Detailed Business Strategy Analysis of Marks and Spencer (M&S) Report

This report provides a comprehensive analysis of Marks and Spencer's business strategy, examining its performance within the retail industry and its adaptation to the changing external environment. It begins with an abstract summarizing the key findings, followed by an introduction outlining the report's objectives. The report then delves into a detailed macro-environment analysis using the PESTLE framework to assess political, economic, sociological, technological, legal, and environmental factors impacting M&S. Internal environmental analysis includes a SWOT analysis, McKinsey 7s model, and a resource-based view. Competitive forces are evaluated using Porter's Five Forces model. Strategic planning tools like the Balance Scorecard, Ansoff matrix, BCG matrix, and Porter Generic Model are also discussed. The report concludes with recommendations for M&S's strategic direction. The report provides a thorough examination of M&S's strategic decisions, competitive position, and future prospects.

Business Strategy

ABSTRACT
Marks and Spencer is engaged in delivering its service in retail industry. The company is
doing better in the changing external environment. Firm is developing various business strategy
to expand business. From this report this can be abstracted that SWOT analysis of the respective
organisation helps in identifying strength and weaknesses of business entity. This helps in
garbing various opportunities and countering with different threats in external macro
environment effectively. Competitive strength and their capability to concur the market can be
abstracted from discussing porters five force model in the existing market scenario.

Table of Contents
ABSTRACT.....................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MACRO ENVIRONMENT ANALYSIS........................................................................................1
PESTLE analysis....................................................................................................................1
Economical.............................................................................................................................3
Sociological ...........................................................................................................................4
Technological.........................................................................................................................4
Legal factors...........................................................................................................................5
Environmental factors............................................................................................................5
INTERNAL ENVIRONMENTAL ANALYSIS.............................................................................6
SWOT Analysis......................................................................................................................6
Strength:.................................................................................................................................6
Weaknesses:...........................................................................................................................7
Opportunities:.........................................................................................................................8
Threat:.....................................................................................................................................8
McKinsey 7s Model...............................................................................................................9
Resource based view..............................................................................................................9
COMPETITIVE FORCES OF CURRENT MARKET...................................................................9
Porter five forces model.........................................................................................................9
Level of competition...............................................................................................................9
Threat from substitutes.........................................................................................................10
Bargaining power of customers............................................................................................10
Bargaining power of suppliers..............................................................................................10
Threat of new entrants..........................................................................................................10
Balance Scorecard approach.................................................................................................11
Ansoff matrix........................................................................................................................11
STRATEGIC PLAN......................................................................................................................13
Resource based theory..........................................................................................................13
Human resources based theory.............................................................................................13
Competitive theory: .............................................................................................................14

Agency theory: ....................................................................................................................14
Contingency theory: ............................................................................................................14
Boston Consulting group (BCG) Matrix..............................................................................14
Porter Generic Model...........................................................................................................15
General electric matrix: .......................................................................................................17
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................20

INTRODUCTION
Long term planning of on organisation to achieve specific goals and objectives of
company is called as Business Strategies. Firm formulate different strategies in order to gain
competitive advantage in market, development of brand image and product differentiation
strategies in order to take action against changing market scenario and other internal and external
environment of business firm. Companies are engaged in developing different plan related to
their growth, product, promotion and price in order to capture huge market to earn more profit.
In this report various impact of external environment on strategic decision making
process is studied along with optimum utilization of internal skill set and capabilities of
resources available to business firm. Different types of competitive forces that affect expansion
of business and development of tactical strategic plan is discussed in this assignment.
COMPANY OVERVIEW
Vision- Expanding brand globally.
Marks and Spencer is an retail outlet that is running its business world wide. So , in order
to maintain business globally business has to formulate different types of strategies in order to
make consistent profit over changing external economical and political policies (Acquaah, 2011).
Mangers and leaders of Marks and Spencer develop various strategies according to the different
culture and customer preferences by utilising internal capabilities of organisation optimally to
achieve best result of growth in market. M&S is having approximately 716 store in UK and more
than 416 retail outlet across the world in more than 40 countries. So, company have to follow
various types of acquisition, growth strategics in order to run business successfully and
expansion of venture in other part of world.
