Strategic and Entrepreneurial Analysis Report: Marks and Spencer (M&S)

This report presents a strategic analysis of Marks and Spencer (M&S), a UK-based retailer. It begins with an introduction to entrepreneurial strategy and its application to M&S, which operates in clothing, home products, and food. The report employs a PESTLE analysis to examine the macro-environmental factors affecting M&S, including political, economic, social, technological, legal, and environmental influences. It then utilizes Porter's Five Forces to assess the competitive landscape of the retail industry, evaluating the level of competition, threats of substitutes, new entrants, and the bargaining power of buyers and suppliers. Furthermore, the report incorporates internal analysis, potentially using the VRIO framework to assess M&S's strategic capabilities and concludes with a SWOT analysis to identify the company's strengths, weaknesses, opportunities, and threats. The analysis aims to provide a comprehensive understanding of M&S's strategic position and challenges within its market.

STRATEGY AND
ENTREPRENEURSHIP

Table of Contents
INTRODUCTION...........................................................................................................................1
ENVIRONMENTAL MACRO-ANALYSIS..................................................................................1
INDUSTRY ANALYSIS................................................................................................................3
INTERNAL ANALYSIS.................................................................................................................6
SWOT ANALYSIS.........................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

LIST OF TABLES
Table 1 M&S strategic capabilities..................................................................................................6
Table 2 VRIO model for M&S........................................................................................................7
Table 3 SWOT ANALYSIS of M&S..............................................................................................8

INTRODUCTION
Entrepreneurial strategy refers to that in which a company establishes or re-establishes its
important set of relationships within the environment (Kalling and Alvarez, 2012). It is a strategy
to carry out more or less simultaneous changes in the pattern of decision taken by the
organisation. Entrepreneurship is the process of launching, designing and running a new business
such as start up of a company in which the people who start the business are known as
entrepreneurs. Present report is based on the Marks and Spencer which is a UK based company
engaged in clothing, home products and luxury food products (Hunter, 2011). This report covers
the external environment of industry using appropriate tools for strategy. Further, it covers the
industry analysis by five forces which evaluate the forces as high, moderate and low. Moreover,
it also covers the internal analysis of the organisation using appropriate strategy tools by using
VRIO analysis for discussing the activities of company. At last, it covers the SWOT analysis of
Marks and Spencer to identify the strength, weaknesses, opportunities and threats.
ENVIRONMENTAL MACRO-ANALYSIS
Macro environmental analysis consists of various factors for analysis including the
political, social, technological, legal, economic and environmental factors and mainly it is known
as PESTLE analysis (Dana, 2010). The micro environment of Marks and Spencer consist of
those elements which are controllable by the management. Marks and Spencer is a largest
clothing retailer in UK and most of its domestic stores sell both food and clothing. The stated
organisation has increasingly moves overseas in recent years and take advantage of the higher
margins offered (Demil, Lecocq, Ricart. and Zott, 201). This report is focusing on political,
economical, sociological, technological and environmental factors that affected Marks and
Spencer and how they overcome their issues.
Political Factors- There are various rules and regulations abide by the government on
the company such as health and safety standards including risk control, risk assessment and
planning for hazard identification. If the company is not able to follow such regulations then they
will be fined or in some cases they force to be close down (George and Bock, 2011). The main
issue which create a problem in the company which is when an employee injured by falling of
door and then there is still no outcome of this happening. M&S is the first major retailer to go
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down the Fair-trade route on both the food and clothing. Thus, customers want a good value and
so that they care for how the food and clothing products are made.
For example, the UK government sets some regulations for the retail companies such as
Health and Safety, Risk Assessment, Discrimination and Equality Act etc. M&S did not abide by
the British Standards in few years back and the result was company were charged for neglecting
health & safety regulations (Webb, Ireland and Ketchen, 2014). There was a case happen at the
workplace where an employee allegedly injured after a warehouse door in the store at Braehead
that was near Glasgow. The door of the warehouse was left hanging on loose fixture. The request
of staff members towards the maintenance of that door have ignored and have allowed the door
to fall into disrepair. So, the impact of political factor on M&S was company has paid penalty
against disobey of law (Allen, 2010). On the other hand, in 2006, the cited firm was the first
company that adopt the Fair-trade route framework on both clothing and food. Organization was
cut salt and fat level from foods, change the packaging style of products and take the steps in the
direction of animal welfare.
