Analysis of Macro Environment and Internal Capabilities of Marks and Spencer

This report analyzes the impact of macro environment on Marks and Spencer and its strategies. It also examines the internal environment and capabilities of the company. The report includes a Porter Five Force Analysis and a strategic management plan.

Business Strategy

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1 Analysis the impact and influence of macro environment on Marks and Spencer and its
strategies......................................................................................................................................3
LO2..................................................................................................................................................5
P2 Internal environment and capabilities of Marks and spencer.................................................5
LO3..................................................................................................................................................8
P3 Porter Five Force Analysis.....................................................................................................8
LO4................................................................................................................................................10
P4: Strategic Management Plan.................................................................................................10
CONCLUSION................................................................................................................................1
REFERENCES................................................................................................................................2

INTRODUCTION
Business environment refers to all internal and external factors such as customers,
employees and government that impact on the functioning of business in the market. In this
report Marks and Spencer has been taken as company that operates its business worldwide and
specialized in providing quality clothing, home and food products to its customers. This report
covers market analysis by using appropriate framework that impact and influence macro
environment on Marks and Spencer and its strategies. It also analysis internal environment and
capabilities of company to identify its strength and weaknesses. It also analysis market position
of the company by using Porter five force model. At last this report prepare strategic
management plan that has tangible and tactical strategies priorities and objectives of the
company that helps in expansion of business and achievement of objectives.
LO1
P1 Analysis the impact and influence of macro environment on Marks and Spencer and its
strategies
Pestle analysis: It is an analytical tool that is used to analysis various external factors of
environment that impact on the functioning of business thus helps in gaining competitive
position in the market. Marks and Spencer by analysing external factors such as customers,
government, employees and investor of the company is able to expand its business and gain
competitive position in the industry (Jia, 2020). Thus, it helps in better understanding of
competitive position or current and future position of Marks and Spencer in the market.
Political Factors: It refers to policies, procedure or rules and regulations of government that
need to be considered by the company for smooth operational of business. This factor has
adversely impact on the functioning of marks and Spencer in the market. Due to political
instability and Brexit in UK company sales and profitability has been declined tremendously as
disposable income of customers was low, and they are also less willing to make purchase. On the
other hand free trade benefited company to expand its business across various nation with
minimum restriction. Company is able to survive and grow in the industry by expanding its
business across nation and by using various marketing strategies to induce people to make
purchase. Thus, it can be stated that political factor adversely impact on company functioning
and its strategies as it has to change as per policies of government. It also helps in smooth
functioning of business and achievement of company goals.

Economic factors: It analysis and determine economic condition of country by identifying
factors such as interest rate, employment rate and disposable income of customers. UK is
suffering situation of recession thus it means high employment rate, interest rate and debt of
government and people. It impacts positively to the company as high employment rate means
company can hire suitable candidates at lower price. On the other hand cost of production has
increased due to increase in interest rate, cost of input of raw material that has impact on
company sales and profitability (Dirick, and et.al., 2019). Company by generating large number
of employment and by using various method to enhances skills and knowledge of employees can
reduces cost of production and wastage. It can also provide various promotional offers that
influences customers to make purchase thus it helps in achievement of goals. Thus, economic
conditions of UK has impact Marks and Spencer functioning and strategies.
Social Factor: It includes belief, preferences, values and culture of people living in the society
so company has to consider such factor to gain competitive advantages and enhances its sales. It
has impact on Marks and Spencers sales as it is not able to satisfy needs of youth customers due
to long-standing existence. Most of the people tend to associate brand of company with past thus
company was not able to retain customers satisfaction and loyalty. But company able to expand
and survive in ready meals sectors as there was wide scale increase in consumption of ready
meals. Thus, company by making use of available opportunity in food store is able to expand its
market and able to gain competitive advantage in the industry. Thus, it can be stated that
company by considering social factors and change its strategies is able to expands its market
share.
Technology Factor: It refers to prevailing technology and technological innovations in the
industry that help company in gaining competitive advantages and establishing brand image. It
impacts on the functioning as Marks and Spencer has to update its technology and innovative its
product to differentiate it from other competitors (Kemsa, 2019). Self- checkout and online
shopping are the two changes in technology that impact on the functioning and strategies of
Marks and Spencer. Company by introducing self-checkout in its food stores is able to reduce
cost and able to get quick and fast feedback from customers. On the other hand company by
building strong presence in e-commerce has provided ease to its customers to shop online and
get their product at their doorsteps. Thus, it has change strategies and impact on functioning of
company adversely.

