Strategic Analysis of Marks & Spencer: Macro and Internal Environments

This report provides a comprehensive analysis of Marks and Spencer's (M&S) business strategy. It begins with an introduction outlining the importance of strategic planning and its role in achieving organizational goals. The report then delves into the macro-environment, utilizing PESTLE analysis to evaluate political, economic, social, technological, legal, and environmental factors impacting M&S. Following this, the internal environment is assessed through a SWOT analysis, identifying M&S's strengths, weaknesses, opportunities, and threats, along with an examination of its strategic capabilities. Finally, the report evaluates the retail sector using Porter's Five Forces model to understand the competitive landscape and profitability within the industry. The report concludes with a summary of findings and references used throughout the analysis.

Business strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Evaluate the impact of macro environment on organisation and its strategies......................1
TASK 2............................................................................................................................................3
P2 Assess internal environment of organisation and its capabilities..........................................3
TASK 3............................................................................................................................................6
P3 Evaluation of retail sector by using Porter’s Five Forces model...........................................6
TASK 4............................................................................................................................................8
P4 Apply range of theories, concepts, models and interpret or devise a strategic planning.......8
CONCLUSION..............................................................................................................................10
REFERENCES .............................................................................................................................11

INTRODUCTION
Formulation of business strategy is a well structured process which is envision to attain
future goals and objectives of the company. Strategic planning supports to identify direction and
scope of a firm long run in market, it also involves matching resources with changing
environment in order to meet stakeholders expectations in an effective manner. Along with this,
strategic business planning not only ensure long term success of the company but also liable for
making day to day business decisions (Woerner and Wixom, 2015). The present assignment is
based on Mark and Spencer; it is one of the largest dealer of home products, clothing and other
consumer products. The main objective of the company is to deliver new and innovative
products to its customers by managing their quality which adds value for target audiences. Apart
from this, the report is going to be defined impact of macro environmental analysis as well as
assessment of internal environment of the company. In order to cope with internal and external
factors, there will define Porters' five forces model which also provides strategic direction to
company.
TASK 1
P1 Evaluate the impact of macro environment on organisation and its strategies
Macro environment refers to external factors which affects organisation and its growth.
These factors are uncontrollable and influences business strategies, decision making process and
performance of organisation. In addition to this, macro environment also affects the business
operations and activities which are performed by the employees in order to meet predetermined
goals and objective. Marks and Spencer is multinational retailer which majorly offers clothing,
luxury food products and home products world wide. Manager of this company have to
formulate various strategies to increase customer satisfaction level for achieving their business
objectives (Ackermann and Audretsch, 2013) . In this, PESTLE analysis is done by the top
management of this organisation to identify the impact of external factor on business and use it
as the opportunity for achieving business objectives.
PESTLE: It is termed as the analytical tool which helps the business in their strategic
planning. It supports the organisation in understanding its impact of external factor in positive or
negative manner. PESTLE analysis is based on various factors such as political, social,
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technological, environmental, economic and legal which influence business growth and its
decline. PESTLE of Marks and Spencer is evaluated as below:
Political: Factors which are formulated and changed by the government of UK are
considered as political factors. These factors includes tax policies, trade tariffs, political stability,
In relation to Marks and Spencer, this organisation is providing its goods and services in several
countries. Changing tax policies may increase or decrease their sales in different countries
(Annabi and McGann, 2013). This influences its business strategies and creates barrier for the
employees in achieving their predetermined goals and objectives. Manager of Marks and
Spencer should analyse the political environment of their trading countries to identify the
obstacles and formulate strategies accordingly. It will help the organisation in preparing back
plan for such situation and guide the employees in order to accomplish business objectives.
Economic: These factors influences organisational future planning and its economic
growth. Factors which affects the business environment are inflation rate, interest rate, economic
growth patterns, recessions, foreign exchange rate etc. In context to Marks and Spencer, buying
and spending power of customer affects the organisational growth pattern. Recession in United
kingdom have impacted sales of this company in negatively as the lots of customers were
suffering from financial crisis. Due to this, purchasing power of customers have declined and
affected the sales of the Marks and Spencer. Manager of this organisation should formulate
strategy which majorly concentrate on fulfilling needs of customers rather than profit earning
motive. For this, organisation should introduce low cost food products in its store to avail various
inexpensive option to the customer which satisfy their needs and develop loyalty among the
customers towards this organisation (Auzair, 2011).
