Business Strategy Analysis: M&S Macro Environment and Internal Factors

This report provides a comprehensive analysis of Marks & Spencer's business strategy, examining the impact of the macro environment on its operations. It delves into political, economic, social, and technological factors, as well as the company's internal environment, strategic capabilities, and the application of models such as Ansoff's Growth Matrix and Porter's Five Forces. The report further explores strategic choices, value chain analysis, and the implementation of strategies to improve competitive advantage. It highlights how M&S adapts to external factors and utilizes strategic planning to achieve its business objectives, including market penetration, product development, and diversification. The analysis includes a critical assessment of the company's strengths, weaknesses, opportunities, and threats in the context of its industry and competitive landscape.

Business Strategy (Unit 32)

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1) Analyse the impact and influence of the macro environment on Marks and Spencer and its
strategies.................................................................................................................................1
M1) Critical analysis of macro factors ..................................................................................4
TASK 2............................................................................................................................................4
P 2) Internal environment of M&S and capabilities-.............................................................4
TASK 3............................................................................................................................................8
P 3) Porter’s Five Forces model to evaluate the competitive forces......................................8
M 3) Strategies to improve competitive edge- ....................................................................13
TASK 4..........................................................................................................................................13
P 4 & M 4) Models, theories and concepts to understand interpretation of strategic-.........13
CONCLUSION..............................................................................................................................16
REFERENCES .............................................................................................................................17

INTRODUCTION
Business strategy is the company's working plan for achieve its vision, prioritizing
objectives, accomplish successfully or accomplish financial performance through business
model. Cost leadership, differentiation and focus are the basic strategies (Boyd and et.al., 2017).
Business model is a management template for developing new or documenting existing methods.
It's a big chart with components describing organization value proposition, infra, consumers and
finances. Marks & Spencer Group Plc is a British multinational retailer firm, which
headquartered in the City of Westminster, London. It is listed on the Stock Exchange. The
company expert in selling of clothing, domestic products or luxury foods. Report include
explanation about impact of macro environment on M&S Plc., Ansoff Growth matrix, internal
culture of organization and capabilities etc. It describes outcomes through Porter's five forces
models, theories, concepts theories of strategic planning.
Mission and Vision
Marks and Spencer has a specific mission statement is to build a brand on core values of
quality, service, trust, value and innovation. The company's vision is to use natural resources in
the best way possible. M&S Plc focus on eliminating any wastage in their organisational
functions, the company also manage and maintain high employee turnover to sustain its
productivity. Organisation needs to increase earnings from 10% to 15% because other shops
closed such as House of Fraser.
TASK 1
P1) Analyse the impact and influence of the macro environment on Marks and Spencer and its
strategies
Macro environment consist of all factors which are uncontrollable and it has direct impact
on the decision making process of business. Elements like social, political affects overall growth
and productivity of Marks and Spencer company. Economic cycle like inflation and deflation
affect the customer's purchasing power. In order to achieve target organisation critically evaluate
the impact of Macro Environment and accordingly develops business strategies to deliver quality
products and services to customers.
Impact macro environment on Marks and Spencer
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 Political and Legal factor: It is mandatory for business to follow all rules and regulation
as prescribe by the government. One of the government policy is to consider
environmental surroundings before developing business plan which is followed by Marks
and Spencer. UK government has introduced policy like climate change levy and green
tax which are to be strictly followed by organisation to maintain sustainability. Marks and
Spencer has taken initiative to minimise consumption of energy by 5 % at their store.
Political factor has effect on cited organization business policies, planning etc. Changes
in law like employment legislation have an impact on human resources management
practices. Marks and Spencer needs to consider policies related to general taxation, Value
added tax on income as they are very fluctuating. Changes in apolitical parties and
government highly influence these policies which affect functions of M&S Plc. Brexit is
one the most significant example of political factor influencing UK businesses.
 Economic factor: It keeps focus on expansion of activities to earn profit. There was
experienced change in purchasing power of customers because of economic crisis in
North America and other countries. Marks and Spencer has closed it's all operations
which were running in losses and sold the business to North America. On the other hand,
when an economy face downward fall this will force business to lower down their prices
in order to maintain balance of sale (Dayan, Heisig and Matos, 2017). Economic factors
like exports law affect the import and export of raw material and finished products. This
factor makes significant impact on cited company financial strategies and has direct
effect on annual turnover of the organization. This factor also include currency of the
nation, pound is world's 3rd most essential currency in the world. The value of currency
plays an important in the functioning of each and every business, if the value of pound
decreases importing cost of goods will raise and vice versa.
