competition is very strong for the retail sectors other supermarket chain for its home
wear, clothing and fashion product as well as for food products. The competitions is growing
online segment where users are selecting and collecting shopping experiences on reducing cost
in store shopping. As per that, competitors are the fewer and has the larger market share is create
and generate strong force for company (Ethiraj, Gambardella and Helfat, 2018). Its means will
be engage in the competitive actions in order to gain best and effective position for becoming
successful market leaders. That is make rivalry a stronger force within the industry. As that
having huge pressures in country industry as market is fiercely competitive.
Fixed cost is also high into industry where marks and Spencer is operates. That is making
and create effective capacity which have simply means to reduce price at that demand is slaking.
This is make competitive rivalry stronger force within the industry because in production of
products are higher. As per that, company need to increase production capacity with larger
increments at the working place (Schilling and Shankar, 2019). This leads overproduction which
means companies has cut price in order to ensuring about the product as well as sells. That is
creating stronger price for company with competitive rivalry into the industry as well as market
place. In that management of marks and Spencer need to make complete focus on innovation in
existing products. That is help to build better and unique products.
As per the above discussion of porter five force about marks and Spencer for analysing
competitive advantage for company. This shows very importance for company in order to
manage growth and some of the factors. That is help to give hard contribution for analysis
Effectiveness Company through analysing competitive advantage. Through that company have
best chance for creating business opportunities for company is help to grow in effective manner
(Hitt and Duane Ireland, 2017). As per that, competitive rivalry, bargaining power of customers
and threat of substitute product and services are stronger force for company. On the other side,
threat of new entrants and bargaining power of suppliers has lower force for company.
Environmental analysis:
The retail sector is the most competitive and very dynamic sector and has the major
contribution of revenues to UK. It is link with providing goods and services from the biggest
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framework of production as well as consumption. For more consumption company require
various number of employees and labour for working in better manner. The physical retails store
is giving way to change the game of floor space and labour developed. In that management need
to organize training and development program for employee in order to working in better and in
effective manner (Hitt, Ireland and Hoskisson, 2016). Productivity and efficiency is move toward
retail supply chain which is tuning to make work properly lean with lower inventory and quicker
order of product and service with best quality. This help to creates higher growth for company in
effective manner.
Porter generic model:
Porter generic model is help to analysis the best competitive strategy in the way of
competing. There is two basic type of competitive advantage combined with the higher scope of
activities those company have really need to achieve goals and objectives. This generic strategy
is leads three effective and valuable generic strategies for achieving above the average
performance within industry. This includes cost leadership, differentiation and focused strategy.
The cost leadership strategy is help to company for achieving goals and objectives of company
by marketing complete focus on cost and price of product and services which are offer by
company. Through that marks and Spencer have complete focus on cost of product and services
in effective manner. As per that company have best and effective advantage to attract more
customers towards company (Lasserre, 2017). Differentiation is another best strategy where
company is making complete focus innovation in existing products and services. With the help
of this, marks and Spencer is able to attract more customers towards company with adding some
of feature and ingredients into products. At the end, focused strategy is including both
differentiation and cost leadership strategy. In that company make innovative product and
services at lower price is highly helped top attract more customers towards company in effective
and valuable manner. as per that focused strategy is best and effective strategy for marks and
Spencer for getting effective success within the competitive edge in effective and respective
manner.
PESTEL analysis:
 Political factor: This factor is consisting with laws and regulations which are
implemented by government of UK. Like policies to reduce corporate tax. As per that
marks and Spencer have chance to save lots of funds. Through that marks and Spencer
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have chance to grape new market with innovation within existing products and the
market place for satisfying needs of customers in effective manner.
 Economic factor: economic factor is consisting with rate of interest like foreign
exchange rate, stock market, job market and unemployment rate. That has created huge
impact on marks and Spencer and its strategy (Morden, 2016). This affect to business in
negative manner if company have not chance to hire new candidates for company. on the
other side, company have chance to get positive impact when company is hire best
employees for work.