Economical factors- Economic factors includes the economic growth rates, cost of raw
materials such as energy, interest rates, monetary policies and inflation rate. Currently, the
economic outlook is uncertain and likely to affect the retail sales as people do not have much
money to spend on luxury food and clothing. M&S have been hit by this and cutting jobs of 2%
of their 70000 staff (Ruebottom, 2013). The affects of recession where they have to take decision
of 20% discount on the different products so that they keep up with their competitors. M&S have
to change the way they market themselves so that they can stay ahead of the recession.
Sociological Factors-Social factors include the social environment of the area such as
demographic, culture and populations. The chief executives of M&S wanted to stretch the
company by considering the online selling of clothes and food and they plan to become a multi-
chain retailer to keep up with the competitive market such as Asda (Hitt, Ireland, Sirmon and
Trahms, 2011). M&S appeal to various market in terms of social class and other demographics
and this has a major influence on the way they respond to the current issues.
Technological factors- Technological factors are important in the retail market. The
brands must be managed by the company and the position of the brands should be communicated
with the customers. M&S spending a huge amount of money on advertising and there are
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different face of M&S who appear on the adverts so they covering all areas with their advertising
campaign. The website of M&S is very appealing and easy to use and they constantly updated
with new brands (Nordqvist and Zellweger, 2010).
Legal factors- Legislations are always changing and so that M&S carry out update and
re-training every year and keep up to date with laws and legislation with the issues regarding
health and safety so that they make sure that their legal protection is updated. Marks and Spencer
invite tax changes to the business and products changes to many other things. There is a
legislation Fair packaging and Labelling Act which provides regulation of packaging and
labelling of consumer goods (Durand and Paolella, 2013).
Environmental Factors- Environmental factors including the issues such as natural
resources, waste disposal and the recycling procedures. Presently, the environmental issues are
being promoted on the television, magazine or newspaper and so that all the companies are
pressured to change the ways when it comes to material they use and the manufacturing process.
M&S establishes their own green policy in which they re-engineer it to become a carbon neutral,
sustainable sourcing and health promoting business (Madhok and Keyhani, 2012).
Thus, Marks and Spencer have been highly competitive and successful with a drive to
provide high quality services to their customers. The business required an overhaul, management
needs to be streamline and business need to be re-organised so that it more efficient in its
strategy of business and make more appealing to the customers.
INDUSTRY ANALYSIS
Industry analysis is a tool that facilitates an organisation understanding its position
related to other companies that produce similar product or services. This analysis helps to
identify the competitive position of business within the market. It is most important tool to
identify the development and growth of business within the market (Kyrgidou and Hughes,
2010). Companies undertake competitive analysis the competitive position of business. The
competitive analysis of Marks and Spencer through the Porter five forces is as follows:
AXIS IMPACT ANALYSIS
Level of competition High There is high competition in retail sector as food
industry is expanding vastly and frequently within
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the economy. M&S vulnerable to competition as it
sells not only food but also household items and
apparel (Ormiston and Seymour, 2011). Thus it
faces competition from both Tesco, Asda and
clothes retailers such as Next, Zara and Topshop.
Threats of substitutes High M&S apparel and food can be substituted by
products from other retailers. The direct rival in
food market is Waitrose while Peter jones offer
high quality products so that threats of substitutes is
high. Customers have wide choice to shift to
different business units in the absence of M&S
(Oborn, Barrett and Exworthy, 2011).
Threats of new entrants Moderate There is a huge capital investment is required to set
up a successful chain of stores and a new entrant in
market is need to offer something radically new
which is quite difficult in food and clothing retail.
All the retailers have already establishes their brand
name and which becomes increasingly important in
homogeneous market (Ketchen, Ireland and Webb,
2014).
Bargaining power of buyers Moderate The concentration of buyers is high and so that they
can dictate their tastes. Customers have plenty of
choices and switching costs are low. A people's
income become more uncertain and they will shop
more. However, the bargaining power of buyers is
moderate in the market (Kalling and Alvarez,
2012).