 Social factor: It includes change in taste and preferences of customers, in current world
people prefer having more fashionable and luxurious items. In order to satisfy need of
their potential buyers M&S have developed product using attractive colours and latest
pattern of clothing. Business has to produce those products and services which are
environmental friendly in nature. In social factors such as customer requirements has
direct as well as significant impact on firms operational planning and manufacturing
system. Another example of social factor includes pre-prepared food which is a
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increasing demand in the society. Development of wide range of pre-prepared food items
can help an organisation to attract more customers.
 Technological factor: It was observed rapid change in technology, companies have
started designing official websites for convince of potential buyers. Marks and Spencer
collect all point of view of clients about the product using feedback option which is
available on their websites. Company invest large sum of money in technological
advancement in order to satisfy needs and requirement customers. The improvement of
website and interface can positively affect the company's profitability in the market, the
online portal can also include various features such as option for submitting feedback,
cash on delivery method etc.
People generally prefer buying products and services using credit card, M&S has
accepted credit cards payment. Above mentioned strategies has helped in improving trade
transaction. Moreover, it has improved its efficiency by rewarding customers with the help of
electronic points of sale. However, it was observed that EPOS were not working effectively
because points were not added automatically, due to this customer were not satisfied with the
services.
Ansoff Growth matrix
This is a marketing planning model which is essential in context of identifying the growth
of a particular product in market. It provides business with various suggestions to expand their
operations by evaluating macro environment (Elmes and Barry, 2017). Some of growth strategies
which is applied by Marks and Spencer are given below.
Market penetration: This a technique used by used to increase sales of the existing
products and services by combining of two pricing strategies. Market penetration is essential for
Marks and Spencer to increase market share with already targeted customer segment. Company
emphasis on targeting new customers by providing them with quality service at minimum cost.
Market development: It is a strategy used by business to sale existing products in new
segment to targeted customer. Marks and Spencer consider geographical boundaries before
deciding to export products to the other countries. Moreover, they can select new distribution
channel according to the customers' requirement. For example, M&S sell products online on
their official websites and they collect feedback regarding the services provided by organisation.
On the basis of above observation, they modify or change existing products.
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Product development: This technique is essential for launching of new merchandise, in
order to perform this process, it is significant to identify need and requirements of potential
buyers. Marks and Spencer use this process to stay competitive by differentiating products form
the other brand. Company critically analyse business environment and they develop or innovate
the services to satisfy customers. Joint ownership with other company play crucial role in
reaching the target segments because they have access to new distribution channels.
Diversification: This technique is implemented by business to promote new product and
identify new targeted segment. It is termed as risky situation because organisation is moving in a
completely new phase with minimum experience (Evans and et.al., 2017). Marks and Spencer
use diversification strategy because they have unique idea about maintaining the balance
between rewards and risk within the business. According to this strategy the company can grow
its market share by inventing new offerings at initial stages of marketing.
M1) Critical analysis of macro factors
Macro environment make impact on not only production but also it influences strategic
management decisions. They take decision according to current situation of external factors. It
may be positive like increase productivity and negative such decrease customers numbers due to
high market competition. This environmental factors are generally made negative impact on the
organization because it not easy to adopt all things at the same time. The macro environmental
elements therefore have both positive and negative impact on M&S such as low taxation policy
by a new new government can be beneficial for the company as it leads to low cost and increased
margin. On the other hand high taxes can result in low profitability for the organisation.
TASK 2
P 2) Internal environment of M&S and capabilities-
Internal environment- An organization internal environment is composed of the
tools within the company, involving current employees, management, corporate culture which
related to workers’ behaviour. Few elements have direct impact on whole business and other
affects only managers.
Strategic capabilities- It refers to a business ability to successfully employ competitive
strategies which allow organization to survive and increase value with time. While strategies
capability take responsibility of M&S services, this keep focus on cited company's assets,
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available resources, market image and future planning for employee’s growth. There are three
important key components of M&S strategic management-
Strategic analysis- This analysis is helpful to understand M&S Plc strategic position. This is
good to study environmental changes and address impact of them on chosen company &
employees. It aims to create a view of key components which can influence not only present but
also future performance of the organization. Right analysis is helpful to select correct planning
for business. Some factors of analysis are below which provide solutions for issues-
 The external environment- M&S Plc can't run without connection with a critical
external environment like economic, political, technological, social environment.
