Business Project Report: Competitive Strategies for Marks & Spencer

This report presents a business project analysis of Marks & Spencer (M&S), a global retail company specializing in clothing, home products, and food. The report examines M&S's competitive position, challenges in international trade, and strategies for business growth. It includes a comparative analysis of M&S's competitive landscape, utilizing Porter's Five Forces model and discussing strategies like cost leadership and differentiation. The report also explores the challenges faced by the company when trading across borders and evaluates various theories to facilitate business growth. Key competitors such as NEXT Plc., ALDI, ASDA Group Limited, and TESCO Plc. are considered. The analysis includes benchmarking and the importance of customer service and quality to gain competitive advantage. The report also highlights the use of Porter's Generic strategies, including cost leadership, differentiation, and cost focus, to maintain a competitive edge in the market.

Business Project

Table of Contents
INTRODUCTION........................................................................................................... 2
PART 1........................................................................................................................ 3
a) Comparative analysis of how the company is competing and its competitive
position? Does the company’s activity result in gaining an advantage?............3
b) Challenges faced by company doing trade across borders............................9
PART 2...................................................................................................................... 13
Needs of company to grow their business by using different theories.............13
CONCLUSION ........................................................................................................... 16
REFERENCES............................................................................................................. 18
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INTRODUCTION
A business project is specifically intended to achieve organizational goals by
aiming at the key area that can impact on it. In the present study, a research design
for business is prepared for Marks & Spencer (M & S). Marks and Spencer is
providing its products and services in different countries to attract customers from
different countires. The global organization was founded 133 years ago in the year
1884 and headquartered in the City of Westminster, London, United Kingdom. The
establishment is having specialization in the merchandising of clothing, home
products, and food products. Majorly the stores of the firm include clothing, shoe
outlet, home furniture, housewares, retail stores, home furnishing, grocery outlets
and furniture stores (Shen, Qian and Choi, 2017.). Marks and Spencer provide
clothing for Womens, men and kids. Total revenue of M & S from April 2016 to April
2017 is £10,622 million. The international market share of the group is 1.26% and
in context to the UK, it is 5.5% (M & S, 2017). Thus, in order to maintain such a
huge system effective business project is required to be followed. Marks and
Spencer is providing its products through different channels to attract more
customers such as it provide its products through its web portal.
However, the factor that affects the entity mostly in performing well is the
high level of competition present in the clothing, home products, and food products'
sector (Barberia and et.al., 2016). There is a tough competition existing in this
industry as number of retailers are increasing due to which competition is
increasing day by day. In this report there is description of competitive position and
challenges faced by M&S, types of consideration and its future prospects. Different
types of models are used for its analysis. Considerations of M&S are illustrated in
order to create a social impact. Future prospects of M & S have also been discussed
in this report.
Furthermore, this assignment will provide with various challenges which are
faced by organisation while trading across borders which will provide with factors
such as political factors, economic situation, customers taste and preference etc. It
will also provide with different theories which will assist in growth of business.
Moreover, this report will provide with comparative analysis of organisation and its
competitive position. This will include about porter's five forces model to provide
with comparative analysis which will include cost leadership, differentiation etc.
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Grand unified theory of business development will be included in this report to
access the growth of organisation.
The key competitors in the M & S group are NEXT Plc., ALDI, ASDA Group
Limited, TESCO Plc. All these entities are performing well on the international level
and at national standard too. Some of them have really good competitors that can
harm the business of Marks and Spencer. Hence, effective competitive strategies
are required to achieve a competitive advantage over them (Ashraf and et.al.,
2017). Marks and Spencer in order to gain competitive advantage have to adopt
various strategies which will be included in this report.
PART 1
a) Comparative analysis of how the company is competing and its competitive
position? Does the company’s activity result in gaining an advantage?
