Business Strategy of Marks and Spencer: A Comprehensive Analysis

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Business Strategy
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Table of Contents
Introduction................................................................................................................. 3
LO1............................................................................................................................. 4
LO2............................................................................................................................. 7
LO3........................................................................................................................... 10
LO4........................................................................................................................... 13
Conclusion................................................................................................................ 16
Reference List...........................................................................................................17
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Introduction
Marks and Spencer is a world-renowned retail chain that has more than 80,000
employees working for the betterment of the organisation. Marks and Spencer aims
at providing an excellent service to their customers (Marksandspencer.com, 2019).
Marks and Spencer provides services in several countries across the globe and
therefore, is a brand that is highly appreciated by the customers. The study has a
detailed abbreviation of the macro as well as micro factors that affect the growth as
well as the development of the Marks and Spencer. The macro factors shall depict
the external factors that affect the operations as well as managerial decisions of the
organisation. Moreover, due to the fierce competition of the retail sectors, it is
extremely beneficial for the management of Marks and Spencer to analyse the
macro as well as micro factors. Furthermore, the competitive analyses have been
depicted by applying the Porter's five forces. In addition to this, several models,
theories as well as frameworks have been applied that interprets and devises a
strategic plan for Marks and Spencer.
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LO1
Q1. Analyse the impact and influence which the macro environment has on an
organisation
Macro Environment Analysis of Marks & Spencer
It is important for a business organisation to understand its position in the local
business environment and by analysing different macro factors, it can be understood
properly.
Figure 1: PESTLE Analysis of Mark and Spencer
(Source: Woods and Linsley, 2017)
Political Factors:
Mark and Spencer have been affected by the free trade agreement of the European
Commission. It has helped the company to imports products easily and that led to
reducing sourcing price. Due to high-cost structure, Mark and Spencer was suffered
loss in market share while entering in the market (Cabrera and Mauricio, 2017). In
2018, Mark and Spencer experienced stalled development in international market
due to substandard infrastructure, global uncertainties, and reduced profitability in
the new market and that resulted in the close of twelve stores in 2016. Geopolitical
unrest has also affected the Mark and Spencer’s overseas businesses and that
resulted in local currency fluctuations and reducing customer demands.
Economic Factors:
During financial crisis in 2008, Mark and Spencer Company emphasised better
customer satisfaction and higher quality products, while the competitive company
such as Aldi, Tesco, and Asos implemented a strategy of lower cost. The company
was beneficial due to strategy as the strategy resulted in a short-term reduction in
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the sales and long-term enhancement in customer confidence due to customers’
preference. The strategy provided benefits the company to sustain its market shares
of the fashion business and gained a strong sale in the fashion industry. In addition
to this, long-term financial crisis also raised the prices sensitivity of the Mark and
Spencer’s customers (Chan et al., 2017). Apart from that, various macroeconomic
factors such as pound fluctuations, falling commodity cost, and Brexit lowered the
customers’ confidence. Clothing sales were also lowered as compared to previous
ten years in Britain. As a result, it affected the economy of the mark and Spencer.
Social Factors:
Two external factors that affected the retail companies in the UK include change in
generation shift and population. Due to the retirement of the Baby Boomer
generation, Mark and Spencer had to redirect its awareness towards the Millennial
and Generation X. As a result, customers’ behaviour changed in the field of
shopping. The retail company should focus on two trends such are customer
preference of the different generation for fashionable items and the growing
perception (Winter and Lasch, 2016). Hence, the Mark and Spencer Company had
to keep all the issues in mind and accordingly operate the business.
Apart from that, Mark and Spencer had used strategies such as Green
Consumerism and customers’ ethical concerns towards social- environment price of
the brand and that helped in contributing the development of the companies’
sustainability and the related activities. The Mark and Spencer Company have
placed a considerable emphasis on the social agenda. According to the Plan A,
strategic sustainability approach of the company, the company introduced building
relationship between the customers and suppliers and communities where they
operate were essential for the company to gain a huge number of customers and
profit.
Technological Factors:
Mark and Spencer Company always contains a good strategic position that enjoys
all the benefits of the rise in technologies such as mobile wave, the proliferation of
social networks and the altering media landscape. Regarding its fashion business,
the designers of the company have to speed up their performance (Underhill, 2016).
The advanced technologies help shopping such as online shopping. It helps the
company in supplying the products to the customers’’ hands much faster and easier.
