Strategy and the Global Competitive Environment

This report discusses the strategies and plans organizations make to face challenges in the global competitive market. It focuses on the analysis of the external environment and the use of various models such as SWOT, PESTLE, Porter's Five Forces, Ansoff Matrix, and Bowman's Strategic Clock to formulate effective strategies for future competitive advantages. The report specifically examines the case of Marks and Spencer in the retail industry.

Strategy and the
Global Competitive
Environment

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
4 scenarios for future of retail industry........................................................................................3
Pestle Analysis.............................................................................................................................3
Porter five Force..........................................................................................................................5
SWOT analysis............................................................................................................................6
Ansoff Matrix..............................................................................................................................7
Bowman Strategic clock..............................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Organisation make various strategies and plan in advanced in order to face different
challenges of global competitive market so that it can sustain and grow its business operation.
Companies while operating internationally have to understand views, ideas of each individual
that live in society in order to provided products and services as per their requirements so that
overall objectives of firm can be achieved. This report is about Marks and Spencer that operates
in retail industry providing personal, home care and clothing products to its large number of
customers to earn maximum amount of profitability. It have discussed analysis external
environment that affects operation of Marks and Spencer in UK by use of several model such as
Swot, pestle, porter five forces. Ansoff Matrix and Bowman’s clock are used to formulated
effective strategies that can be used by company to gain competitive advantages in future.
4 scenarios for future of retail industry
There are four scenarios that need to be considered by companies
that operate in retail industry such as digital transformation that is Artificial
intelligence, sustainability or optimum utilisation of resources, ethical work
practice, Brexit and organic food products so that customer’s requirements
can be meet. Companies that operate in retail industry have to ensure that it
makes specific changes in its organisational structure, operation and
technology to grow and sustain its business in future circumstances. Brexit
one of the uncertain policies of UK government that have reduce sales
volume of enterprises that operates in retail industry. COvid -19 have also
tremendously impacted sales volume and profitability of most of the retail
sectors enterprise. Therefore, various models are used to justify four recent
scenarios for future of organisation in retail sectors.
Pestle Analysis
External environment of business includes various factors such as political situation,
economic condition, needs and preference of individual or legal factors that impact or influence
on strategies of organisation (Bloom and et.al., 2019). Manager of different companies has

effective analysis all such factor so that firm can easily expand its business operation and attain
its specific objectives. Therefore Pestle analysis of retail industry can be illustrated as follows:
Political factors: There are numerous changes in policies of government that have adversely
impact on operation and profitability of organisation. Brexit is one of the recent policies that
have made by UK government which have adversely impacted overall sales volume and
profitability as before company can easily import and export good to member of EU. But now it
has to pay extra tariff and taxes for export that have increased overall cost so less number may
prefer products due to high cost. At the same time they have get benefit from free trade
regulation thus it can easily enter new market to earn more profitability and customers
satisfaction. On the other hand Organic food product strategy has helped M&S to improve its
market position and competitive advantages. Sustainable or optimum utilisation of resources
contributed in providing more values to customers thus satisfy their needs in best possible
manner.
Economic factors: It is another factor that has been considered by companies while formulating
different strategies in order to retain its market position. UK is facing recession since people
have voted for existence from EU as most of the trade of country is done with EU so it have
resulted in economic slowdown for temporary basis. Companies in retail sectors have planned to
trained employees to make optimum utilisation of available resources so that needs of individual
can be satisfied and they can be motivated to make purchased. For examples: Due to less
availability of employment opportunities and decreased in disposable income of people Marks
and Spencer sales have gone down as people are less likely to spend money on products (Al-
Khasawneh, 2020). It have also make use of ethical practices to retained talented employees
within organisation so that customers are delivered qualitative services.
Social factors: There are various factors that influence decision making of customers such as
social culture, technological or psychological that are understand by manager of different firm so
that it can expand its business operation. Manager of retail sectors have to provide good working
environment, equal opportunities to people to retain highly talented employees within
organisation. Most of the younger generation in UK and worldwide like to shop products and
services through online so company have increased its presence in social sites to meet customers’
requirements.

