LSBM103 Business Environment: Industry Analysis of UK Apparel

This report provides an industry analysis and explores possible adaptations for apparel retailers in the UK economy, focusing on the Apparel Retailers subsector. It identifies and analyzes macro and microenvironmental influences, using tools like Porter's Five Forces to assess competitive dyna...Read More

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Industry analysis and possible adaptations
The aim of the paper is to reflect upon the industry analysis and possible adaptation of the
Apparel Retailers subsector within the UK economy. This paper includes the identification and
analyses of the macro and microenvironment influences that can affect the operations of the
business organizations today. Further, the reflection upon the forces in the macro environment
that can contribute in shaping the performance of the business is conducted which shows the
limitation that might be faced by the company. The paper identifies and evaluates the strategic
tools in conducting the analysis of the internal business environment. The internal analysis has
been done on the Mark and Spencer which is an apparel retailer UK with the support of the
Value chain analysis.
In the dynamic worlsd, the companies are performing their business operations in a
common environment where they can face the influence from both the external factors. The
external factors are determined with the help of the macro environment agents that play a pivotal
role in identifying the decisions that are taken by the organization. The macro environment
factors help the management to have the complete understanding of the external or bigger
environment prevalent in the regions (Armstrong et al., 2014)
The market of UK apparel retailer is growing with the rise in the demand of the UK
clothing marketing by 16.6% in the next five years to £51.2bn. The growth in the market is
stronger by 3.9 ppts in the year 2012-2017. The market of UK is driven by the inflation staying
more than 2.0% mark until 2020 owing to the weak pound that drives up the manufacturing and
import costs (Cission, 2017). The rise in the clothing market in the environment affects the
working of the company in the UK. Moreover, this has been found that the clothing is forecast to

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outperform total retail growth in between the year 2017 and 2022 as this is the third fastest
growing sector. The macro environmental factors help in understanding the effect on the
working. The major external factors are political, economic, social/cultural, technological, legal
and environmental factors that can create an impact on Apparel retailer in the UK.
The political factors majorly include the government set rules and regulation for the
companies that are essential to abide by the Apparel Retailers subsector in the UK market. The
regulations like Health & Safety British Standards are required to be followed by the companies
(Baker, 2014). It is essential for the company to implement all the regulations and rules that are
applied to the industry. The economic factors that affect the working of company include the
GDP, inflation rate and the purchasing power of customers. UK registered GDP worth of
2622.43 billion US dollars in the year 2017 which has reflected the decline from the previous
year (Trading Economics, 2018). This creates an impact on the working of the Apparel Retailers
subsector in the UK market because the customers won’t be able to purchase the products
because of the low purchasing power.
Further, the other factors like technology and social factors can also affect the working
because in the competitive apparel industry the technology and social factors are changing
according to the innovation and needs of the customers. Moreover, the environmental factors
include the protection and safeguarding of the environment where the company is performing
business operations (Chernev, 2018). The companies dealing their business in the competitive
environment ensure that they abide by all the legal issues which can affect the working for which
they need to follow the Fair Packaging and Labelling Act (1996) which helps them in meeting
their obligations. Thus, I believe that entire external environmental factors can contribute in
shaping the decisions of the company (David, 2011). This has been found that the decisions of

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the company depend on external forces which make the company form the decisions in the
manner so that they can resolve the factors that affect their operations.
In the world, the companies also deal with the microenvironmental factors which might
influence the working of the company. The analysis of the microenvironment factor can be done
with the help of Porter's five forces of the competitive position analysis. The analysis of the
microenvironmental factors is done for the apparel retailer’s subsector in the UK market.
Porter’s five forces
The theory of Porter's five forces is a tool that helps in analyzing the competition of
business. The analysis of Porter's five forces helps in understanding the forces that shape the
competition within the industry (Dawson, 2014) The below given Porter's five forces analysis of
the apparel retailer’s subsector in the UK market: -
Bargaining power of the suppliers: - This dimension shows the way through which the
suppliers drive up the prices of the industry. In UK apparel retailer subsector this has been found
that there is the presence of low bargaining power which is clear with the presence of the high
number of suppliers. The suppliers are increasing the market due to which the large retailers are
getting the opportunity to meet the needs of customers at low prices (Bush, 2016). The suppliers
get to agree to offer their products at low prices because they want to form loyalty and increase
their sales. In case the suppliers will not offer effective prices then the retailers will shift towards
the other suppliers present in the market.
Bargaining power of buyers: - The buyer's force is one of the important forces who can
choose to push down the prices. The bargaining power of buyers in the market is high and this is
the reason due to which they dictate their rules and tastes in the apparel retailer (Grant, 2016).

