Mark & Spencer Plc: Competitive Analysis, Challenges & Improvement

This report provides a comprehensive analysis of Mark & Spencer Plc, a multinational retailer, focusing on its competitive position and strategies for business improvement. It employs Porter's Five Forces to assess the competitive landscape, identifying threats from new entrants, supplier bargaining power, buyer power, substitute products, and rivalry among existing competitors. The report also uses VIRO analysis to evaluate the company's resources and capabilities. Furthermore, it examines the challenges M&S faces in cross-border trading, including organizational structure and government regulations. To identify opportunities for growth, the report applies the Ansoff Matrix, suggesting strategies for market penetration, market development, product development, and diversification. The analysis culminates in recommending a specific strategy for M&S to enhance its business performance, increase its market base, and improve profitability through focused pricing, branding, and promotion activities. Desklib offers a variety of resources to aid students in their studies, including similar solved assignments and past papers.

BUSINESS PROJECT
Mark & Spencer Plc

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
PART 1............................................................................................................................................4
a) Comparative analysis of M&S.................................................................................................4
b) Considerations M&S should consider when trading across borders......................................8
PART 2..........................................................................................................................................11
Considerations that M&S needs to improve business................................................................11
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business activities are the ways in which the company is able to make money by either
producing or buying and selling the products and services. Competition in business is the contest
or the rivalry which happens among the companies selling the similar products and has the same
target audience to get more sales. Competitive advantages are very important for the organization
to gain an advantage towards the business activities which can help them it to increase its
profitability. In this project the chosen organization is Mark and Spencer group plc which is also
abbreviated as M&S. This company is a multinational organization based in United Kingdom
which is the retailer for clothes, food and home products. This organization was founded in 1884
by Michael Marks and Thomas Spencer in Leeds. Only in UK this company has more than 960
stores most of which are very successful.
The famous products of this company is the luxury food and beverages which can also be
ordered online through food delivery services. Mark and Spencer is the part of a retail industry
which is very competitive and has a lot of large companies competing with each other with their
own specific strategies for success. In first part, the report will outline the comparative analysis
of M&S competitive position in the market with the help of porter’s five forces. These forces
help the company to examine all the strengths, weaknesses, threats and opportunities to take a
first mover advantage of the new opportunities emerging. Furthermore, the report will highlight
various challenges and barriers faced by Mark & Spencer for carrying out its cross border trade.
In addition to this, a VIRO analysis is performed for better understanding of the resources
available with company.
There are many issues and challenges for Mark & Spencer to be scrutinized to improve its
business performance. In the second part, the report will highlight all those considerations that a

business can adapt to improve and grow its business. For this purpose, Ansoff matrix is applied
to identify the opportunities available in the market. Ansoff Matrix helps to spot the strategies
which will benefit the company. Lastly, the report will pin point one strategy that Mark &
Spencer can implement to enhance the business performance and to give a tough competition to
its rival company's and increase its profitability. The report will also show that how company can
increase its market base by focusing on pricing, branding and promotion activities.
MAIN BODY
PART 1
a) Comparative analysis of M&S
For the analysation of the competitive position of the Mark & Spencer porter's fiver
forces be utilized. This model has been developed by Michael Porter who observed fiver forces
which impacts a company's profitability. This model analyses the five competitive forces which
shapes up the industry and determines the strengths and the weakness of the competition (Lin
and Dinh, 2020). The forces discussed in this model can be applicable in the segment of the
economy for understanding the level of competition within the industry and also enhancing the
company's long term profitability.
Source : Martin, 2019
Illustration 1: Porter's Five Forces