Social:In this, social surrounding influences organisation and its growth. Social factors
included in this are culture trends, changes in customers taste and preferences, size of population
etc. In relation to Marks and Spencer, changes in lifestyle of the customer, eating habits, culture
of different countries might affect the predetermined strategy of this organisation. Marks and
Spencer deals in various country which have their own cultural trend. Manager of this company
should analyse the social environment of trading country and introduce new and innovative
products according to their taste and preferences. This will provide more options to customer
and attract to remain loyal towards this brand.
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Technological: Technological factors are considered as their updated technology which
increases productivity of the products and reduce its costing. In context to Marks and Spencer,
this organisation is providing its products on its online and application which makes shopping
easier for the customer and provides them all the options at their home. For opting advance
technology, manager of this organisation have to frame new strategies for achieving their goal
and objectives (Azar, 2011). This factors influences the company in positive manner and
increases sales of the company. Its beneficial for manager to monitor business operation on
system and also promotes the products and services more efficiently.
Legal: There are various laws which influences business environment in trading country.
In relation to Marks and Spencer various factors such as consumer laws, employment laws,
safety standards etc. affect the business environment and its strategies. In this, Marks and
Spencer follows all the legal laws related to their customers as well as employees. Manager of
this organisation majorly focuses on providing health and safety assurance to its employees at
work place. This develops more number of loyal employees who continues with organisation for
long term and it also increases their satisfaction level.
Environment: In this, factors which influences by business environment like climate,
weather conditions, global changes etc. are included. In relation with Marks and Spencer, this
organisation is charging amount for the paper bag that is used by the customer for carrying their
purchased items (Bharadwajand et.al., 2013). Profit generated from these bags is used for
developing parks, public gardens, playing areas etc. in United Kingdom. It supports in
development of the country and enhances the corporate social responsibility. As a result, Marks
and Spencer have developed its positive image in UK and also attracts more number of customer
which directly increases profitability of this organisation.
TASK 2
P2 Assess internal environment of organisation and its capabilities
It is essential for every organisation to formulate its strategies after evaluating its internal
environment to identify its own strengths and weaknesses. This helps the business manager in
making effective strategies in order to achieve goals and objective for betterment of the
company. In context to Marks and Spencer, it is responsibility of its manager to analyse the
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internal environment of the business which will help in understanding their own strengths and
weaknesses of the products. It will also guide manager in making their strategies for business
growth according the situation. SWOT analysis of Marks and Spencer is described as below:
Strengths Weaknesses
 Marks and Spencer offers customer
oriented products with high quality at
market place and develops its brand
name (Bucolo and Matthews, 2011).
 This organisation has its presence in
international market as it owns large
number of stores and outlets
worldwide.
 It offers wide range of products to its
customers which provide increases
option for the customer and give the
opportunity to choose best product for
them according to their needs.
 High participation in corporate social
responsibility is grabbing attention of
customers as well as employees which
enhances the goodwill of this
organisation.
 Marks and Spencer offers high
innovative products rapidly which
attracts increases customer satisfaction
and also increases their expectation
from this organisation.
 This organisation believes in following
traditional techniques of selling in its
store which is becoming drawback for
the coming. Many automation
machines are available in the market
which can reduce the cost production
cost and saves time of the employees.
 Negative perception of customers about
the product is one of the major
weakness for Marks and Spencer
(Kalyani and Sahoo, 2011). Customer
believes that its products are non trendy
and made for old-age customers only.
 Marks and Spencer faces huge
competition from its competitors which
directly decreases the market share and
also reduces profit margin of whole
industry.
 Many of small firm are using logo and
name of the brand to attract customer
by offering low price product. This
affects the name of the brand in
negative manner as low cost products
are low in quality.
Opportunities Threats
 Marks and Spencer can expand their  Changing taste and preferences of
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business in other countries that will
help the organisation in attracting more
number of customers.
 Marks and Spencer should introduce
option of personalised products to its
customer in stores. This will attract
customers of special segment which
gives more importance to their
appearance and prefer their own
designed apparels
 This organisation should formulate its
strategies for reducing the cost of the
products according to budget of the
customers (Köseoglu and et. al., 2013).
 Adding healthy food products in their
stores will attract health conscious
customer. Marks and Spencer can
introduce organic product to gain
customer attention that will directly
increase sales of the company.
customers is becoming threat for the
company as old stock in warehouses
will be sold through less prices.
 Increasing competition among the UK
market in similar sector is considered
as major threat for Marks and Spencer.
Competitor brands are offering same
quality product with latest trend at low
price that attracts customers attention
towards them.
 Economic recession in United
Kingdom results in decreasing
purchasing power of the buyer and
affects the sales of Marks and Spencer.