 Social factor; this factors is consist with attitude of customers, taste and preference. That
had affected to business because that can changed as per the time and trends. As per the
current scenario, trends are continuously changed which is affect to marks and Spencer.
Like customer have demand of organic food product from the company. Company is not
able to provide organic product than it affect to profit of business.
 Technological factor: technology is more advanced day to day due to competitive edge.
The newest technological which is marks and Spencer using for easing inside store
(Newburry, Deephouse and Gardberg, 2019). There are technology is increase day to day
which is created negative impact on the business if company is not uses any technology.
 Environmental factor: environmental factor is consisting with the climate changes and
weather changes which are give negative impact on the business. Customer needs wants
changed as per climate and weather changes in effective manner. This reflects on the
business environment in effective manner as well as creates effective chances to
understand needs and wants of marks and Spencer.
 Legal factors: this refers with all the rules and regulations which are established by
government. In this sector food related laws are very important and effective for the
business to know (Rothaermel, 2016). The quality control is an assurance for marks and
Spencer which enables for maintain the food value.
This help to analysis environmental competitive advantage for business or for marks and Spencer
in effective and valuable manner.
CONCLUSION
From the above study it had been concluded that the strategic management has very
important and effective part of company. This helped to analysis complete competitive
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advantage and edge at the market place. In respect of that, report had been covered with porter
five force analysis models. This model helped to analysis competitive era for company. This
refers with threat of new entrants, threat of substitute product and services, bargaining power of
customers, competitive rivalry and bargaining power of suppliers. As per that analysis, it had
been concluded that bargaining power of customer, competitive rivalry and threat from substitute
product and services has created the stronger force on company. On the other side, bargaining
power of suppliers and threat of new entrants has created lower and weaker force on business.
That had created more advantage for business in effective and valuable manner.
RECOMMENDATIONS
As per the above study, here is added some recommendations for company which will
help to make great success of company. Marks and Spencer should work on pricing policy to
achieve cost leadership position. It has the successful segregated with the basic product and
added value through the organic product and services. Company should think about innovative
product and services for managing hire success of company. In respect of that, company need to
more investment on research and development department for analysing market. Company
should organize training and development for increasing capacity of employees towards working
ion effective manner.
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REFERENCES
Books and Journals
Ansoff, H.I. and et.al., 2018. Implanting strategic management. Springer.
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.
David, F. and David, F.R., 2016. Strategic management: A competitive advantage approach,
concepts and cases. Pearson–Prentice Hall.
Engert, S., Rauter, R. and Baumgartner, R.J., 2016. Exploring the integration of corporate
sustainability into strategic management: a literature review. Journal of cleaner
production. 112. pp.2833-2850.
Ethiraj, S.K., Gambardella, A. and Helfat, C.E., 2018. Theory in strategic management. Strategic
Management Journal,. 39(6). pp.1529-1529.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2016. Strategic management: Concepts and
cases: Competitiveness and globalization. Cengage Learning.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Morden, T., 2016. Principles of strategic management. Routledge.
Newburry, W., Deephouse, D.L. and Gardberg, N.A., 2019. Global aspects of reputation and
strategic management. Global Aspects of Reputation and Strategic Management, pp.1-
20.
Rothaermel, F.T., 2016. Strategic management: concepts (Vol. 2). McGraw-Hill Education.
Schilling, M.A. and Shankar, R., 2019. Strategic management of technological innovation.
McGraw-Hill Education.
Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management. Strategic
Management Journal,. 38(1). pp.42-63.
Zhao, E.Y. and et.al., 2017. Optimal distinctiveness: Broadening the interface between
institutional theory and strategic management. Strategic Management Journal. 38(1).
pp.93-113.
ONLINE
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Marks and Spencer mission, vision and values. 2019. [Online]. Available through: <
https://www.comparably.com/companies/ms/mission>
Porter five force analyses of marks and Spencer. 2017. [Online]. Available through:
<https://www.essay48.com/term-paper/13854-Marks-Spencer-Porter-Five-Forces>
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