Cited organization faced changes into the culture and understand their impact is
good for the formation of planning. These external impact on business show its,
weaknesses and threats.
 Resources- Available resources are the internal influences of cited organization.
Company has sufficient and costly resources which are valuable for business
expansion.
 Expectation of different stakeholders- The growth and development of the
selected company depends on the stakeholders (Fontana, Sastre-Merino and
Baca, 2017). Their beliefs give a legal base of the organization. For example, the
thoughts of different managers of two separate department have different
conclusion of planning. The aim of M&S Plc to get high returns from
stakeholder and satisfied employees as well as customers. It is right of investors
that they know about firm profitability.
Strategic choice- After strategic analysis of M&S Plc management will be ready to make a
planning choice. It is defined as the selection of the best possible action which relay on the
evaluation of strategic options.
Strategy implementation- This is the last step, which is defined as the way in which cited
organization translate planning into action. Implementation requires careful strategy and correct
development of company resources, manage possible changes in management structure.
Value chain analysis- Value chain analysis is a method to visually analyse M&S Plc
activities to see how cited company generate competitive advantage for itself. In other words, if
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business run efficiently, the obtained value should maximize the operating costs and customers
should return to the organization transact freely or willingly.
Selected firm engage in hundreds, thousands of activities in the process of change inputs
into outputs. Competitive advantage is the ability of a firm to create “generic strategy” into
practice. It involves:
1. Cost leadership: Offer the lowest price to users.
2. Differentiation: Choosing the important attributes which buyers want so cited company
get a premium price.
3. Focus: Operate each strategy according to market segments.
Value is the total revenue that customers are ready to pay for selected organization
products. The difference between total value and cost performing of all business activities, gives
the margin (Fontana, Sastre-Merino and Baca, 2017).
A value chain keep focus on the change raw material into products and services. The
organization perform two types of activities like primary and support.
Primary activities- It is directly concerned with creating and delivering goods. They can be
grouped into five areas, like
 Inbound logistics- Products being obtained from selected firm's suppliers and
used for producing the end product.
 Operation- Raw materials change into end products and services.
 Outbound logistics- After manufactured they are ready for distribution to
wholesalers, retailers or users.
 Marketing and sales- Marketing make sure that, which products deliver to
targeted customers.
 Services- It offers sale after services to customers. They selling clothings, luxury
foods at large scale with qualitative services.
Support activities- It supports chosen company to achieve its competitive advantages. This
includes four areas like procurement, technology development, infrastructure and human
resources' management.
VIRO analysis- It is an analytical technique best for the evaluation of M&S Plc resources and
competitive advantages. VIRO is an acronym from initials of the names of Values, Rareness,
Imitability and Organization.
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 Value- Does chosen organization offer a resource which adds value for
consumers? Is M&S Plc able to exploit a chance or neutralize competition with
internal capability? Its answer is yes if value is established, move on in the
organization VRIO analysis to rarity. Business has more valuable resources which
assist company to produces innovative products for attract new customers.
 Rarity- Does M&S Plc control scarce resources or capabilities?
Answer- No-- Management of cited company has value but lack rarity, putting
organization in a position of competitive parity.
Yes-- With value and rarity decided, firm's next hurdle is Imitability.
 Imitability-- Is it costly to duplicate selected organization's resources or
capability?
Answer- No-- If company resources have value and rarity, but it affordable or easy to
copy, firm has temporary competitive advantage. It will need considerable effort to stay ahead of
competitors.
Yes-- M&S Plc offer something which is valuable, rare and difficult to imitate.
 Organization- Does cited company have managed management system, processes,
structures and culture, to investment on resources and capability?
Answer- No-- Without internal organization support it will be difficult to realize valuable,
rare, costly-to-imitate available resources.
Yes-- M&S Plc has accomplished ultimate goal of sustained competitive
advantage with the help of identified all elements of VRIO framework.
Cost benefit Analysis-It is the process which businesses used to analyse decisions. The cited
organization analyst adds benefits of a condition or action and after this subtracts the costs
related with action. Consultants build the model to increase the value of intangible goods like
benefits and cost associated with specific market area (Good, 2017). The first step of this is to
compile a comprehensive list of costs (direct and indirect, opportunity etc.) & benefits related
with decision.