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Moreover, in the UK there are many retailers who deal in the apparel due to which the switching
cost of the buyers is low. Along with this, the bargaining power of the buyers is forcing to reduce
the prices and to meet the needs by offering the quality products. In case, the retailers of apparel
are not able to reduce the prices then they will switch (Ho, 2014). Thus, this shows the major
influence on the Apparel Retailers subsector in the UK.
The threat of substitutes: - The threat of the substitutes shows the force when the
product can be replaced with the other in the market. In the apparel industry of UK, the threat of
substitutes is low because the substitute of the clothing is not present (CMGA, 2013). This
provides the advantage to the retailers of the apparel industry due to which they can attain the
high profit in the market which contribute in enhancing the economy.
The threat of New Entrants: - This drive includes the entrants of the other companies in
the market. This has been found that the profitable markets generally attract the new entrants
which mean that the new entrants in the apparel industry will be more. Though, the fact is that
threat of the new entrants is low because the companies in the apparel retail industry need a large
amount of capital which is required for establishing the company (Khan et al., 2011). Moreover,
the UK market includes different retailers who are able to maintain the good brand value in the
market due to which the new entrant will not be able to manage their position in the market in
Apparel Retailers subsector in the UK.
Competitive rivalry: - The main driver is the number and capability of the competitors
that are present in the market. This has been found that competitive rivalry in the UK apparel
retailer subsector is fierce due to which the companies need to adopt different strategies that help
them in dealing with the competition present in the market (Kotler, 2015). The competition is

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increasing and the major retailers that are currently present in the UK market include Topshop,
Next, Zara and John Lewis. Thus, apparel retailers in the UK majorly influenced by competition
which contributes in shaping the operations.
In the environment, the analysis of the external factors is not sufficient due to which there
is a need for the internal analysis. The internal analysis is essential to be conducted by the
companies which help them in evaluating the factors that can affect the working (Kumar et al.,
2012). This analysis forces the companies to bring the changes in their strategy. The internal
analysis is conducted with the help of the value chain analysis.
Value chain analysis
Value chain analysis is a strategic tool which is used by companies in analysing the
interior actions of the business. The aim of strategy is to recognize the activities that contribute
to the success of the business and to provide a competitive advantage (Hollensen, 2015). The
company that has been selected for the internal analysis is Mark and Spencer. The value chain
analysis of the marks and Spencer include the primary activities which are related to the creation
and delivery of the services and product. These primary activities include inbound logistics,
outbound logistics, operations, marketing and sales, services (Lovelock & Patterson, 2015).
Further, there is the presence of support activities that offer the support to the primary activities.
The support activities include human resource management, technology, procurement and firm
infrastructure.

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(Source: (Lovelock & Patterson, 2015)
Inbound logistics: - The inbound logistics are the primary actions that are concerned
with the storing, receiving and distributing the inputs to go with the creating of the products and
services. Marks and Spencer won the GBS supply chain award. Further, the company is able to
maintain the lead in the apparel industry because its sustainability program which is must create
the steps that bring the changes in the global supply chain (Frynas & Mellahi, 2015). Further, the
company has received the commendation from the EC that has given it European business award
for the environment. Mark and Spencer is able to maintain its stronghold on the sustainability of
the resources which is the major advantage for the company over its competitors in the apparel
industry of UK (Rothaermel, 2015).
Operations: - Marks and Spencer major operation activity is to meet the needs of the
customers which is essential to deliver the customer experience. According to the annual report
of the company, it is working to enhance the customer’s visits and spend through inspiring and
effortless experience. Further, it provides effective experience to their customer which is possible
with the help of their trained and skilled experienced personnel that are present in the company