Strategic capabilities: This refers to the ability of the company to develop their strategies
according to the market scenario to growth purpose. It is responsibility of the manager of
organisation to formulate proper strategies and guide employees to use it to convince more
number of customers. Strategic capability is combination of skills, capacities and resources that
are beneficial for the organisation in terms of developing its competitiveness for long run. In
relation to Marks and Spencer, this organisation is using its presence across the world as it
strategy to cover reach maximum number of customers for increasing profitability and gain
competitiveness at market place (Matzler and et. al., 2013). This organisation is offering its
services in various sectors like food products, clothing, home appliance etc. to its customer
which is considered as the strength in order to grab customers from every sector and enhance the
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growth of the company. Manager of Marks and Spencer is hiring high skilled candidates which
performs in effective manner and achieve organisational goal and objectives. Manpower are
considered as the beneficiary resource for this organisation which are necessary for business
growth. Top management of Marks and Spencer formulates effective strategies that supports
organisation in increasing its sales for long term benefit.
TASK 3
P3 Evaluation of retail sector by using Porter’s Five Forces model.
Porter’s Five Forces model refers to the strategic tool which helps in evaluating industry
in order to understand the opportunities of profitability in the same industry. In this model
various factors are included as it involves bargaining power of buyer, threats from new entrants,
rivalry among existing companies, bargaining power of suppliers and threats from substitute
products. Marks and Spencer is one among the top retailer in UK market, it is essential for this
organisation to maintain its position in UK as well as other business country (Meskendahl,
2011). For this its manager have to firstly understand the retail sector in order to formulate their
strategies for performing business operations. In addition to this, competitors of the organisation
are also analysed to expand business and increase their business profitability. Porter’s Five
Forces model is described below to understand retail sector in better way.
Rivalry among the competitors: Marks and Spencer offers its services in retail sector
which is highly competitive sector. Intense competition in this sector affect overall profit of all
the competitors. This organisation faces competition from supermarkets as well as clothing
section. In supermarket its major competitors are Tesco, Sainsbury and Asda on the other hand in
retail sector its competitors are Next, Topshop, John Lewis and Zara. In context to retail sector
every organisation is introducing new products and services with best quality at affordable or
budget friendly price. This provides many options to the customers and creating difficulty for the
organisation to earn profit margins (Slater, Olson and Finnegan, 2011). To avoid this situation
Marks and Spencer can collaborate with its competitors and increase their probability by
covering whole market segment.
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Bargaining power of suppliers: Marks and Spencer is large multinational company of
retail sector. Bargaining power of its supplier is basically low as this organisation is not
dependent on its supplier. This brand buys raw material at large scale and manufacture their
products in warehouses which are further sold at stores. Supplier of this organisation have to
agree with the decided rates as if they will deny then the company will buy the raw material
from some other buyers. Suppliers of this organisation have to satisfy themselves by the name of
the brand only (Mitra, and Bhardwaj, 2010).
Bargaining power of buyers: It is necessary for every organisation to satisfy the need
and wants of its customer. So, bargaining power of buyer for Marks and Spencer is high as if
customers are not satisfy with the quality, trend and price they will switch to some other brand.
Customers have lots of options at market place that influences them to compare the products and
services with the other brand and choose best among them. To increase customers strength with
this organisation it manager should more focus providing products and services according to the
requirement of consumers taste and preference this will increase their satisfaction level and
encourage them to shop with similar brand.
Threats from Substitute products: This organisation is having high range of threats from
the substitute products. As Marks and Spencer belongs to retail industry and serves most of its
products and services in UK, where every next companies are offering substitute products to its
customer. It has grabbed attention of maximum customers and reduced the sales of Marks and
Spencer which results in loss. Products and services of this organisation are quiet expensive
which provides opportunity to other substitute goods and services and affect Marks and Spencer
in negative manner. In order to maintain their sales level this organisation should encourage
reduce the price of its products and introduce new products and services in its store for
decreasing the affect of substitute products.
Threats from new entrants: Marks and Spencer is already well established company that
which has covered maximum number of customers in United Kingdom. According to the retail
sector its very difficult for the new entrants to affect the business of this organisation and attract
the customers. So for this organisation threat of new entrants is low. Marks and Spencer has
already invested in marketing and advertisement which has resulted in high brand recognition
among customers (Schaltegger and Wagner, 2011). Its quiet difficult new entrants to invest
similar kind amount in promotional activities at initial stage. In relation terms of experience and
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knowledge new entrants will not get success at market place as employees of Marks and Spencer
expertise in convincing and persuading customers in order to satisfy their needs.