Legal Factor: It refers to rules and regulation such as employment law, discriminative law that
are needed to be followed by company to avoid itself from impose of fines and penalty. This
factor has adversely impact on company brand image and sales as it had been found that Marks
and Spencer has involved in multiple legal disputes (Zhao and et.al.,2019). Such as it does not
able to ensure health and safety of it employees from asbestos risk which lead to fines and
penalty. It was also found that company was underpaying its employees and forcing them to
work overtime. This all has adversely impact on company functioning of company as it had to
incurred additional cost of penalty and fines. Thus, it also impacts on strategies of Marks and
Spencer as it had to change its strategies in order to build strong brand image and gain customers
loyalty. Company by abiding to such legal laws made by government can enhance its market
share and satisfy needs of customers and established strong brand image in the industry.
Environment Factor: This factor was recently includes as increasing awareness among people
the affect caused by company on environment. As the resources in the environment are limited,
so they need to be protected by company while operating its business. Company in
manufacturing its product clothing, food has ensured safety of environment by using less energy.
Company is well know for providing sustainable products within its customers thus able to build
strong brand image and customers satisfaction. Thus, environmental factor also impact on
company functioning and strategies as it has to consider such factor for gaining customers
loyalty.
LO2
P2 Internal environment and capabilities of Marks and spencer
Swot analysis
SWOT analysis is a strategical tool which analyses the internal business micro
environment in terms of strengths and weakness of company, the various opportunities and
threats it has to work towards for positioning itself firmly in the volatile business environment.
STRENGTHS -
 High recognition of brand- Marks and Spencer established high recognition value in the
customers preferences when it comes to offering high fashionable clothes. The company
has high goodwill among customers which is a great internal strength affecting the
business growth (Büyüközkan and Ilıcak, 2019).

 Wide variety of products-Marks and Spencer has wide variety of products under the
brand catering to various segments of customers who look for high quality shopping
experience. High skill sets in employees are a great strength for company as it enables to
gain competitive advantage in long term sustainability.
 Large number of outlets – The company has 900 stores all over world and around 600
stores in UK which offers wider business opportunities and high sales target. It increases
the internal strength of company as being large availability of stores the overall structure
of company functioning is enhanced.
WEAKNESSES-
 Bad publicity as non trendy store- Mark and Spencer has created wrong assumption in
minds of people as non trendy clothing store which has affected the business greatly.
Company must formulate strategies to attract customers in all age groups and enhance its
range of clothing, quality by working towards changing preferences of segmented
customers.
 Manual working increases the overall cost.- Company has been long following
traditional methods of producing their products and services which has lead to overall
increase in their cost. It has been affecting their profit margins greatly and leading to less
cost efficiency in operations(Erofeeva and Egbert,2020). The company must increase the
innovative technologies to speed up the whole process of manufacturing clothes.
OPPORTUNITIES
 Internalization- The company must aim towards increasing its presence globally by
increasing number of store outlets in new countries where they have large opportunities
for growth. Global expansion is the extreme need in changing business scenario for
companies for gaining long term growth in the market spread.
 Market Segmentation-M&S has the opportunity to segment its customers worldwide by
targeting them according to various needs and preferences. Company must aim to
formulate strategies for satisfying the various customer demands depending on their
preferences and changing fashionable scenario fp clothing industry to establishes a firm
business structure.
THREATS

 Increased competitive business environment – There are large number of brands
emerging every day globally in clothing industry which has becoming an increasing
threat for S&M. Competition in the retail sector and changing business scenario is a real
worry due to which reputation and goodwill of company has been largely affected. M&S
need to come with new operational strategies for developing risk management and
increase the stores globally (Phadermrod, Crowder and Wills, 2019).
 Volatile customer preferences- With high increase in customer preferences for
fashionable clothing it is becoming an increasing threat for S&M to adapt to their
preferences quickly. Company must formulate new strategies and enhance the use of
innovative technologies in their products, analyse the changing market demands and
upgrade its products and services.
VRIO FRAMEWORK
VRIO Framework is a strategic analysis tool that is used by company to identify and evaluates its
internal resources and capabilities that are used to gain sustainable competitive advantages in the
market (Lüttgens and Montemari, 2016). Marks and Spencer is able to achieve its objectives and
gain competitive advantages by identifying its internal capabilities to make use of available
opportunities. The four attributes of Marks and Spencer resources that promote long term growth
and survival of business are as follows:
Valuable Rare Cost to imitate Organized to
capture value
Product quality Yes No No Yes
Global presence Yes No No Yes
Employee
management
Yes Yes Yes Yes
Organization
culture
Yes No Yes Yes
Pricing policies Yes No No Yes
Value: It refers to the value or price of product that is offered to customer and helps in
exploitation of opportunity or neutralize competition by using internal capabilities. Marks and