Threat of New Entrants:
New entrants in the retail business is very common. New business brings innovative ideas
of doing things which puts pressure over the Marks and Spencer Group Plc. Through lower
pricing strategy, reduction of costs and providing new value proposition of the customer’s new
entrants threatens the business of M&S. This company can build some effective barriers for
safeguarding the competitive edge. Following are the strategies which M&S can use for tackling
the threats of new entrants,
 Bringing new and innovative products will bring new customers to the company and also
provide the old customers reasons for being regular to M&S. Large quantities of
products in the M&S store will restrict the customers from visiting new and small
businesses (Trujillo-Cabezas, 2020).
 Utilization of the economies of scale the business will ensure that it can lower the fixed
cost per unit.
 Spending money on research and development and training can help the business
improve the effectiveness and efficiency of the business performance.
Bargaining power of Suppliers:
Mark and Spencer along with other retailer in this industry buy their raw materials from
numerous suppliers. The Suppliers in the dominant position can increase or decrease the margins
of earning of M&S. The powerful suppliers in consumer services sector use their negotiating
power. To extract higher prices from the firms in retail field. The overall impact of higher
supplier bargaining power lowers the productivity of the retailers (Krstić, Nikolić and Petković,
2018). Due to strong power of suppliers of M&S it is not able to negotiate with the suppliers and
cannot reduce its cost for gaining a competitive advantage. M&S can follow the following
strategies for tackling Bargaining power of the suppliers,
 M&S should try to build efficiency in the supply chain by having multiple supply chain.
This will help the company negotiate with the suppliers.
 Experimentations with the products design and use of different raw materials the prices
of the raw materials can shift the form one supplier to the other.
 Developing strong relations with the suppliers to make them the only supplier of M&S
can also be strategy to reduce the cost prices incurred through suppliers.

Bargaining power of buyers:
Buyers of this company are very demanding, and want to buy the best offerings available
and have to pay the least amount as possible. This puts M&S into a lot of pressure because of the
profitability in the long run. The smaller and more powerful customer base is the market and
Spencer group plc which has higher bargaining power of the customers and has the ability to
seek increasing discounts and offers. The bargaining power of the buyers influences the
company's ability to increase its prices. Following strategies can be used by the company to
negotiate the prices with its customers,
 Market development will provide the company a large customer base which will help the
business to reduce the bargaining power of the buyers and also provide opportunity to the
firm for streamlining its sales and production process (Bhandary, 2019).
 Rapid innovation of new products can also be way of influencing the customers.
Discounts, offers and other established products can help the business keep coming with
new products and ideas.
 New products will help the business to reduce the defection of existing customers of
M&S. This will keep the customers of the company excited for the new products and help
the business with competitive advantage.
Threat of substitute Products and services:
The business facing issues from new products or services which are very similar to the
needs of the customers in different ways is a real problem for M&S. As a retail business there are
a lot of direct as well as indirect substitute for this organization. The threat posed by the
substitute products and services can be higher if it offers a value proposition which is unique in
different forms of present offerings of the industry. With the help of the following strategies the
business will be able to tackle the threat of substitute,
 Increasing the service's orientation can help the business to increase their products
viability.
 Understanding the core needs of the customers will help the business to modify the
products according to their needs.
 Reduction of the prices or offering the products in discount on large quantities can
increase the switching cost for the customers.
Rivalry Among the Existing Competitors:

The fashion retail industry of Mark & Spencer has a lot of big companies which have
very similar business model to that of this company. These companies are existing competitors
for the company which intend to drive down the prices and decrease the overall profitability of
the industry. Competing with these competitors effect the long term profitability of the business.
Following strategies can help the business to gain upper hand in the business competition.
 Being sustainably different from the other organization the business will be able to
provide itself competitive advantage.
 Building a scale for better performance can allow the business to grow and be better
competitively.
 Collaboration with the competitors can also help the business to increase the market size
rather than just competing for small markets.
These forces can be used by the organization for gaining a complete picture of what are
the factors which effect the profitability of the company in the Retail industry. With the help of
this analysation the company can understand the different strategies for improving the business
performance in the competitive market. These force help in the identification of the trends which
can swifty respond to the exploited emerging opportunities.
For improving the business of M&S it can also use the VIRO analysis which will provide
evaluation of its resource which it can use for sustainability in the competitive advantage with
better understanding of role of resources (Virtala-Raskila, 2018). This tool can be used by the
organization for making tough decisions. There are four components for this analysis which can
be used for the decision-making,
Valuable:
In this component all the valuable resources of this organization are discussed. Financial
resources, human resources, marketing resources and marketing expertise are few of the most
valuable components of M&S business.
Rare:
It is equally important for the business to understand which resources are rare as well as
valuable to the company. These resources hold an importance for the company as the
competitors or new entrants will not be able to access the competitive landscape. These generally
are the loyal employee of the organization which are key to their success (Obaje, 2020).
Imitability:

In the present times most of the industries are facing threats of disruption. There are
many small entrants which try to imitate the products, process and business model of the
organization. Therefore, there are some resources which cost higher to be imitated whereas there
are some which easy to imitate.
Organizational competence & capabilities:
In this the organization's capacity to harness the most valuable, rare and difficult to
imitate resources are suggested. With the help of this analysis the exploitation levels of the
products can be done from different perspectives. The capabilities of the organization arises
when they expand over the time by undertaking the actions which are built on strategic
resources.
b) Considerations M&S should consider when trading across borders
Cross border trading can be defined as trading or transaction of goods and services
between the two parties of two different countries. It has become very famous in the last decade
with onset of online shopping trend. The growth rate is quite huge and is expected to grow over
time. However, cross border trading brews up various challenges in front of business which
needs to be addressed. There are many threats and challenges that Mark & Spencer need to
consider at the time of cross border transactions which are discussed below:
Organization structure: If a company wishes to go global, firstly, it has to decide about
the company structure it will follow. Whether the company will be governed from one
headquarters or will have different offices across all different countries. Mark & Spencer faces
problem of communication and coordination because of the time differences between countries
(Marks & Spencer, 2021). Recruiting the local employees for new offices can also be a problem
because they have knowledge about their region but not about the central market.
Government regulation for different countries: Local rules and regulation will be
applicable to the company operating in a particular country. Now, every country has its own set
of laws and regulations that need to be followed (Chang, Iakovou and Shi, 2020). The taxation
and tariffs policy will have an impact on profits of the company. For M&S, it can be very
challenging to abide by official laws of different countries.
International Accounting: Accounting system to be followed can prove to be
challenging to M&S when it operates in different countries. Taxation system of different

country, rates prevailing, etc. has to be considered while making the final accounts of the
company. M&S need to have a complete knowledge about tax treaties between countries which
is quite complicated sometimes.
Lack of Market Research: Sometimes, it happens that the corporate does not have full
knowledge about the market and start operating in it. It poses a big challenge in front of the
business (Kahiya and Kadirov, 2020). Not having a complete knowledge about the foreign
market proves to be challenging for M&S because the shopping patterns and trends differ from
one country to another and also the payment system are different in the countries. Foreign
markets are so diverse that is difficult to perform the market research.
Cultural differences: Another main challenge of cross border trade is cultural differences
between the nations. The two parties involved in the transaction comes from 2 different cultural
backgrounds. The impact of lack of cultural differences is so high that it leads to no integration
between countries and the main aim and goal behind the deal is lost. M&S faces the problem of
differences in working culture, gender issues in some countries, management style followed, that
is democratic or authoritative, diverse cultures etc.
Labour laws: Employment issues can be major obstacle In cross border trade to M&S
because different country have different employment laws and rules that are followed.
Complying with each country's rules and regulation can be a tough job. The local labour laws,
working hours of employees, fringe benefits like leaves and vacation holidays, etc. need to be
considered by M&S while forming employment policies.
Political Scenario: One more restriction to cross border trade is of Political structure of
the country. If M&S is trading with a country where there is no political stability, that is the
government and it rules and regulations are changing every now and then, it will lead to huge
losses for the company (Makkonen and Leick, 2020). If the government is changing frequently
which in turn is changing policies for businesses, such unclear and unstable policies of
government can be problematic for M&S.
Currency rates: Continuous fluctuations in the currency rates of various countries poses a
threat and challenge to M&S. Along with the currency rates, changes in inflation rate can also be
a serious issue to be considered by M&S. It can have a huge influence over the cost of direct
materials and labour employed and also on the prices of the product.