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(Wilson and Gilligan, 2012). Moreover, the operations of the company are also dealing with the
security issues as 800 customers faced the leak of personal detail. Though, the company said that
no financial data was leaked. This reflects that the online mode of shopping through website
requires the high safety transaction which helps them to purchase the product with the help of the
online website.
Outbound logistics: - Outbound logistics include the group, storage and supply of the
apparel to the end users. M&S works with the in-store shopping as well as the shopping through
the home catalogue, online shopping which helps the company to attain the maximum sales in
the market. The company ensure that their potential customers and new customers get the
delivery of products on time. The company deals with the issues in managing the online
operations when the availability of the hi-tech distribution centre in Castle Donington is facing
the issues. These issues affect the operations of the company and reduce sales by 2%.
Considering this, the M&S is spending more towards the up-gradation of the IT system which
helps them in improving the supply chain management.
Marketing and sales: - The marketing and sales of the company are just as it helps in
making the customers aware of the products and services. Marks and Spencer work effectively
with the digital marketing team which helps to generate awareness for the products. The
company is generating the awareness with the help of the online modes which majorly include
the use of social media. Further, the online sales through the website are another way which
contributes to improving the performance.
Service: - The aspect of service includes the activities that contribute in enhancing and
maintaining the value of the product. Marks and Spencer company knows the fact that they have

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to maintain customer loyalty by offering great customers service. The major services which are
offered by the company include offering free delivery for orders above £50 with free returns by
post for up to 35 days after purchase.
Human resource management: - Marks and Spencer is able to manage the skilled and
experienced staff that has the knowledge of fashion and can contribute in forming the effective
relationship with the customers. The company have a dedicated team who ensure that selection
of the employees on the basis of the company.
Technology: - Technology contributes effectively in supporting the primary activities of
the company. The company is effectively able to make use of the technology by increasing the
online sales of the company which is essential to meet the goals of the company. Moreover, the
company is making use of technology for promoting the products with the help of technology
like social media channel and other platforms.
Procurement: - Company ensure that they are able to procure the goods and services so
that they can meet the demands of products. M&S is also focusing on merging the smaller
warehouses which helps them to make the distribution of goods efficient. Thus, this effective
warehouse and distribution help the company in making the products easily available to the
customers.
Firm infrastructure: - The firm infrastructure includes the strategy that is followed by
the company which contribute in improving the operations. M&S is making use of the effective
leadership style is used by the company which helps in managing the operations effectively.
Appropriate adaptations: - Considering the selected firm Marks and Spencer, the firm
should undertake the different response to the external business environmental forces. One of the

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major responses is to adopt the strategy of Focus strategy. This has been found that the Marks
and Spencer generally target the few markets because the products are generally for the people
with high-income group and youth who consider these products as part of their lifestyle.
According to this strategy, the company should extend their target market which helps in
increasing the market share with this the company will be able to deal with their competitors.
Further, the company should make use of the diversification strategy as with the rise in
the competition in the apparel industry the company should bring diversified products which can
attract the customers towards their brand. Thus, the company should bring their new accessories
(eg. watches, glasses, shoes and other) that can help them in attracting and gaining customers
attention. The adaption of this technology will help the marks and Spencer in dealing with the
competition, increasing market share, increasing global presence and many other factors.
According to my opinion, Porter’s model is based on the approach which shows that the
corporate strategy should fulfil the opportunities and threats that are present in the organisation.
The framework checks the effect of five forces on the industry which means that it evaluates the
competitiveness of the industry. Further, I believe that the effective business manager needs to
understand and analyse a model with the help of the analytical abilities and skills. I believe that
the five forces analysis help the organisation to understand the factors that affect the profitability
of the specific industry. Further, the analyses help to inform the major decisions like to enter into
the specific industry, to increase the capacity, to develop the strategies that can help in
competing. This is the reason most of the companies make use of this model for analysing the
competitiveness present in the market. Thus, according to me, the company will get help while
taking the future actions related to the decisions that are must to be taken by the company.

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I believe that the limitations of the model are that while analysing the industry it assumes
a classic perfect market. Moreover, this model doesn’t consider the account strategic alliances,
the electronic interconnection of the information system of the company with the value chain and
others. As per my understanding, the model assumes the relatively static market structure
(Beattie, 2018). In addition to this, it has been assumed that the companies should aim to achieve
the competitive advantage over the other companies in the market. Moreover, the competition
exists among the suppliers and customers that are present in the market.
In the end, this can be said that marketing and management include different theory and
models by the companies. The companies should consider the macro and micro factors that can
influence in the market in which they are dealing and performing their operations. The Porter's
five forces model can be used by the company with the motive to analyse the industry
competitiveness. The industry on which the analysis is conducted is an apparel retail industry
present in the UK. In addition to this, the value chain analysis has been used to analyse the
internal factors which are based on the Marks and Spencer Company. Further, the appropriate
adaptations in form of the strategies are discussed which should be used by the companies to
overcome from the factors that can affect the working of the company. In the end, the views have
been shared related to the limitations and benefits of Porter's value chain model.

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