It can be critically analysed that At the same time people have become more and more concerned
about their health and safety so various firms have launch organic food products ranges so that
they can be motivated to purchase.
Technological changes: Most of the organisations are using innovative technologies and digital
medium to build strong relationship with customers so that it can grow its business for long
period of time. Artificial intelligence has reduced number of work that need to be performed and
provided customers personalised experienced in retail sectors. More than 77% of Retailer are
planning to use AI and use of robost that will effect operation of business and lead to less
employment opportunities for people in retail. Companies such as Marks and Spencer have
provide all crucial information, images of products and services in which company deals so that
they can take accurate decision within limited time frame. Manager have also planned strategies
that it need to make its website attractive and offer 24 hours services to customers so that their
requirements can be fulfilled beyond their expectancy. It can also be critically stated that
Innovative technologies have contributed towards sustainable development or maximum
utilisation of resources.
Figure 1 Artificial intelligence

Sources: (Technavio, 2020)
Environmental Factors: Government and people are highly concerned about increasing harmful
impact of various companies or industry on environment that have caused threat to availability of
natural resources for future generation (Mele, 2018). Retail industries are moving toward
sustainable and zero carbon or optimum utilisation of resources so that requirements of
customers can be fulfilled. It have been found increased in value of global second hand apparel
by $24 billion as per 2018 and it is estimated that it will reached by $51billion till 2023. For
examples: M&S manager have planned to make effective utilisation of resources and bring
economic of scale by guiding and supportive employees at the same time making use of
innovative technologies so that best outcome can be gained.
Investment in CSR activities have increased cost as well as brand image, customers loyalty so it
have positively and negatively impacted on organisation.
Legal factors: There are some legal laws, rules that are made by government so that no harm can
be caused to consumer or employees that are working in the organisation. Therefore,
organisation ensures that all laws are followed while framing strategies for smooth operation of
business. For examples: Marks and Spencer was not able to followed health and safety laws at
it stores that have resulted in harmful effects on employees. Thus company have to pay fine of
500000 pounds for each offence that have reduced brand image and market position of firm.

Figure 2 Retail ecommerce sales
Sources: (The Future of Retailing, 2019)
Porter five Force
It is one of the powerful tools that are used by enterprise to know about level of
competition in specific industry so that effective strategies can be formulated for achievement of
objectives (Danemo, 2018). Porter’s five forces includes power of consumers, power of
suppliers, level of competition, threats of substitute products and threat of new entrance within
organisation. Therefore by analysing all such factors market positioning of firm such as Marks
and Spencer can be easily understand in retail industry.
Rivalry among existing competitors: There are various competitors in retail industry such as
Tesco, ASDA and ALDI that operates in UK to provide various products and services to number
of individual. Therefore it can be stated that competition level in retail industry is high so
company by maintain its quality of products and services have gain differentiate positioning in
retail industry. For examples: ALDI is one of the heavy discount provider to customers so it have
forced Marks and Spencer to reduce its cost of products and services to retained customers

satisfaction. Artificial intelligence can be used by firm to gain competitive advantages from other
supermarket firm in retail sectors.
Power of consumer: It can be stated that UK have number of customers with different needs and
preference so they forced companies to manufacture products as per their requirement for growth
of enterprise. Therefore bargaining power of consumer is high as there are large organisation
with number of products and services that operates its function to fulfil their requirements and
achievement of goals (Sahani, 2020). Such as Manager of Marks and Spencer by ensuring that it
deals in highly branded and quality products is able to charged competitive pricing from people.
On the other hand it can be critically stated that Sustainable use of resources helps company to
reduce amount of wastage and meet needs of customers in best manner.
Power of supplier: There are various small supplier of retail industry which offers similar
qualities of products and services at reasonable rates in order to earn specific amount of profit
margin. Manager by making purchase of products and services in bulk amount is able to enforce
supplier to provide several discount so that it can make purchased. Thus, it can be stated that
effective strategies, strong brand image and relationship with various supplier have contributed
in reducing their power and availability of resource at minimum rates so that more benefits can
be render to customers.
Threats of new entrance: It is another element of porter five forces which stated that number of
firm can enter into retail industry thus increasing level of competition. Lot of capital or fund is
required by new enterprise to enter into retail sectors as there are large firm such as Tesco, Marks
and Spencer with huge market share. So threat of new entrance is low to medium in retail
industry. It can be justified by Marks and Spencer have focused on customer loyalty and
satisfaction so it has created barriers for new entrance to enter into retail industry. M&S can
reduced threat of entrance by promotion organic products range and use of artificial intelligence
for fulfilment of customers requirements.
Threat of substitute products: Many small firm have tries to imitate or copies products and
services as of each other firm to influence customers. Such as design of clothe, product like
shampoo, furniture so companies have copyright and patents its technology and products so that
no other firm can copy and gain competitive advantages. Thus, it can be stated that threat of
substitute products is medium.