Spencer by providing valuable and qualitative products to its customers is able to maintained and
retain customers satisfaction and loyalty. Company continually evaluates its value of product for
achievement of company objectives by offering product at reasonable price. Thus, company has
set appropriate value for its product by effectively pricing of valuable products that helps in
expansion of market share and achieve of goals.
Rare: It includes such resource that are limited in environment or few companies only acquired
it ,so company that have both rare and valuable resource gain competitive position. Marks and
Spencer provide valuable product but its products are not rare as company such as Tesco, ASDA
offers similar products to its customers so it has competitive parity. As the company operates its
business across various nation so it does not have rare global presence. Thus, company is able to
expand its market share and gain customers satisfaction by use of its strength to provide
specialized product.
Cost to imitate: It explains cost incurred to imitate or to manufacture similar product of
company so it is threat for the company if other competitor can easily imitate the products or
services. Marks and Spencer deals in clothing home and food product that can be easily copied
by other competitors in the market (Matila, 2017). Organisation culture can also be easily
imitated without much expense. Thus, cost of imitation of product is low and there are many
competitors in the market that deals in similar product.
Organized to capture value: To provide value to its product and services company has to
organize its management, policies, structure and work environment to gain sustainable
competitive advantages. Marks and Spencer is able to satisfy needs of customers and make use
of available opportunities by effective organize policies and structure. It is able to coordinate
individual goals towards organisational goals due to effective management of resource. Thus, it
can be stated that it helps in identifying strength and capabilities of the company that helps it in
gaining competitive advantages in the market.
LO3
P3 Porter Five Force Analysis
It analytical tool that is used to identify competitive position of businesses and strategy
potential profitability in the industry. Porter five forces helps in identification of company
position in the market by analysing five factors such as degree of competition, number of
substitute products, power of supplier and customers in the market (Click, 2017). Thus, it is

useful strategy management tool that helps in achievement of company objectives or goals in an
effective manner.
Competition Rivalry: It refers to number of competitors and power of each competitor and
quality of product offered by other competitors in the industry. Competition in retail industry is
intensive due to large numbers of competitors offering clothing, home wear and food products to
customers. Online competition has also tremendously increased as every company want to
expand its market share by offering its product online or through its website. High competition
in the industry stated that Marks and Spencer expand its market share by satisfying customers
needs by offering differentiate and quality product to its customers (Namada, 2020). Therefore,
specialized in providing quality product helps company in expanding market share and
achievement of company objective. It can also use update technology or trained employees to
enhance their skill and knowledge for bringing economic of scale and to provide qualitative
products at reasonable rates.
Power of buyer: It explains the ability or power of buyer to bring down price of product or force
company to cut down its price. It is determined by identifying number of prevailing customers
and importance of each customer for the company. Marks and Spencer operate in retail industry
so there are number of competitors that offers quality product at reasonable rates so customers
have wide varieties of option to choose among. Switching cost of customers is also low thus
they can easily change their preferences without incurring much cost. Marks and Spencer by
building and maintaining customers loyalty and satisfaction is able to retains its customers and
promote growth and survival in the industry.
Power of suppliers: It refers to ability of supplier to charges high prices of its input thus it is
determined by number of supplier and uniqueness of raw material. Marks and Spencer has well-
established brand image and number of supplier in the industry are also large so company can
easily bargain from such supplier (Palkovits-Rauter, 2018). Cost of switching is also low so
company can easily avail its product at lower cost. Thus, it can be state that low Bargaining
power of supplier helps in reduction of cost of production and increase profit margin of the
company. Due to strong established brand image of the company in the market bargaining power
of supplier is less and it can easily avail products at lower cost.
Threats of new entrance: Company power and position is also affected by how easily new
company can enter into the market. It identifies time and amount of capital required to enter into