Bargaining power of supplier's Low M&S is a huge listed company with a massive
turnover and suppliers want their goods on the
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shelves of retailers to reach the large number of
customers. M&S is not dependent on suppliers as
other stores it mainly sells own branded products.
This means that it largely buys raw materials and
not the finished goods, which is favourable for
margins (Hunter, 2011). However, the raw material
for production is easily available.
Thus, the Porter five forces analysis on Marks and Spencer shows the analysis of the
industry in the competitive market. It covers the level of competition, threats of substitutes,
bargaining power of buyers, threats of new entrants and bargaining power of supplier's which
helps to analyse the position of Marks and Spencer in context of firstly there is high level of
competition in the retail sector where various substitute products and supplier's and buyers in the
market (Dana, 2010). In addition to this, there is high threat of substitutes in the market as
customers have different option to switch to the alternatives thus in clothing market there are lot
of retailers operating with foreign import by lower price. In order to analyse the bargaining
power of buyer, which is quite high because consumers are price sensitive and the customers just
want lower price with high quality products, therefore a consumer oriented strategy is required
instead of product oriented strategy (Demil, Lecocq, Ricart. and Zott, 2015). Moreover, the
bargaining power of supplier's is low because the company concentrated purchase from few
suppliers only. At last, the threat of entrants is moderate as it requires a huge amount of money to
enter into a market and high cost of entry and maintenance are required in entering the clothing
market. M&S has many distribution channels and cost advantage of new entrants due to their
knowledge in this field. However, there is requirement of huge capital and confidence of
customers and market is also sensitive to the reputation so that the threat of new entrants is low
(George and Bock, 2011). Thus, this is the industry analysis of Marks and Spencer which shows
the position of the company in the market with different aspects.
INTERNAL ANALYSIS
Strategic capabilities can be defined as an ability of a business which helps the
organization to successfully implement competitive strategies (Strategic capabilities, 2016). It
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helps the firm to survive in the market place and increase the quality of the end products. It is
very significant element of a company that always remain financially viable and grows in the
presence of competitors (What Is Strategic Capability?, 2016.). Strategic capabilities includes
resourced and competencies. In the context of M&S, the strategic capabilities are as follows:
Table 1 M&S strategic capabilities
Easy to imitate Difficult to imitate
Resources Threshold resources Unique resources
Competences Threshold competences Core competences
The analysis of strategic capabilities of M&S can be done with the help of VRIO
framework. From the assessment, it becomes easy to find out the resources and capabilities that
can give competitive advantages to the company which is as follows:
Threshold Resources: There are can be considered as a requirements needed by an
organization for current market place. M&S has about to 300 stores where the experienced staff
members have served the large customers. Company has made long term contracts with the
supplier that has important to ensure the quality level of the products and services. Along with
this, firm have sufficient financial resources in hand to run the different operations of business in
an appropriate manner (Allen, 2010).
Unique resources: These help the companies to take competitive advantages in the
marketplace. As per the research, it has found the customers have aware towards the services and
products of the M&S. The history of the firm shows that service users have very well known the
brand of cited company. The brand name and its symbol denote the trust and quality. From the
long time, the performance of M&S has decreased. In this context, organization has appointed an
experienced CEO that has showed an outstanding performance in the industry (Ruebottom,
2013). He has focused over the flatter the organizational structure so that decision making
environment and customer relationship can be improved.
Threshold competences: There are competences that are more important for the
organizations to survive in the industry. M&S offers retail services to domestic and international
level. To deal with the intensive competition, company has planned to make adjustment in the
existing purchasing systems and begin global sourcing in order to minimize the costs of sales.
Along with this, organization has charged rents for all stores to make the store managers more
accountable and responsible for the performance of branches. Further, firm has grouped the
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outlets on the basis of the demographic characteristics and lifestyle pattern at the place of
allocation of merchandise which depends on floor space (Hitt, Ireland, Sirmon and Trahms,
2011).
Core competences: These are those activities which critically support an organization
competitive advantage. From the research, it has found that there is no clear evidence found for
M&S related to core competence. But the new CEO of the company considers the flatter
organizational structure as a core competency in order to recover the market share. It has helped
the management to improve the decision making process. Along with this, the CEO has stated
that M&S is customer oriented organization that is also a core competency of the company
(Nordqvist and Zellweger, 2010).