SWOT analysis
It is another model that is used to identify strength and weakness of particular
organisation so various strategies can be planned by manager for growth and sustainability of
firm in competitive market (Routledge. Hakobyan, 2019). Swot analysis of marks and Spencer
helps in understanding strength and capabilities of firm that are used to get better result of
available opportunities so that specific goals can be attained. Therefore Swot analysis of firm can
be illustrated as follows:
Strength: Marks and Spencer have strong presence in Ecommerce that provide opportunities to
company to induce people living in UK as well as across worldwide to make purchased for
satisfaction of their own requirements. Company have ensured that customers are provided better
experienced so that it can build strong brand image and survive in market for long period of time.
Weakness: There are frequent recalls which have adversely impacted on customer’s satisfaction
and brand loyalty of Marks and Spencer. At the same time company has mainly realised upon
UK market for its growth that hinder expansion of business in new countries (Phadermrod,
Crowder and Wills, 2019). It have been noticed that marks and Spencer is not able to manage its
various stores across worldwide that have lead to closure and cut of job for many individual.
Opportunity: There are various opportunities for Marks and Spencer such as due to strong
brand image, high awareness among customers about products and services firm can easily enter
into new market segment to earn more profitability. It can also expand its operation in
ecommerce in order to gain maximum customers satisfaction and enhance its sales volume or
market share.
Threats: Political instability and continuous changes in preference and requirements of
customers has been one of the most important threats for organisation (Gürel and Tat, 2017).
Brexit is such as uncertain event that have reduce overall import and export of firm and possess
threat on its further operation. Increasing in number of competitors in retail industry can be
another threat for Marks and Spencer so manager have effectively understand external
environment for sustainability of firm.

Ansoff Matrix
These model is also used by enterprise to frame different strategies in order to survive
and sustain its operation in retail industry (BÃlÃescu, 2018). There are four types of strategies
which are suggested in Ansoff Matrix which is used by manager to increase sales volume and
profitability of organisation. Various strategies for growth and success of firm are :
Market penetration: This is simplest and no risky strategy that can be adopted by firm that
wants to influence existing customer to make purchased of existing products and services. Marks
and Spencer in initial stage of business with limited resources have attracted various individual
to select existing products for better satisfaction of their needs by use of digital media and strong
brand image to promote ethical practices in firm. Thus, it has contributed in sustainability of
organisation in retail industry.
Product development: Company have introduced various products and services as per
expansion in its market share and customers satisfaction. Marks and Spencer have range of
products and services from clothing, personal care to financial services so that requirements of
diverse individual can be fulfilled (Teece, Peteraf and Leih, 2016). It has recently launch
organic products range for people of UK so that they can be attracted to make purchased for
fulfilment of their requirements. Artificial intelligence technology can also be used by company
to meet needs of existing customer’s bases.
Market development: As marks and Spencer is able to gain market share it have planned to
enter into various market segment so that objective of firm can be meet. Company have entered
into different countries with existing products and services and now planning to enter into India
because there are large numbers of customers so that firm can easily earn maximum profit
margin. This types of strategy is little bit risky as company is unaware about market trends and
customer preference so manager have decided that before making investment overall market
research will be conducted for better operation of business. Digital media can be used to
influence large number of individual to make purchased. Artificial intelligence can be used by
firm to enter into new market so that customers requirements can be satisfied in best possible
manner. Ethical work practices and organic food products are also recent trends which helps
company to rapidly grow and expand its business operation.

Diversification: It is last and most risky strategy in which company plans to enter into new
market with new products and services. Marks and Spencer manager have planned to launch
organic products while entering into different global market as most of the people across
worldwide are more concerned about their health and safety.
Therefore, company by using its qualitative and organic food range is able to diversify business
and gain competitive advantages.
Bowman Strategic clock
Bowman clock have suggested eight types of strategy that can be used by organisation to
gain advantages in future circumstance. It provided different option for strategic positioning of
enterprise in retail industry so that it can influenced large number of individual to make
purchased. Therefore various strategies that might used by Marks and Spencer are as follows:
Low price and low added value: Such type of strategy is avoided by manager of Marks and
Spencer as it does not deals in low quality of products and services neither it offer products at
lower prices (Goyal, Sergi and Esposito, 2019). Company in order to maintain its image in retail
industry have ensured that its quality of products and services are maintained so that more
customers can be motivated to make purchased over other competitors.
Low price: It is another strategy in which company plans to charge low prices form customers in
order to influence or attract more and more people to choose specific company as compared to
another. Marks and Spencer charge medium to high price form its customers for its qualitative
products and services. Company use of digital marketing can lower prices of products and meet
demand of customers in most effective manner.
Hybrid: It this strategy firm plans to gain market share by reducing price and making
differentiate products so aim of such firm is to persuade customers by adding more and more
value to products. Marks and Spencer by bring economic of scale and training its employees can
use Hybrid strategy to cover large market areas (Keegan, 2017). Sustainable or optimum
utilisation of resources can contributed in reducing prices and providing more benefits to
customers.