PESTEL analysis- It is an element which is helpful to analysis macro environment factors that
have impact on M&S Plc.
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Political- It includes government policy, tax rate, political stability, or overseas markets,
employment law etc. Management of the organization need to able respond to country current
and future rules and regulation and making market policy according that.
Economic- This factors have important impact on organization business and their profit.
It includes- interest rate of country, exchange rate, inflation etc. which necessary to operate M&S
Plc.
Social- Social culture factors are which involve belief and attitudes of the society. It
includes population. Age, gender career etc. M&S Plc. Get impact by country culture. They
produce those kinds of food which like by people.
Technological- M&S Plc through the latest technology to produce new products and
services, distribute them with the help of current method, which make their work easy. But if
these are costly then it creates negative effect on company productivity. Online distribution is
most famous technology for goods distribution.
Legal- It includes health and safety, growth opportunity for all, consumer rights, laws,
product labelling and safety etc.
M 2) Critical evaluation of internal capabilities Strength- M&S Plc has strong brand image and compete with competitors in any
situation. It provides qualitative services to customers which increase its sales. Healthy
working environment develop motivation inside employees, which is good for growth.
High recognition of the brand is another strength or inner capability of Marks and
Spencer, it is very popular for providing high quality products and services to their
customers for past years.
 Weaknesses- It has ineffective market strategy compare to others. Which show the
negative side of internal structure, workers skills etc. which is not good for cited
company market value. If organization have political culture than employee fail to
develop their skills and capabilities. Bad publicity as non stylish or trendy store is another
weaknesses of Marks and Spencer Plc. It has a drawback in the market as the company is
non trendy and out of fashioned. Even Marks and Spencer has a huge number of products
and different brands, people assumes that men and women's wear are only for old age
people not for young or teenage people.
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TASK 3
P 3) Porter’s Five Forces model to evaluate the competitive forces
Porter five force analysis is a strategic tool that helps to analyse the factors associated
with business profitability. Managers of Marks and Spencer are able to use this tool as it will
help to understand how the five competitive forces affect the profits. This will provide strategy to
enhance competitive advantage for the long term production and profitability in retail business
effectively.
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Illustration 1: Porter Five Forces Model
(Source: Porter’s Five Forces, 2016)

Porter five force analysis of Marks and Spencer
Threats of new entrants: It can be said that new entrants help to bring innovation in retail
business along with new ways of doing business. This put pressure on firm in terms of reducing
pricing strategy, costs and providing new values in the form of proposition to consumers’ in
Market.
The firm requires managing and controlling of all these challenges in order to build
effective barriers. This will safeguard its competitive advantage. Marks and Spencer innovate
products and services due to which new segment of customers are attracted towards the
company. Presently retail industry is running in profits so it attracts more of new business
because they want to establish profitable venture (Grayson and Hodges, 2017). If new
organisation is attracted towards the industry this will decrease overall profitability and will
ultimately result in zero.
Marks and Spencer operates at economies of scale by minimising the cost of operation
and offering its products at minimum cost to customers. The Company is not affected by the new
entrants because it has established good brand image and people generally prefer buying branded
products. It has asses to various distribution channel which make process of delivering products
easy thus by maximising its profits. M&S Plc face high threat from new market entrants.
Bargaining power of suppliers: All organisation need to purchase raw materials from the
suppliers it can be said that they are in dominating position. They can decrease price of
intermediaries to increase their margin of profit (Schaltegger and Wagner, 2017). Powerful
suppliers have authority to negotiate and earn huge profits. It emphasis that bargaining power of
the supplier in industry depend upon its competitors (Porter’s Five Forces, 2016). They can put
pressure on organisation to increase their prices and lower quality to earn desired amount of
profits. Furthermore, a potential supplier can increase level of competition in the market.
This factor has moderate effect on the performance of business because they have
multiple suppliers with and efficient supply chain. Marks and Spencer is dealing in various
number of products so they are not influenced by rise in price of raw material. They can easily
switch to other suppliers and continue their manufacturing process at low cost.
Bargaining power of buyers: It is observed that buyers has numbers of demands which are
required to fulfilled by the company to increase its sale. Customers always prefer to buy valuable
products at minimum price. Marks and Spencer is concerned about increasing long term
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