The summarization of VRIO model for M&S is showing in below table which is as
follows:
Table 2 VRIO model for M&S
Resources or
capabilities
Valuable Rare Inimitable
and non
substitutable
Organized to
exploit
Impact on
competitive
advantages
Strong global
presence
Yes Yes Yes Yes Above
average
returns
Supply chain
integration
Yes Yes Yes Yes Above
average
returns
Strong
financial
positioning
Yes Yes Yes Yes Above
average
returns
Skilled and
highly
experienced
employees
Yes Yes Yes Yes Above
average
returns
Customer
services
Yes Yes Yes Yes Above
average
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returns
Technology Yes Yes Yes Yes Above
average
returns
Diverse
products
portfolio
Yes Yes Yes Yes Above
average
returns
Quality Yes Yes Yes Yes Above
average
returns
Brand value Yes Yes Yes Yes Above
average
returns
SWOT ANALYSIS
Marks and Spencer analyses the current position in the UK market under which they
require to conduct the SWOT that are explained below:
Table 3 SWOT ANALYSIS of M&S
Strength
 Company have strong financial position.
 Strong brand equity
 Organization uses the high quality of
material
 M&S has high reputation for focusing on
the customer services (Hitt, Ireland,
Sirmon and Trahms, 2011)
 Corporation expand their business across
the globe and wide range of products and
services.
 Marks and Spencer strict and excellent
Weakness
 Company charges the high prices of the
products
 Strong competition from other retail
brands
 Company have popular brand, they need
to protect their brand unfair practices at
the work place
 Stock controlling
 M&S legacy stores and system are a
competitive disadvantage (Nordqvist and
Zellweger, 2010)
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manager training system
Opportunity
 Internet technology
 Marketing extending
 Company introduces new market
segments that offer the more profitability
 There are future opportunities in
expanding their brands into China and
India.
Threats
 Company faces many challenges because
various firms enter retail industry
 Government policies for retail stores
 Strong competitors
 The changes of social environment
 Price increases in clothing and VAT
increases will lead to the decreases the
number of customers
Strength- Company has strong financial position in UK market which helps to expanding
their business activities. In this way, M&S maintains the brand image in the market which will
help employees easily meet the objectives and goals (Durand and Paolella, 2013) . Organization
focuses on customer under which employees deliver good services to their buyers. Apart from
this, one of the Marks and Spencer major strength under which manager takes the training for
performing in well manner. They take the responsibility for solving the issues of the customer
and managing workforce.
Weakness – Organization charges the high prices of the products and services which will
decrease the number of customers (Madhok and Keyhani, 2012). Company faces many
challenges in retail industry because various firms enter into the retail firm which creates the
strong competition. They have popular brand in the market under which some employees misuse
the brand. In this way, customer complains the company to deliver the products as a out off
stock.
Opportunity- Company develops the website which helps customer to see the products
range accordingly purchases. Organization expand their business and products variety that offers
the maximizing the profits.
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Threats- Organization faces many challenges because government formulates the policy
which direct impact on day to day activities. Company increases the price value of the cloth so
that decline the number of customers (Kyrgidou and Hughes, 2010).
CONCLUSION
From the above table, it can be concluded that strategies have generally prepared by the
top management of the company. In this context, entrepreneurial strategy has helped the
organizations to establish the relationships within the external and internal environmental factors.
M&S business activities have affected by different macro elements such as political, economic,
environment etc, these have made impacts on the business operational tasks either in positive and
negative manner. Industry analysis has a tool which assists M&S to understand and determine
the position in retail industry of the UK. Along with this, it has aid in find the growth and
development aspect of the business. Internal analysis has allowed the company to explore the
strategic capabilities of the firm that has helped the business to take competitive advantages in
the marketplace. With the application of VRIO model, it has become easy to determine the
strategic capabilities of M&S that has made impact on competitive advantages. Along with this,
SWOT analysis has showed that there have some strengths of company which has allowed the
firm to take advantages of opportunities by minimizing the threats and weaknesses to stay remain
in the competition.
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Ormiston, J. and Seymour, R., 2011. Understanding value creation in social entrepreneurship:
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