MACRO ENVIRONMENT ANALYSIS
PESTLE analysis
Strategy: It provide the direction to organisation functioning in order to accomplish
desired mission and vision of firm. This is an long term planning of activity through which an
business is able to achieve objectives successfully. Organisation strategies are having important
role in assigning task to workforce in order to enhance firm productivity efficiently.
An business entity is surrounded by sphere of factors that influence strategic decision
development for success of an firm. Organisation surrounding is made up internal, micro and
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macro environment. Internal environment consist of employees, trade union and business
enterprise that is controllable by firm itself. While micro surroundings of system constitutes
market i.e. Customers, suppliers, vendors and competitive of firm (Astrachan, 2010). These also
somehow controllable by firm functioning and planning. The external environment i.e. macro
environment is having large impact of venture strategic development. It constitutes various
factors like political, economical, legal, environmental, technological that are not regulated and
controlled by company. So, in order to reduce impact of these macro factors ion success of firm
have to be critically analysed and various strategies to be developed in order to deal with
changing macro surrounding needs in business scenario (Bharadwaj and et. al., 2013). The
PESTLE analysis is carried out in order to study influence of macro environment on business
and its strategic development plans. Pestle analysis of business organisation Marks and Spencer
is described below.
Political
These factors are developed and regulated by government of country. Government make
various policies related to employee relations, labour laws, trade related rules and various tariffs
plans and tax rates. These all effect an organisation functioning to large extent. Business firms
like Marks and Spencer are affected by political instability and tax rates and various exchange
rates. Government controls export and import of product type and its quantity. Political
instability effects trade and exchange rate to large extent (Strategy theory. 2017). Marks and
Spencer is an global firm that is involved in various activities related to export and import of raw
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material and end product overseas. These are all controlled by trade laws and exchange rates that
ultimately effects profitability of firm. M&S pricing strategies us affected by Value added tax
rate defined by government of country. This is the tax that is given to government in order to run
business abide by all government laws. Increase in taxation and VAT force Marks and Spencer
to bring changes in marketing strategies related to its price. This will leads in increased prices of
product. While changes in exchange rate leads to increased cost of production that also affects
profit margin of venture to large extent (Boyer and et. al., 2010). The company is also affected
by services that are provided by government to business environment as public services.
Utilization of public resources and giving it back to country helps in developing various social
responsibilities by identifying social cost benefits of M&S. This firm is one who first achieved
fair trading rules in practice defined by government by cutting down salt and fat content in their
food services to contributes in their corporate social responsibility efficiently and in order to run
their business ethically. This strategic implementation of reducing fat content in their products
helps in achieving their vision efficiently.
Economical
These factors influence business strategies to large extent as it is related to monetary
benefits of firm. Economical factors like GDP of country, interest rates, exchange rate and
inflation rate affects business objectives and planning largely. Higher interests rate affects
investment in country to large extent and also affects employment rate of country. Decrease in
employment leads to lower income and salary of individual to spend on leisure activities and
other products. This affects probability of organisation ultimately. Marks and Spencer follows
changing economical trends in developing strategies related to prices and promotion of product.
M&S expansion is dependent on foreign exchange rate and inflation rate largely. Inflation rate
affects investment of organisation in overseas largely. Higher FDI affects economical growth of
country and hence, also influence investment by venture in foreign market. Marks and Spencer is
focusing on developing various strategies related to changing fashion [references of youth in
country (Demystifying Strategy: The What, Who, How, and Why. 2017). As today's youth is
having larger disposable income that affects their spending habits and helps in increasing sales of
M&S largely. Disposable income of country affects Marks and Spencer revenue generation to
large extent. So, company should critically analyse economical factors like FDI, inflation rate
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and disposable income of country to develop various strategies related to expansion and
differentiation missions of enterprise in foreign market and host country too.