Differentiate: Company have make use of differentiate strategy in order to earn profit margin
and competitive positioning in market. Marks and Spencer manager always plans to provide
innovative and differentiate products and services to customers for retaining their satisfaction
level and loyalty. On the other hand artificial intelligence can be used by company to
differentiate itself form other competitors.
Focused Differentiation: Company has manufactured high and standard products and services
for high class group or for children, men and women so that it can cater need and requirements
of each individual. Marks and Spence by offering products and services at single stores have
provided ease and comfort to them in making purchased. Company by promoting ethical
practices in firm can motivate employees to delivered differentiate products to focused group of
people.
Risky high margin: Manager of M&S ensures that its does not set high margin or price of
products in order to retain its market positioning in retail industry (VAHDATI, NEJAD and
SHAHSIAH, 2018).
Monopoly pricing: It can be stated that firm does not operate single in retail industry so it
cannot make use of monopoly prices to gain maximum market share.
Loss of market share: Continuous analysis of set price and products quality that are render by
M&S to its customers have saved firm form loss of market share or customers.
CONCLUSION
It can be conclude that from above report that Pestle analysis helps in identifying macro
factors that impact or influence on overall performance of organisation. Porter five forces is
another powerful model that is used to analysis competitive positioning of enterprise in retail
industry. At last it can be stated that Ansoff Matrix and bowman clock strategies can be used by
M&S to grow its business across globally to achieve its objectives.

REFERENCES
Books and Journals
Al-Khasawneh, R. O. H., 2020. Cost-Driving Strategy Under the Use of E-Business to Achieve a
Competitive Advantage in a Digital Economy Environment. International Journal of
Economics and Finance, 12(1). pp.1-70.
BÃlÃescu, S., 2018. THE ADOPTION OF INNOVATION IN THE RETAIL
INDUSTRY. Bulletin of the Transilvania University of Brasov. Economic Sciences.
Series V, 11(1). pp.15-24.
Bloom, N and et.al., 2019. The impact of Brexit on UK firms (No. w26218). National Bureau of
Economic Research.
Danemo, J., 2018. How is AI influencing industry competition?: An exploration of online
retailing using Porter’s Five Forces Framework.
Goyal, S., Sergi, B. S. and Esposito, M., 2019. Literature review of emerging trends and future
directions of e-commerce in global business landscape. World Review of
Entrepreneurship, Management and Sustainable Development, 15(1-2). pp.226-255.
Gürel, E. and Tat, M., 2017. SWOT analysis: a theoretical review. Journal of International Social
Research, 10(51).
Keegan, W.J., 2017. Global marketing management. Pearson India.
Mele, G., 2018. Equal Opportunities to Prosper: A Statistical Analysis of Macro-and
Microeconomic Factors.
Phadermrod, B., Crowder, R. M. and Wills, G. B., 2019. Importance-performance analysis based
SWOT analysis. International Journal of Information Management, 44. pp.194-203.
Routledge. Hakobyan, N 2019. The implementation of Corporate Social and Environmental
Responsibility practices into competitive strategy of the company. Маркетинг і
менеджмент інновацій, (2), pp.42-51.
Sahani, D., 2020. Business strategies during recession: retail sector. International Journal of
Public Sector Performance Management, 6(2). pp.260-266.
Teece, D., Peteraf, M. and Leih, S., 2016. Dynamic capabilities and organizational agility: Risk,
uncertainty, and strategy in the innovation economy. California Management
Review, 58(4). pp.13-35.
VAHDATI, H., NEJAD, S. H. and SHAHSIAH, N., 2018. Generic Competitive Strategies
toward Achieving Sustainable and Dynamic Competitive Advantage. Revista
ESPACIOS, 39(13).
Appendix
5 predictions for the future of retail, 2015 [Online]. Available through:
<https://www.retaildive.com/news/5-predictions-for-the-future-of-retail/570085/>.
Technavio, 2019, [Online]. Available through:<
https://www.businesswire.com/news/home/20200420005051/en/Pre-Post-COVID-19-
Market-Estimates-Artificial-Intelligence-AI>.

The Future of Retailing, 2019, [Online]. Available through:
<sciencedirect.com/science/article/pii/S0022435916300872>.
What Is the Future of Ecommerce? 10 Insights on the Evolution of an Industry, 2020, [Online].
Available through: < shopify.com/enterprise/the-future-of-ecommerce>.
5 trends that will shape offline retail in 2020, [Online]. Available through
<https://retail.economictimes.indiatimes.com/news/industry/5-trends-that-will-shape-
offline-retail-in-2020/73249360>.
Figure 3 Future of retail
Sources:(What Is the Future of Ecommerce? 10 Insights on the Evolution of an Industry,
2020)