Strategic Analysis and Business Strategy Report: Marks and Spencer

This report provides a comprehensive analysis of Marks and Spencer's business strategy. It begins with an introduction to business strategy and outlines the company's mission, vision, goals, and core competencies. The report then delves into the factors considered in strategic planning, including organizational culture, management, and economic conditions. It evaluates the effectiveness of tools and techniques like the BCG matrix and SPACE matrix. The report further examines organizational and environmental audits using SWOT and PESTLE analyses, discusses the significance of stakeholders, and proposes a new strategy. It assesses the appropriateness of alternative strategies and develops a suitable one, while also outlining the roles and responsibilities in strategic implementation, resource requirements, and the contribution of SMART targets. The conclusion summarizes the key findings and recommendations, offering valuable insights into Marks and Spencer's strategic approach.

BUSINESS
STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................2
1.1 Assess business goals, objectives, vision, mission and core competencies.....................2
1.2 Factors that are considered in strategic plan.....................................................................3
1.3 Evaluate the effectiveness of tools and techniques..........................................................4
TASK 2............................................................................................................................................5
2.1 Organisational audit .........................................................................................................5
2.2 Environmental audit.........................................................................................................6
2.3 Significance of stakeholders.............................................................................................7
2.4 Present a new strategy......................................................................................................8
TASK 3............................................................................................................................................9
3.1 Appropriateness of alternative strategies..........................................................................9
3.2 Develop an appropriate strategy.....................................................................................10
TASK 4..........................................................................................................................................10
4.1 Roles and responsibilities of persons who are charged in strategic implementation.....10
4.2 Resources requirement in implementation of new strategy...........................................11
4.3 Contribution of SMART targets.....................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategy is a systematic approach which is used to pursue company's goals and
objectives. Every commercial entity formulates an effective business strategy that is based upon
certain aspects. It is all about delivering superior value over competition and achieving higher
market growth. Before, implementing any strategy is essential for managers to set vision and
mission which they want to achieve. Adequate business strategies can give directions and
guidance to working activities and operations in order to gain higher volume of outputs. Business
strategies concern with resolving all issues and problems which will affect future performance of
the firm and its productivity (Acquaah, 2013). Marks and Spencer is the chosen organisation in
this present assignment.
It is one of the major British multinational retailer which basically deals in home,
clothing and luxury products. Marks and Spencer is public limited company and it trades in
London stock exchange market. It was established in 1884 by Michael Marks and Thomas
Spencer. The firm served its products and services across the world, it has wide range of loyal
customers. The overall revenue of the company is £123.3 million whereas its operating income is
£690.6 million. Furthermore, there are over 85000 employees are currently working with Marks
and Spencer. The mission statement of the firm is to supply new and branded products in the
areas of food, home, cloths and financial services. For this purpose, it offers products at
affordable prices in order to achieve customers' interest and loyalty for long span of time.
Whereas the vision statement of the company is “To be standard” against its competitors so as to
gain high competitive advantage. In this regard, the firm is focused to implement benchmarking
so as to make effective business practices. Beside this, Marks and Spencer has also begun to sell
its good to other brands, i.e. Kellogg's Corn flakes. It has almost 960 stores over the United
Kingdom in which 620 sells only food products. Marks and Spencer is famous for its qualitative
and luxurious products; it always focuses on market research so as to know customers’ needs and
desires.
Furthermore, the present assignment has described mission, vision, goals, objectives and
core competencies of the business organisation; all of them have huge role in planning and
implementation of a strong business strategy. The assignment will be explained that managers
have to consider certain factors before developing any plan or policy. Decision makers of Marks
and Spencer can choose BCG and SPACE matrix; it will help in analysing all external factors
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which will affect firm's performance. Organisational and environmental audit is conducted
through SWOT and PESTLE analyse in order to examine all internal and factors of market. The
report also enlightens the role of stakeholders in strategic planning process of the company. It is
necessary for every business organisation to use an effective and new strategy so as to get high
market expansion and growth. It will also discuss role of certain people in the process of
strategic implementation.