Sociological
Choices and preferences of people of society largely affects business strategies. Different
cultural and values leads to change in taste and preferences of community. Increased mortality
rate of person in country leads to higher old age people in country that are consistent with their
choices. So, firm focuses on product design that is consistent and according to conservative
choices of person. Now a days youth are more focused upon being up to date, develop new
fashion trends. All these affects development of new fashion trends and products according to
changing needs of youngsters. Acceptance of credit card in 2007 by marks and Spencer helps in
increasing sales revenue and gain competitive advantage from other competitors in market. M&S
introduced classic collection and autograph range of clothing to attract more customers towards
brand product (Burlton, 2010). Credit card leads to increased sales of all companies up-to 10%
that helps in increasing profitability of organisation to large extent and achieve their goals
through this particularly strategic implementation in practice through an effective analysis of
sociological factors of business environment.. So, changing trends of payment and spending
habits of society influence profit margin of company.
Technological
Installation of up-graded technology in business structure helps in enhanced probability
of institution and performance of employee in firm. This will helps in cutting down wastage cost
and leading to optimum utilisation of resources available to firm. Introduction to new
organisation website and helps in increased sales of Marks and Spencer through medium of
internet. This helps in expanding customer base from all over the world. Online marketing and
shopping bring automation in processes of M&S and helps in delivering product to global
customers. Venture has spend approximately 150 million dollar to develop new website in 2014.
Marks and Spencer installed Wi-Fi system in their stores so that customer can check other
similar product that are not available in stores in company websites and can demand for
particular cloth or food item. M&S sales person in retail outlet is provided with iPads in order to
provide a good knowledge about particular item of venture to their customers. Enterprise is
developed efficiency through implementation of technology in their supply chain management
and inventory management system (Campbell, Edgar and Stonehouse, 2011). Marks and Spencer
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is having distribution centre about of 9,0000 sq. ft area that engaged in 1 million product delivery
every day and contain 16 million inventory item stored at same time. This distribution centre is
one of the largest centre in UK. This is having well developed infrastructure along with various
large display screen that shows variety of product of company and other interactive small screen
that is used by customer to place their order.
Legal factors
Marks and Spencer has to face many legal complication while running its business
successfully. This system have to deal with many restriction in growth and expansion of business
in different countries due to various changes in legislation. M&S have to give fine of about 1
million due to asbestos risk in workplace. Asbestos is silicate mineral which is resistant to heat.
Company should protect their employee from high risk of asbestos. But organisation fails to do
so and fined by government about 1 million dollar. The judge claimed that Marks and Spencer is
highly focusing upon earning more and more profit and not serving their corporate social
responsibility towards employee and society efficiently. Organisation is also claimed in
providing less than minimum wages given to its workers. This also leads to arose of legal
complication and charges by legislation of country on profitability of M&S. This also affects
band image to large extent (Business Strategy: 7 Principles Every Leader Should Know!. 2017).
Firm is not providing appropriate salary to suppliers that are working overtime for them. Venture
is forcing their workers to work 7 days a week and this is declared by its union as slave labour.
But later on enterprise refused to this statement. Enterprise is also involved in taxation fraud and
transfer their sales revenue to Ireland having less taxation rate as compared to UK. All these
legal complication affects company probability in later years and organisation has to develop
various strategies in order to counter affect of these legal obligations in company activities.
Environmental factors
Marks and Spencer is highly concerned about healthy environment. So, entity is involved
in development of various strategies in order to reduce negative impact of their activities on
environment and helps in development of healthy surrounding. Organisation develops Plan A
that leads to development of about 180 commitments of marks and Spencer to protect
environment in 2015. The firm objective is to become most sustainable business entity in world.
This company introduce concept of Shwopping that increases rate of recycling, reuse and resells.
Marks and Spencer clothes that are returned by consumers to organisation back after use is sold
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to other venture Oxfam that either resells or recycles product. Oxfam sells product to other third
world of market i.e. the people are needing products but they are incapable of purchasing it. This
concept of shwopping results in 11 million items are being donated by company and that
contributes about 8 million charity clothes that are being recycled. M&S is engaged in
sustainable development of business and protection of environment (Chang and Chuang, 2011).
Institution is involved in charging 5p per plastic bag used by customers at retail stores. Sales of
plastic bags are contributed by the venture in development of parks and plantation campaign by
Marks and Spencer. This institution leads to use of improved renewable energy sources and
optimum utilisation of energy by manufacturing plant by reducing about 15% of packaging.