Environmental Factor:
A company should operate safe maintenance within the working field in order to hold
a healthy environment in the society. The company should focus on producing
harmless products and go through the procedures of the productions. It helps the
company to gain much company to hold the responsibility to keep society harmless.
Apart from this, the waste products should be used as a reusable source. The
company should keep good relationship with the shareholders to gain profit.
In 2015, one-third of the Mark and Spencer Company’s products were sourced from
Silver and Gold sustainability eight standard producers; on the other hand, scheme
named as Shwopping has gained over ten million garments and that has been
donated to Oxfam. Due to continuous investment in the scheme, a massive number
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of Plan A products had been generated that includes Plan A incubator for the
growth of the products and the UK’ eco-factory as well (Morgan, 2015). In the year
2016, the company had published a map where the company source its goods and
that provided transparency in its supply chain. The Mark and SpencerCompany
gained competitive advantages over other companies due to the sustainability of the
products and services.
Legal Factor
Legal factors mainly consist of various legislations to be implemented in business to
make the environment fair and equal among the workforce. Several legislations such
as health and safety rules, employment rights, discrimination acts, and other
regulations affect the business of an organisation. Mark and Spencer launched an
initiative named as ‘Behind the Barcode’. The application was made to order online
for home delivery and scan the code in the store to purchase the products. It helped
the company as well as the customers to deal with the fashion products fast and
easier. The initiative gave a standard quality of service by which the company
abided. Therefore, Mark and Spencer Company have to control the initiative with
high maintenance in to order to keep the process and the business out of the illegal
issues in its home market as well as out the UK (Aspey and Craven, 2018). In
addition to this, the legal environment and its various departments of the company
had been dominant through the company’s ‘Simply Food’ chain development and
particularly building its BP petrol stations. The company aimed to keep transparency
with its stakeholders to maintain the legal environment in the workplace.
Apart from that, the most vital issue, Brexit affected most of the business in the UK
that is the UK’s decision to exit the EU market (Kreindler et al., 2016). Mark and
Spencer faced a legal issue in the business as an exit from the common market
affected the supply chain and the company has to gain international contracts and IP
rights. As a result, the company faced new tax rules in the import of the items. The
company was affected in reducing customer-buying capability of pound and £1.1
billion in the profits coming from the international market. Hence, Mark and Spencer
have to implement different strategic planning in their working functions in the
fashion industry to deal with legal issues in the UK market.
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LO2
Q. Assess an organisation’s internal environment and capabilities.
The organisation chosen for this study is Marks and Spencer, a reputed retail
organisation in the retail and fashion industry. The internal environment or micro
environmental factors of the organisation can be best assessed by SWOT analysis.
A SWOT analysis is performed by an organisation to point out their internal strengths
and weaknesses along with their possible opportunities and threats in the external
environment. In this regard, the SWOT analysis will help to identify the strengths,
opportunities, weaknesses, and threats of Marks and Spencer in a detailed way.
The analysis will be useful to project the probable competences with their rival
companies in the future by evaluating its present situation.
Figure 2: SWOT Analysis
(Source: Bull et al., 2016)
The Strengths of M&S
It is evident from its brand value that Marks and Spencers have a huge number of
strengths. The huge availability of a varied range of products and worldwide
expansion has lead to the evolvement of several strengths of the organisation.
 Maintenance of latest trends in the industry: The Company has improvised
its production in the fashion segment. They have shifted their focus from
branding to designing fashion segment products in different categories. In the
marketing campaign of winter wear, the organisation’s focus was on the £99
collection, which comprised of a coat made of a wool-mixed pea. The
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organisation has a huge global existence and local presence in the market of
the UK with more than 1434 worldwide outlets. They promote their own
fashion segment brands namely Autograph, North coast, Blue Harbour,
Indigo collection, Portfolio, Big & tall and many more. It depicts their
strategy to cater to the needs of all sections of the society and variety of
customers. Other than the fashion segment, they have emphasised on other
segments as well such as healthy food, electronic products and others (Banet
et al., 2016).
 The infrastructure of e-commerce is very strong: The organisation has
formulated strategies to cope up with the fast budding e-commerce market of
UK and developed its base to expand their global business operation. M&S
has invested a lot of money on logistics, system development, and IT sector.
The organisation uses the e-commerce base to reach to a large span of
customers through the website, stores, and electronic gadgets. The
company’s sales are mainly driven by the availability of their products in every
segment, their services, and their price range.