According to Rothaermel, (2016), competition plays the most crucial role in
the global business. In context to present project, the selected organization belongs
to retail sector where high level of competition is present. It is thus essential for the
Marks & Spencer which possess effective competitive strategies. The company can
result in gaining an advantage
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Illustration 1: Marks & Spencer Long-term financial results

in competition by using proper techniques, policies and processes. Regardless of
considerable recession in the business value of the firm, it held its nerves by
maintaining its premium prices and brand-building advertising. Further,
communication is the most significant strategy that is used by the entity in
multiplying the customer figures.
In addition to this, with the excellence in the services provided to the
consumers, the firm holds a special place in their heart. It may be recognized that
from past 3 years the market share in food and clothing has remained virtually
static with the help of its strong branding and immense buying power (Drucker,
2017). Also, Marks and Spencer are more interested in having franchisees rather
than any other partnership method. This activity will help them in engaging local
people with their business which are familiar with the regional cultures and thus,
more profit can be earned by developing customised service and products.
Porters five force model Threats of new entrant: In retail market there is high entry barrier because
to enter in this market a company need to invest a lot. Along with this other
firms popularity can also create barrier in increasing the sale of the products
(Gunn and Mintrom, (2017). Marks and Spencer face this difficulty due to
which its market share can be reduced because of new entrants which are
giving tough competition to the organisation. Threat of substitute products: Marks and Spencer continuous innovation
help in making a strong position in the market. It is easy to copy the design of
the firm and reduce cost elsewhere. Along with this, food business is already
undertaken by another firm such as Tesco, Sainsbury etc. However, Marks
and Spencer private label on its product with different offer help in gaining
competitive advantage. Bargaining power of buyers: Bargaining power of customer is important
as if different firm sell similar products at different price then it provides
chance to customer to switch from one brand to other (Dey, 2016). There are
many alternatives available for the customers so Marks and Spencer need to
build up its loyalty and offer its customers something different.
 Bargaining power of supplier: Bargaining power of supplier reduce quality
by effecting prices of women wear. They minimize profitability through which
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they are unable to recover increase in their own prices. Bargaining power of
supplier reduce the profitability of the firm and also affect the cost of product.
For example, there are many competitors of Marks and Spencer who are
selling similar product but selling them product through adding some additional
feature can make easy to survive in competitive market (Daghigh and et.al., 2016).
The key competitors in clothes and food sections of the M & S are the chains
such as Next, Gap, BHS, etc. Some of them are using low pricing structure as their
competitive advantage against the cited firm where few if they have the similar
concept as the chosen entity that is good brand image an immense branding (Dey,
2016).
As per the views of Laszlo and Zhexembayeva, (2017), the most effective
method which will assist the Marks and Spencer for gaining competitive advantage
is Benchmarking. In this tool, the best entity in the industry is chosen for evaluation
of the policies so that they can be implemented. It has been observed that the
companies like ALDI and TESCO are dealing with similar products but at low prices.
This strategy of them is effective enough to draw attraction of a large number of
customers. By using this tool and cutting down high prices, M & S can definitely gain
competitive advantage. In contrary to this Davis and Davis, (2017), explained that
customers can bear extra price spend if companies assure quality in the services. It
may be however recognized that the firm is more concentrated on the quality and
services of the products they offer with its premium pricing structure. Also, M & S is
considered far better than the competitors like Primark which sell their products at
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cheap prices but lacks in customer service and quality. Marks and Spencer is
provding its sevices which are high qualtiy and are affordable by customers which
provide compaetitive advanatage to firm in increasing their customer base.
In contrary to this Moreno-Inquired, Ramón-Rodríguez, and Perles-Ribes,
(2016) described that the most useful activity performed by M & S which helps in
gaining competitive advantage is an analysis of the level of competition using
Porter's Five Forces Model. This tool helps in knowing the future threats, power of
new competitors and substitute products(Drucker, 2017). According to this model,
there are five key forces that analyse the competitive environment in which a
product or an entity works.
These forces involve competitive rivalry, threats of new entrants, threats of
substitutes, bargaining power of customers and bargaining power of suppliers.