TASK 1
1.1 Assess business goals, objectives, vision, mission and core competencies
There are certain aspects which plays a significant role in development of strategic
planning. It is essential for managers to set certain aims and targets for which the strategy is
executed.
Vision Vision statement is all about where a company want to reach in future. It
serves as the point which directs all activities and functions of the firm. For
example- the vision statement of Marks and Spencer is to be world's largest
retailing company delivering qualitative and branded products to its
customers.
Mission Mission statement seems as purpose through which business can intend its
stakeholders. In other words, it is also known as what a company will be
serve to its stakeholders which makes it unique to others (Astrachan, 2010).
For example- the prime mission of Marks and Spencer is to fulfil social
responsibilities in order to gain wide range of customers from target market.
Goals Goals are helpful in giving direction to business activities and it also keep
emphasises where business wants to end up. It is an aim for which an
individual is directed. For instance – the main goal of Marks and Spencer is
to increase its market by 10 to 20% by next year.
Objectives It dictates as various steps in order to attain identified goals. For example-
the main objective of the referred company is to enhance its sales and
profits in competitive market (Auzair, 2011). So as to cover up high market
share and growth.
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Core
competencies
Core competencies consists as the abilities and skills of a firm through
which it can achieve its goals and objectives. Marks and Spencer is very old
firm and it has variety of products. Such things will be helpful for it to
achieve high competitive advantages.
1.2 Factors that are considered in strategic plan
While formulating a strategic plan, it is necessary for managers to consider certain factors
which are assistive in making an effective strategic plan. In addition, to grow and diversify at
marketplace, managers need to anticipate and recognise the changes in environment; this will be
aids them to take better business decisions. Changes are uncertain, for this business owners have
to must engage to those activities which are helpful in determining such variations. Below
mentioned certain factors that are involved in strategy formulation: - Organisational cultural – within business entities, organisational cultural is very
imperative factor that is liable for success or failure of business strategy. It involves
attitude, beliefs, values, morales etc. of employees who are included in strategic planning
process. Positive attitude of managers towards their subordinates facilitates tasks and
practices (Azar, 2011). Therefore, it must that all managers and employees can work
together so as to achieve goals and objectives of the firm. Management – Various leadership styles and ability of team management should also
consider in strategy formulation. There are certain managerial forms which helps in
taking effective business decisions. Although, it is not possible that all managers and
workers have same point of view; so that they need to establish coordination and
cooperation among all staff members.
 Economic condition – Economic condition of a country also bear upon customers'
purchasing power. Extensions in interest or bank rate, unemployment, poverty etc. could
decrease consumption on non-essential goods. For example- if people of UK have to
proper source of income then, they cannot spend more amount of luxurious products. So
that Marks and Spencer has to develop such kind of business strategy which can gives it
more profits (Montgomery, 2011).
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1.3 Evaluate the effectiveness of tools and techniques
In order to gain high competitive advantage, several business entities are usage effective
tools and techniques. This will be help them to make an active and strong business strategy. In
this context, Marks and Spencer is used BCG matrix.
BCG matrix is accessible in providing a framework for allocation of various resources in
the process of strategic planning (Barberá and et. al., 2012). It allows a comparison between
different products and services at a glance. The model is also accessible in identifying market
share and profitability. BCG matrix is a product life cycle theory which gives priorities to
products which are capable to provide high market growth and competitive advantage to a firm.
Marks and Spencer is endorsed this matrix so as to ensure long term profits and value creation. It
involve two dimension, i.e. market growth and market share. Beside this, BCG matrix has a
meaningful approach that fits in all approaches, i.e. generic approach. There are four elements of
BCG matrix, such as-
(Source: BCG Matrix or BCG analysis, 2017)
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Illustration 1: BCG matrix

 Stars – These products have high market growth and high market share. They generate
large amount of cash and market leaders in the organisation. It is advised to managers to
spend more money on star products if they want to increase their market share
(Bharadwaj and et. al., 2013). Cash cows – Such products have low growth but high market share. It delivers maximum
profits and cash to business organisations. Due to their low growth, there is no need of
large investments. Dogs – These goods have low market share and high growth. In other words, dog’s
products need high investments and they give low returns to a company.
 Question marks – Such products have low market share and high growth.