M&S is being improved in reduction in carbon dioxide emission through their plants achieved
about reduction 40% of its emission. This business is also involved in sustainable development
of process by removing selling Angora wool in product that helps in implementation of animal
protection in practice. This all strategies developed by Marks and Spencer at global level helps in
developing and eco- friendly environment and protection of natural environment to large extent
(Cinquini and Tenucci, 2010).
INTERNAL ENVIRONMENTAL ANALYSIS
SWOT Analysis
Capability of administration is defining features of organisation competitive advantages.
This can be analysed by SWOT analysis of internal and external environment available to
business firm. This will be helpful in developing various types of strategies in order to utilising
strengths of company in gaining different opportunities by analysing threat and weakness that
may affect strategic development of Marks and Spencer to large extent. Skill set, system
functioning structure and its capabilities largely affects strength and weakness of firm. That also
influence capability of gaining opportunity and dealing with different threats available as
competitors and substituent of product in market. The SWOT analysis of Marks and Spencer is
defined below.
Strength:
 Strength of Marks and Spencer is good quality products.
 Company is maintaining good employee relationship and workforce is paid good amount
in comparison in other competitive industries.
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 Higher employee engagement at workplace.
 Large no. of successfully earning retail outlet. This is having large no. of stores in almost
all busy streets of UK (Woodcock, Green and Starkey, 2011).
 Marks and Spencer is having great historical development and profitable brand.
 M&S has captured huge no. of market share which helps in developing its financial
strength.
 This business organisation is achieved a good market position and having good brand
image.
 Firm has maintained excellent long term relationship with its suppliers and vendors by
managing its supply chain efficiently.
Weaknesses:
 Company is maintaining a long term relationship with single British supplier while its
other competitors receive their raw material from overseas supplier at lower cost helps in
increased profitability.
 The venture is following conservative style of fashion trends that is not useful; ion
attracting new generation customers. Firm is still consistent with classic fashion image of
grey and navy colour clothes from 1998 fashion style. This is major weakness of M&S
having traditional fashion approach in their clothing items (Connor and Lande, 2012).
The establishment should develop new product differentiation strategies by analysing
changing market trends.
 Organisation is weak in developing marketing promotional strategies to attract more
customers by offering sales and offer during festive season like Christmas and Easter
periods. M&S is not clear and good in their marketing plans to enhance sales and
profitability of company.
 Business entity strategies are more focusing towards old age or adult customers ageing
from 35-55 years old. Firm is not concerned about youth and children choices and
preferences according to changing fashion trends and demand. The institution is achieved
high reputation in women's wear like underwear, jumpsuit and skirts but now it is not
capable of maintaining good brand image.
 Business firm lacks in quality customers services and infrastructure according to
consumer needs in their outlet (Cooke and Saini, 2010). There is lack of trail room, fitting
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rooms and less sales person. Their consistent and loyal customers are not entertained by
loyalty cards and its various benefits.
 Poor implementation of technology in business organisation. Lack of software that
maintain continuous availability of inventory and stock of products in retail stores.
Opportunities:
 Marks and Spencer is having great opportunity in increasing profitability through
entraining their customers by online marketing and developing online websites. This
helps in maintaining good relationship with customers by availing their services from just
sitting at home.
 E-commerce websites helps in reducing cost of physical stores and retail outlets in
expensive localities.
 Another opportunity of growth can be compliance with changing and faster developing
technology that helps in gaining competitive advantage in fast growing market.
 Development of effective strategies by market segmentation and targeting various
customers according to age, sex, choices and interests of particular group of consumers
(Dong-Hun, 2010). Developing goods in accordance with choices of children, youngsters
and women differently by product skimming and product differentiation can be helpful in
increasing sales.
Threat:
 Higher amount of competition from companies like ASDA, Zara, TESCO, Gap etc.
 Expansion in international market may be having higher threat of failure because of
incapability to analyse external market scenario and macro environment efficiently.
 Due to presence of unsaturated market there is continuous changing and increased trends
in fashion industry that leads to need of development of new strategies at faster rate by
Marks and Spencer.
McKinsey 7s Model
The McKinsey 7s model defines various factors which are influenced by effective
management of firm. Marks and Spencer hard factors are strategy, structure and system of firm
which is directly affected by management style. While the soft aspects of company are skills,
style staff and shared values which is having great impact of culture of venture.
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