Copyright issues: If M&S is operating its business in many nations, then, there can be the
copyright issues. Rivalry firms can copy the product of the company illegally in the form of
market branding. Minimal changes in the product by the competitor and selling it at low price
can pose a major threat on the M&S.
Pricing problems: Determining the price of the product in cross border trade can be a
problematic issue for M&S. The company has to consider many factors while quoting the price
such as production cost, marketing cost, shipping and transportation cost, etc. Again, examining
the pricing policy is a crucial factor, that is, adopting a competitive pricing policy for luxurious
goods to create a brand image in foreign market or price penetration policy to create a deeper
market share by keeping price low.
Technology issues: If M&S is carrying out its business activities in a country which is
not tech savvy, it can create a problem for cross border trade. A huge investment in technology
in the other country can be expensive and it will increase the cost of the company which on the
hand will lead to decline in profits (Carter and Poast, 2020). Such technological issues can be
challenging thing in front of M&S. Further, it will require funds and resources to provide
training to the employees.
Unavailability of raw materials and resources: Mark & Spencer can also face the
problem of unavailability or shortage of raw materials and other resources. Running a business in
a country where raw materials are not available in abundance can create a hindrance in the
production process, thereby, long production cycle, and delayed profits. Such a challenge need to
be addressed before starting business in new country.
Problems of Shipping & logistics: There are many issues related to shipping and logistics
which create a problem for cross border trade. M&S need to comply with the customs office of
each country. Every country has the rules regarding the quality of goods which can be imported
in their countries.
Promotions in foreign market: The company need to understand the customers need and
preferences and should focus on emotional front to promote their products. M&S can focus on
the current market trends to identify the promotional tools. Due to cultural differences, M&S can
sometimes have problem in identifying the core need of the consumers which in turn will badly
affect the promotional policy.

Infrastructure problems: if the infrastructural system of the country is not in a good
condition then it will create a problem for cross border trade (Kandogan, 2020). M&S investing
in a country with poor infrastructural facility, where there is no proper supply of electricity, poor
connectivity of roads, it will lead to full wastage of money and resources.
International Payment System: Focusing on one payment system can be very difficult in
cross border trade. M&S have to settle their payments with different countries having different
currencies which creates a problem and leads to high transaction fees. Such problem cannot be
eliminated completely and company must consider this before imitating business.
Transportation difficulty: transportation of good from the place of production to the
place of consumption take a longer time which involves huge expenses. M&S have incur huge
expenditure in transportation of goods from one country to another which increases its costs
(Palit, 2019).
Non-tariff restrictions: There are various non-tariff restrictions such as the government
imposes quotas or limits on import of goods. Such quotas restrict the ability of Mark & Spencer
to export its goes to other countries because such countries have imposed the quota restrictions
(The rising challenges and opportunities of cross-border trade, 2020).
Market changes: Mark & Spencer also has to face the problem of frequent changes in
market trends such as changes in tastes and preferences, change in custom duty, entry of new
rival firms, etc.
PART 2
Considerations that M&S needs to improve business
For improving the business of the multi-nation organization Mark & Spencer it is
important for the business to develop a strategy which will help it to grow. The development of
the strategy for this organization can be done with the help of some tools such as the Ansoff
Matrix (Sastry, Katvi and Tourani, 2019). This matrix is a product/ market expansion grid which
is used as a framework which enables the organization to identify its growth opportunities by
leveraging both the internal and external opportunities.

Source : Emerald Works Limited, 2021
The growth of its business the four generic growth strategies of this matrix can be
recommended.
Market Penetration:
It is that strategy which is used by the organization when it has the potential for growing
the market share in the existing market. For this approach the business needs to be sales driven
with the help of the following ways, increasing the sales target, reaching directly to customers,
improving dealer network, increasing the relationships with customers and by making efforts for
increasing the total sales made by the customers.
Market Development:
Market development for M&S can create new opportunities and channels for the current
products. This strategy includes entering new international markets, or entering new domestic
areas which are not explored by the business before (Thanh and McALEER, 2021). This
organization can also think about tying up with new complimentary companies for driving the
sales of the current products of the organization.
Illustration 1: Ansoff Matrix