SPACE Matrix -
SPACE matrix can be used as an effective tool in formulation of strategic planning. It is
also helpful in evaluation of individual strategic options that are generated for specific purpose,
There are two elements of SPACE matrix, such as- internal and external.
Internal factors are – industry attractiveness and environmental stability. These are seen as as a
potentially alternative sources of superior profit.
External factors are competitive advantage and financial strength.
Each factor in the strategic Position and Action Evaluation matrix can be quickly judged
but there are benefits for exploring each in detail. In Mark and Spencer, there is a large number
of factors that can be considered and each industry will have its own key features which should
be included in the detailed SPACE evaluation.
 Factors for financial strengthen – return on sales, return on assets, cash flow, gearing,
working capital intensity.
 Factors of competitive advantage – Market share, quality, customer loyalty, cost level
and product range.
 Factors for industry attractiveness – growth potential, life cycle stage, entry barriers,
customer power, substitutes.
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 Factors of environmental stability – Political uncertainty, interest rates, cyclical,
environmental issues, interest rates.
TASK 2
2.1 Organisational audit
Organisational audit is conducted through SWOT in order to analyse all internal factors
which will affect strategic plans and policies of the firm. It is a disciplined approach which can
boost up the potential of risk management and govern all activities. In simple words,
organisational audit helps in determining strength, weaknesses, opportunities and threats of firm.
Below described SWOT analysis of Marks and Spencer: -
 STRENGTH - Marks and Spencer is a leader of UK's retail market because, there every
person is well known about the quality of its products and services. It has diverse outlets,
which are accessible in growing as well as diversifying in target market. Therefore, it can
be said Marks and Spencer has great brand value, as people who will prefer to go high
street will be preferred for shopping at their (Bharadwaj and et. al., 2013). The company
has almost 900 stores across the world in 40 countries. Hence, large number of stores
helps to extend the business of Marks and Spencer. The firm deals in home, luxurious,
food and clothing items.
 WEAKNESSES - There is no protection which can preserved firm's brand and its
products from any type of misuse. Another weakness of the firm is, frequently variations
in environment and management, weak public relation across UK. Its some products are
too costly which cannot be afforded by every person and weak logistic.
 OPPORTUNITIES- These are the major opportunities for Mark and Spencer: - E-
commerce and mobilisation, Asian marketing is booming now. Recently, the firm tend
towards online channels in order to promote itself; it will flourish its sales and profits in
short time of span.
 THREATS - Changes in legal and political systems in nations and domestic and global
competition are the main threats of the firm. Apart from this, impact of new entrants and
competitors is also become an important threat for business organisations which can
hinder their business in adverse manner.
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Apart from this, Ansoff's matrix is also another tool of organisational audit. There are
four factors which are involved in this matrix, the brief description of all these factors are stated
as under: -
(Source: Dedicated And Generic Marketing Strategies, 2018)
 Market penetration – Its a growth strategy where the business focuses on selling existing
products into existing markets. Marks & Spencer, as for the item "Clothes", the company
has shown that they are providing high quality goods to clients across the UK and
Europe.
 Market development – In this, business seeks to sell its existing products into new
markets. In February 2007, Marks & Spencer announced the opening of the world's
largest Marks & Spencer store outside the UK at Dubai Festival City.
 Product development – In this growth intensive strategy business aims to introduce new
products into existing markets. Marks and Spencer's financial service and banking are
some example of new product development.
 Diversification – Its an inherently more risk strategy because the business is moving into
markets in which it has little or no experience, which can be dangerous in terms of which
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Illustration 2: Ansoff Matrix

strategies to use. As Mark and Spencer has increased its number for 40 countries, the
new markets that it reached has been successfully met.
2.2 Environmental audit
Environmental audit brings a lot of opportunities which will be beneficial; it also
examines certain threats or challenges for the company. It refers with analysing all external
forces that will influence and its prime aim is to determine key variables so as to develop an
adequate strategy. It can be done through PESTLE analysis: -
PESTLE analysis of Marks and Spencer: -
 Political factors - UK's government and other legal authorities create certain rules and
regulations, i.e. health and safety acts, risk control, planning for hazard identification, risk
control etc. that must be followed by every business organisation (Burlton, 2010). On the
other hand, if companies will not abide with such regulations then they would not
perform effectively in target market. Government also regulate certain fair-trade policies,
and as per January 2006, Marks and Spencer was measured the first retailer which go
down the route of Fair trade in both areas, clothing as well as food.