Rivalry tool includes its upcoming competitors and threats for which it should be
prepared beforehand. With the help of this technique, the M&S could improve its
existence, availability of resources and its rights and patents. In the present
context, if Marks and Spencer will observe the policies of Tesco then it can gain
competitive advantage. Besides this, buyer power is the ability of the customers to
drive the prices. It depends on the number of customers that company is having. If
the bargaining power of the customers will be high than entity is required to
increase the customer figure. (Magagula and Lees, 2017).
Also, if the organization will have the detailed information of the new entrant
then it can prepare or modify the strategies accordingly so that the business value
does not affect. Marks and spencer by identifying these factors can gain
competitive advanatage by identifyingt the threats which wmay affect the business
in norder to formulate various strategies in gain compativie advanatage.
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Competitive advantage of Mark & Spenser-
Competitive advantage is favorable position an entity seeks, in terms to be
more profitable as comparative to their rivals. In order to gain and maintain
competitive advantage, M&S must work as to demonstrate greater comparative or
differentiate value than its customers and conveying of information to desired
target market. With help of differentiated from their rivalries it is essential to have
use Porter's Generic strategy. It will be discussed in below context as are-
1. Cost leadership- In this, M&S need to put major focus in terms to provide
reasonable value at lower price. With help of it, there can be improvement in
operational efficiencies. In this, the workers of firm gets less pay. Under it,
some compensates by offering intangible benefits as are stick options,
benefits, promotional opportunities etc. In addition to it, source of cost
advantage depends over size and structure of company. If quoted company is
able to achieve and sustain overall cost leadership than this firm will an
above average performer than its rivalries.2. Differentiation- With this, M&S works as to targets larger marketer and
aims to achieve competitive advantage through differentiation across whole
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Illustration 3: Porter's Five Forces Model
(Source: Davis and Davis, 2017)

of industry. It refers as to selecting one or more criteria used by buyers in
market. It is about charging premium price because it covers the more
production cost and give customer the clear reason to prefer product as
comparative to less differentiated products in market. This focuses over
several ways will be inclusive as are- Superior product quality: The quality of the product offered to customers
must be high quality in order to satisfy the demands of the customers and
provide them better experience. Branding: branding refers to providing unique name for the business to
attract more customers towards the brand. Industry wide distribution: products and services must be provide to
customers using various channels of distribution.
 Consistent promotional support: promotional support is involved in this to
promote the products and services of the organisation.
3. Cost Focus- In this, business seeks lower cost advantage in just one or small
number of market segments. With help of this strategy, similar commodity of
higher prices and featured market leader but it will be acceptable for
sufficient customers. It is acceptable to sufficient customers in market. Cost
focus strategy of porter model helps in providing similar products at the
higher prices to increase the demand of other products. Marks and Spencer
have adopted this strategy to gain a competitive advantage by providing
similar products with higher prices.
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4. Differentiation focus- M&S has adopted differentiation focus strategy aims
to produce differentiate product into smaller and target market segments.
With help of it, customer can have attracted towards the products available in
market. Differentiation focus strategy assist in providing different products in
different market segment. Marks and Spencer provide different products in
different market segment to increase its customers for different products
which is not available in the market.
Hence, it can be said that by adopting this strategy it will be possible to gain
competitive advantage in market. Thus, need and wants of buyers are needed to be
satisfied in terms of delivering good commodities at effective price rates. Marks
and Spencer must adopt these strategies to gain competitive advantage which will
assist in increasing their brand image and will also help in increasing their
profitability by attracting more customers towards the brand.
b) Challenges faced by company doing trade across borders
There are various challenges which company face while doing trade
internationally. Companies have to follow foreign rules and regulation regarding tax
implications and trading laws (Barberia and et.al.,2016). Similarly, M & S also faced
various rules when it expanded across borders. It also fixed some pricing strategy
and should be good in communication to build business strategies. M&S has to take
some political risks and economical challenges.