industry and gain competitive advantages in the market. Marks and Spencer operates its business
in retail industry so threat of new entrances is low as it required large amount of capital to
established business in the industry (Lüttgens and Montemari, 2016). Company is able to create
barriers for new entrances as it provide specialized and quality products to its customers. It has
also patent and copyright its technology and products to gain competitive position in the market
and create barriers for new entrances. Thus, it can be stated that low threat of new entrance in the
industry promote growth and survival of company in long run and helps in gaining competitive
advantages in the industry.
Threats of substitute products: It refers to similar product or product that can be used in place
of companies products thus it posses high threat for the company. As when close substitute are
available customers will change their preferences and buy products of another company. The
industry in which Marks and Spencer operates has high substitute such as clothing can be easily
copy and design at reasonable cost. Threat to food business from other competitors such as
Tesco, ASDA, ALDI that offer similar products to their customers. Thus, high threat substitute
of product is minimized by providing qualitative services to its customers and differentiate it
from other competitors in the market. It helps in would expansion of market share and
achievement of organisational objectives.
LO4
P4: Strategic Management Plan
There are various theories and concepts available to the Marks & Spencer to make an
effective strategic plan. Bowman's Strategic Clock is most productive tool for the company to
create a strategic plan.
Bowman's Strategic Clock
It is an important tool for the businesses which very helpful in make effective business
strategies. By using bowman's strategic clock tool, currently many companies are gaining high
competitive advantage in the market (Abedi and Tsaltas, 2018). There are eight different terms
included in this tool as a clock form which mentioned below;
Low Price and Added Value: According to this term the M&S is able to gain high competitive
advantage in the market by reducing price of its products and services.

Low Price: To build large customer base in the international market, the company need to
minimize cost of its products and services. Low price of product and service is highly attracting
people in the retail industry.
Hybrid: This term says, the company need to provide different products to the customers with
low price in the comparison of competitors.
Differentiation: M&S need to produce some different range of products and services to gain
high profit in the market.
Focused Differentiation: The company need produce exclusive and luxury products or services
also to charge high price from the customers. This position in the strategic clock is very helpful
in increase the profit of M&S.
Risky High Margin: In which the company need to provide some additional features to
customers when they buy product or service with high price. Otherwise, customers will drop that
product.
Monopoly Pricing: M&S is able to increase its profit by charge high price on that product which
only sell by them.
Loss of Market Share: It is the major responsibility of the company to provide quality products
to the customers on favourable prices (Ong, 2015). Otherwise, the M&S will loss its high market
share in the retail industry.
These all are major aspects of the bowman's strategic clock tool. In other side, an
effective strategic plan for the M&S is mentioned below;
Strategic Plan
Mission: The main mission of the Marks & Spencer is gain high market share in the
international retail industry.
Vision: Provide best of the best quality products and services to the customers is the main
vision of the company.
Objectives
 To always run all business operations on a progressive path.
 To gain high competitive advantage.
 To become a leading retail company in the world.
Situational Analysis
For situational analysis of the M&S there are SOWT and PEST analysis mentioned

below. Both are helpful to the company to analyse its internal and external factors.
SWOT Analysis
It is a tool to identify the major internal factors of the company which impact it in both
terms; positively and negatively.
 Strength: The M&S is one of the leading company in the retail industry of United
Kingdom. It also has large customer base in all around the world.
 Weaknesses: Company still using some traditional business strategies in its business
operations (Immordino and et.al., 2016). This is the main weakness of the M&S,
because by lack of modern business strategies the company is can't able to achieve huge
profit in many market segments.
 Opportunities: There are great opportunities for the company to rise its profit by
business expansion, use of digital marketing etc.
 Threats: Huge competition in the retail industry is the biggest threat to the M&S, in
which the management of company need improve its marketing strategies to gain high
competitive advantage in the market.
PEST Analysis
PEST analysis is an important tool to the company to identify major external factors of
business environment which impact it in both terms; positively and negatively.
 Political Factors: Political factors of the United Kingdom are too supportive to the
M&S.
 Economic Factors: The company is able to take great advantages from the economic
conditions of the UK.
 Social Factors: These factors are very favourable for the M&S, because most of the
people in this country are completely literate.
 Technological Factors: With the help of technological factors the company is able to
increase its performance in the market.
Marketing Strategies
There are “4Ps of marketing” and “STP model” included in the marketing strategies.
4Ps of Marketing
 Product: The company always need to choose a specific product to launch in the new
market.

 Price: M&S need to offer favourable price to the customers.
 Place: Selection of the specific market place is also necessary task to launch new
product.
 Promotion: Company need to run its promotional activities to increase sales.
STP Model
1. Segmentation: In which, the company need to divide its whole big market into small
market segments.
2. Targeting: The company need to target any market segment to launch new product.
3. Positioning: In positioning the M&S need to run its marketing campaigns for attract
customers towards brand.
Financial plan
Jan Feb March April May June
expenses
rent 6000 6000 6000 6000 6000 6000
salaries 9000 9090 9180.9 9272.709 9365.43609
9459.090450
9
Utility bills 1500 1507.5 1515.0375
1522.612687
5
1530.225750
9375
1537.876879
6922
Other
expenses 1500 1507.5 1515.0375
1522.612687
5
1530.225750
9375
1537.876879
6922
Total cash
out flow 18000 18105 18210.975
18317.93437
5
18425.88759
1875
18534.84421
02844
Income
Sales 20000 18000 22000 25000 30000 35000
Other
income 1800 2200 3000 3500 3700 4000
Total cash
inflow 21800 20200 25000 28500 33700 39000