TASK 4
P4 Apply range of theories, concepts, models and interpret or devise a strategic planning
In adequate organisational management, strategic planning is an activity that is acquired
in order to demonstrate priorities, strengthen operations. It also ensure that all employees and
other stakeholders worked together for attaining desired goals and objectives of the company.
Along with this, strategic planning process involves decisions which are made on the basis of
organisational goals and ways of attaining these goals (Valos and Bednall, 2010).
There are various theories of strategic planning that can be applied by the managers of
Mark and Spencer in order to formulate an adequate business strategy which helps company to
gain high competitive edge and market growth as well. These theories are – Ansoff matrix,
Porter's five forces and value chain analysis. In which, Ansoff Matrix is considered as one of the
best tool for strategic planning. In addition, there are four elements of Ansoff Matrix which are
stated as under -
 Market development – Its a strategy in which a business look outs to sell its existing
products and services into new markets. Thus, market development strategy links with
exploration in other markets by determining new geographical areas or find out new
target markets in order to entice potential clients. In 2007, Mark and Spencer has
established world's largest M&S store outside UK at Dubai festival city whereas in 2008
it has opened very first mainland China Store.
 Market penetration – It is known as one of the effective growth strategy in which firm
focus to sell its existing products and services into current markets (Tsamenyi, Sahadev
and Qiao, 2011). Market penetration strategy seeks out major benefits to Mark and
Spencer – increase or manage market share of existing offerings which can be obtained
through competitive pricing policies, adequate advertising, sales promotion and also
implementing necessary resources which are required in personal selling. In context of
M&S, clothing segment; the firm has provided high quality of goods over UK and
Europe.
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 Product development – In this business strategy, the main objective of business is to
launched new products and services or improvising existing once in order to seize better
market opportunities and increase market share as well. Along with this, strategy of
market development is needed to modify their product line thus to appeal effectively in
existing markets. Mark and Spencer's financial or banking services are best example of
market development. Beside this, it entering into new segments like children’s wear and
teenagers to be competitive is also known as market development. But, before
introducing any new product or service it is essential to recognise market trends.
 Diversification – Inherently, diversification is know as more risky strategy for business
organisations as it implies firms to move into new markets in which they have little or
less experience with new and innovative products. Therefore, it is quite dangerous to use
this kind of strategy because organisation does not have any knowledge about new
markets and their customers' taste. As Mark and Spencer has expanded its operations into
40 nations, new markets which it has been arrived successfully met (Teece, 2010). For
example – Mark and Spencer has diversified itself in food, home appliances and beauty
products as well as it get also into partnership with other retailers across the globe.
As per the all above strategies, managers of Mark and Spencer has decided to apply
market development strategy thus to enhance its functional areas in other markets also. Now, the
firm is trying expand its market in developed countries as well and provide products there at low
prices that is affordable by all people. But before entering into new markets it is essential for
M&S to conduct a market researcher so as to recognise current market trends and changes thus
perform effectively at there.
On the other hand, several models also can be applied in strategic planning of business
associations, which is stated as under -
Issue – Based Strategic Planning Model: The model is usually acquired to formulate a
comprehensive planning thus to attain strategic goals and objectives of the company. There are
certain key steps involves in issues based model of strategic planning, SWOT analysis,
determine prime issues, design strategies to address these issues, upgrade vision and mission,
implement action plans and record issues, actions into plans etc. as well as create a yearly
operating plan. In context of Mark and Spencer, the model helps in determining various issues or
obstacles then apply strategies or actions.
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Alignment Strategic Planning Model – In strategic planning process of company, the
model is adopted in order to make sure that there is an effective alignment of business strategies
with vision and mission. It also ensure optimal and proper utilisation of available resources. In
addition to this, alignment strategic planning model is useful to figure out those aspects which
aren't working in their current business strategy. Below is given main elements of this model,
such as -
 The planning group outlines the organization’s mission, programs, resources, and needed
support.
 Identify what’s working well and what needs adjustment.
CONCLUSION
From the above mentioned report it has been concluded that business strategy is essential
for development and business growth. It is important to formulate strategy after analysing
internal as well as external environment of the business with the purpose of achieving goals and
objectives. SWOT analysis is discussed to understand the internal environment which is
beneficial for the organisation for identifying strengths and weakness. This will also provide
opportunity to management for improving their negative portion of the products and they can be
modified to increase customer satisfaction. In this, porters five forces model have been analysed
in order to expand business operation and growth at global level. Further impact of macro factors
is evaluated on organisation to understand external environment with their threats and
opportunity on business growth.
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