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Illustration 4: Porter's generic strategies
(Source: Porter’s Model of Generic Strategies for Competitive
Advantage, 2018)

In this competitive world, M&S face tough competition due to high use of
internet. Technology has resulted in comparison of prices, easier shopping among
customers who can access fashion all around the world. By 2015 departments of
home ware and clothing brought £4.1 bn revenue (Ladkin, A. and Buhalis, D., 2016).
But it needs help from other nation to expand and satisfy customer demands.
According to analysts, M&s shares are shrinking from last four years. It has
decreased to 9.9% from 11% in 2010. Another challenge faced by it is weak
consumer confidence. It underpins sales of retails sector. Products of M&S should be
satisfactory so that consumers should not loose confidence and repeat their
purchase.
Other challenges include Brexit negotiation in which UK economy shows ease
of trading cross borders with proper procedures ans standard prices. UK companies
should have knowledge of registering for withholding tax on incomes called PAYE.
Then resourcing, recruiting right people are some other challenges faced by M&S.
Regulations change in same way as technologies and markets (Parikh, Kaufman and
Santucci, 2017). There is no use of big shops in the age of e-commerce. M&S needs
to sort out these stores and figure out money that can be saved at long run. It
planning to close it and relocate in other nations.
For relocation it has to go through culture and society of specific country so
that its establishment could worth in the future. It performed well in food sales but
customers steadily lost their interest in M&S clothing. Thus, it was challenging for it
to maintain pace in both fields. Another major challenge was that its culture is
bureaucratic. It has been criticised many times. This business was too corporate
and was never expected to bring change (Shen, Qian and Choi, 2017). Thus, getting
back in fashion, sharpening prices and enhancing services by recruiting right
employees are some challenges faced by M&S.
In order to trade internationally M&S company has to undergo foreign laws
and regulations, as there are different laws in different countries. It becomes
difficult to collect the latest and up to date detail about the countries. As different
countries use different languages, communicating with them becomes difficult.
Local languages help in branding and promotion of products specially in promotion
of clothing and food products as it helps in understanding of brands. To
communicate easily with the local people the company has to advertise the
products which includes product description.
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Fluctuation in currency rate is the most challenging problem faced by the M&S
company. High fluctuations in currency may affect the profit of the company. To
protect from this, the company has to produce and supply products in the same
currency. Advance payment will also help the company from loss, as the currency
will be used to produce the product. Some countries adopt strict dress codes to
attend business meetings. In a new culture proper and adequate knowledge about
the dress code should be there for the success in the deals with international
business. Reputation by M&S company must be maintained by providing attractive
discounts and advertisements to the customers as compared to other rival
companies.
While trading internationally, the company must know exactly when to bring
change in the environment is necessary. Changes specially depends on the demand
and need of the customers. This will help the company to maximize profits and
maintain reputation. Trading internationally brings difficulties in fulfilling customer
service. Distance becomes the main barrier between the customers and the
company. Thus, these are some challenges while trading across borders.
There are various challenges which marks Spencer has to consider while trading
across border which consist of following: Foreign laws: Marks and Spencer while trading across border have to follow
various rules and regulation of the country in which the firm in operating.
Marks and Spencer have to follow the various policies of the government of
that country in which it is operating to perform its various task in that
country. It also has to follow various import and export laws for importing and
exporting of its various products to different countries. Marks and Spencer
have to pay tax for trading in different countries to the government.
 Cultural and language barrier: Marks and Spencer also have to face this
problem due to cultural and language difference of people. Marks and
Spencer in order to trade across border have to face this problem in which it
has to deal with people belonging to different culture and speak different
languages due to which it mat affect the operation of marks and Spencer. Challenges relating to shipping and transportation : Marks and
Spencer also have to face Problems regarding transportation and shipping of
its product to different countries due to which it has to pay various taxes on
transportation of good to different countries. Marks and Spencer while trading
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