 Economic factors - It encompasses interest rates, bank rates, unemployment, poverty,
income level etc. For instance – if the economic condition of people would be good, as
they can spend more money on purchasing branded and luxurious food as well clothing
products. Marks and Spencer has been already hit by economic crises and it was closed
many of its stores. Due to economic downturn, the firm had to cut 2% jobs. It was sold its
products by 30% discount; at that time, the firm was faced huge losses in its sales.
 Social factors - Society has been changed since last few years. Now customers' needs and
wants are rapidly changes; it is too difficult for companies to fulfil their needs and wants
in an effective manner. Therefore, in order to get high market growth and expansion,
CEO of Marks and Spencer is decided to sell its online. This will be help the firm to
reach from wide range of customers by satisfying their desires.
 Technological factors - Now these days, technology is upgrading day by day. Technology
plays a vital role in retail markets, so that it is must for business entities to manage their
brands very carefully (Campbell, Edgar and Stonehouse, 2011). Marks and Spencer
expends huge amount on effective advertising and promotion in order to create brand
awareness and build loyalty as well as preferences among target customers.
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 Legal factors - Laws and legislations are modified day by day. Hence, business
organisations have to up to date about such new laws or acts.
 Environmental factors - It refers that, companies have to promote green products among
customers, they also require to organisational environmental awareness programmes so
that people can aware about it.
Porter's 5 forces model: -
It is another method of external environmental analysis; the model identifies five
competitive forces that gives shape to business industries. Below described are the major
components of Porter's forces model: -
 Industrial rivalry – This force involves that what is the profitability and competitiveness
of an organisation. In this competitive market, firms have to compete with its different
rivals in order to increase its market share.
 Threat of new entrants – It determines that how easily firm can enter into specific
industry. Mark and Spencer is a profitable industry and it has few barriers or rivals which
can hamper the business activities.
 Threats of substitutes – This force is threatening when customers can find out other
substitute of products with more attractive prices or better quality.
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Illustration 3: Porter's 5 forces model

 Bargaining power of buyers – Customers have enough power as they are liable for
increasing and decreasing the prices of products. It put a huge impact on an industry
when the bargaining power is strong.
 Bargaining power of suppliers - Bargaining power of suppliers also allows them to sell
their raw materials on high rates and low quality. It highly influence the sales and
profitability of a firm as they needs to pay more for purchasing of raw materials.
2.3 Significance of stakeholders
There are many people who are connected directly or indirectly with company's functions
and operations. Such people are accessible in accomplishing goals and objectives of business
strategy. In order to attain and retain stakeholders for long span of time, commercial entities
regulate a stakeholders’ analysis in order to review the impact of such persons. Marks and
Spencer has to recognise the interest of all stakeholder; it will be contributing in making
effective business strategy. Government, creditors, directors, managers, employees, shareholders,
customers, suppliers, competitors, government, local communities, media etc. are the main
stakeholders of a firm (Chang and Chuang, 2011). Apart from this, stakeholders are liable for
providing feedbacks and further suggestion during strategic development process. With this,
managers can easily improve their strategies and policies in order to get success in competitive
market. However, firm can earn stakeholder’s loyalty and get their support in order to create and
execute an active business strategy. For instance- customers are one of the most important
stakeholders for a firm. Hence, Marks and Spencer has to conduct a market research so as to
analyse buyers' needs and wants. In addition, the firm also has to make a transparent
communication with its target customers to maintain healthy and positive relationship with them.
With this assistance, any firm can get high market growth, and also achieve its goals and
objectives in a certain time period.
Stakeholders of an organisation Below mentioned are the main stakeholders of a firm: - are
stated as under: -
 Management - The management of any business organisation is responsible for taking
important business decisions. Top management or higher authorities assigned roles and
responsibilities for employees as they can work accordingly.
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