Net flow 3800 2095 6789.025
10182.06562
5
15274.11240
8125
20465.15578
97156
Monitor and Control
Top-level management of M&S need to use the latest business strategies to properly
monitor and control the strategic plan (Mallon, 2019). It is too necessary for the company to
achieve effective results from this plan.

CONCLUSION
From the above report it can be concluded that various factors impact and influences on
the functioning and strategies of company. Macro environment determine and inform strategic
management decision-making of Marks and Spencer. It can also be concluded that Swot analysis
is used to evaluate internal environment and its capabilities thus helps in achievement of
organisational goals. It also provides protection from various threats by overcoming company
weaknesses and using its strength and capabilities to make use of available opportunities. It is
also concluded from above report that porter five forces is an analytical tool that is used to
identify position of company in the industry. It helps in identifying competition level in the
industry and formulation of various strategies that helps in gaining competitive advantages and
achievement of organisational goals. At last, it can be concluded that various analysation and
evaluation of internal and external factors of environment helps company in expansion of
business in new market by framing appropriate strategic planning management. It also helps in
setting tactical and tangible strategies priorities and objectives of the company.
1

REFERENCES
Books and Journals
Büyüközkan, G. and Ilıcak, Ö., 2019. Integrated SWOT analysis with multiple preference
relations. Kybernetes.
Click, B. V., 2017, January. of Retail Relationship Marketing Through Community Engagement,
an Extended. In Creating Marketing Magic and Innovative Future Marketing Trends:
Proceedings of the 2016 Academy of Marketing Science (AMS) Annual Conference. (p.
363). Springer.
Dirick, L and et.al., 2019. Macro-economic factors in credit risk calculations: including time-
varying covariates in mixture cure models. Journal of Business & Economic Statistics.
37(1), pp.40-53.
Erofeeva, S. and Egbert, G. D., 2020, February. An Approach to Empirical Mapping of
Incoherent Internal Tides for SWOT. In Ocean Sciences Meeting 2020. AGU.
Immordino, K. M., and et.al., 2016. Evaluating the Impact of Strategic Planning in Higher
Education. Educational Planning. 23(1). pp.35-47.
Jia, J. Y., 2020. Macro-innovations: The Discipline of Scaling Adoption. In The Corporate
Energy Strategist’s Handbook. (pp. 207-217). Palgrave Macmillan, Cham.
Kemsa, D., 2019. Theoretical and Conceptual Background. In An Investor’s Perspective on
Marketing Excellence.(pp. 5-12). Springer Gabler, Wiesbaden.
Lüttgens, D. and Montemari, M., 2016. New Ways of Developing and Analyzing Business
Model Innovation. Journal of Business Models. 4(3).
Mallon, W. T., 2019. Does Strategic Planning Matter?. Academic Medicine. 94(10). pp.1408-
1411.
Matila, E., 2017. What factors do employees of higher education institutes in Finland value when
considering potential employers?.
Namada, J. M., 2020. The Role of Strategy Implementation in the Relationship Between
Strategic Planning Systems and Performance. International Journal of Business Strategy
and Automation (IJBSA). 1(1), pp.1-23.
Palkovits-Rauter, S., 2018. Shaping Forces of Business Process Management. EPH-International
Journal of Science And Engineering (ISSN: 2454-2016). 4(9). pp.26-41.
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.
Psofogiorgos, N. A. and METAXAS, T., 2016. " Porter vs Krugman": History, Analysis and
Critique of Regional Competitiveness. Journal of Economics and Political Economy.
3(1). p.65.
Zhao, Y and et.al., 2019. The macro-and micro-prospects of the energy potential of the anaerobic
digestion of corn straw under different storage conditions. Bioresource Technology
Reports. 7. p.100189.
Online
Abedi, K and Tsaltas, S. 2018. Customer Loyalty & The Bowman’s Clock. [Online]. Available
Through: <https://www.modernghana.com/news/855211/customer-loyalty-the-bowmans-
clock.html>.
Ong, C. 2015. 5 Benefits of Strategic Planning. [Online]. Available Through:
<https://envisio.com/blog/benefits-of-strategic-planning/>.
2