The Weaknesses of M&S
Although being such a renowned multi-national retail company, Marks and Spencer
have some weaknesses where they need to improve for flourishing its business
operation. Weaknesses should be dealt with great importance as it can hamper the
strategic position of the organisation in the industry.
 Unsuccessful in incorporating varied work culture: Although M&S has
successfully integrated several small companies but failed to merge them
with their firms due to the existence of a variety of organisational culture
(Chua et al., 2017).
 Inability to tackle several small rival companies and new entrants: The
Company has faced several challenges in managing the new entrants in the
market with proportionately in terms of niche categories and few market
shares. In order to counter these challenges, the organisation should build up
a strong feedback system internally to maintain its survey on the sales
ground.
The Opportunities of M&S
Apart from the strengths and weaknesses, Marks and Spencer has some probable
opportunities in the external environment. The opportunities can be listed as follows:
o M&S has an opportunity from the several drives initiated by the UK
government in the procurements of their products such the green government
drive by the federal and state government service providers (Janigo and Wu,
2015).
o The lowering of shipping costs and a decrease in transportation prices can be
fruitful enough to lower down the price of the organisation’s products. It is
indeed an opportunity for M&S, which can increase their market share and
profitability of the organisation.
The probable Threats of M&S
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The organisation can face probable threats in their business operation, which is
analysed from the evaluation of macro environmental factors. The possible threats
are as follows:
o M&S has a global business operation. As a result, the organisation will be
subjected to various liability laws in different nations. It may force them to
change their market policies according to country laws (Toms and Zhang,
2016).
o If the strength of local distributors increases then it would incur possible
threats for the organisation. It would happen due to the rivals who are paying
high remuneration to the local distributors.
VRIO Analysis is an efficient tool for evaluating the resources of an organisation and
examining its competitive advantage in the market. It analyses the values, rareness,
immitability and organisational competence (Knott, 2015.).
Factors Values Rareness Imitation Organisation Competitive
advantages
Execution
of digital
strategy
Yes, It
would be
difficult for
M&S to
compete
with the
rivals
without a
strong
digital
strategy
No,
because
most of
their outlets
invest more
in digital
execution
There is a
chance of
being
imitated by
rivals
One of the
leading
retailers in
the industry
It is unable
to provide a
competitive
advantage
The loyalty
of
customers
and
network
Yes, the
customers
contribute a
lot to the
revenue
sales
Yes, M&S
invested a
lot to create
a strong
loyalty
Not that
impactful
The company
is providing
better effect
on the loyalty
of customers
It provides
medium
competitive
advantage
to the
organisation
Table 1: VRIO analysis of M&S
(Source: Created by learner)
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LO3
Q. Evaluate and apply the outcomes of an analysis using Porter’s Five Forces
model to a given market sector.
Porter’s Five Forces is a framework or tool, which helps in determining
competitions of a business (Mathooko and Ogutu, 2015). These five forces are-
Figure-3: Porter’s Five Forces Model
(Source: Created by the learner)
Porter’s Five Forces model is applied to the chosen market sector Marks Spencer in
order to measure its competitive analysis.
Forces Explanation
Industry Rivalry The retailer industry of the UK consists of strong competition from
other supermarket chains in the market. The competitive products
include home wear and other fashion as well as food products.
The competition is much higher in the online segments, where
customers get a chance to compare quality as well as pricing
through a single click. Marks Spencer has somehow managed to
grow its sustainable profit margin in their online sections. They set
a target of their older women customers by providing them
attractive discounts on any purchased items. Moreover, Marks
Spencer recently declared to open their new commercial outlets
named ‘simply food’ to attract the foodies in a rivalry scenario
(Burden et al., 2015).
The threat of
new entrants
Marks Spencer has a large scale of reputation in the UK market.
Therefore, it will be difficult for a new entrant to become its threat.
Being a British multinational retailer since 1884, the company has
achieved a brand name and customer loyalty. Moreover, since its
foundation, Marks Spencer does not compromise with the quality
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Porter’s Five Forces
Industry Rivalry
Threat of New Entrants
Bargaining power of suppliers
Threat of Substitutes
Bargaining power of buyers

of its products and services under any circumstances. Hence, its
consistency helps in earning new customers every year. In
addition, it provides product advantages, discounts in every
season. Another attractive facility that they have maintained
throughout is that its free delivery service while purchasing over £
50. This offer is valid for every customer irrespective of the item
and season. There are many more beneficial features of this
company, which makes new entrants difficult to compete with this
brand (Jones et al., 2016).
Threat of
substitutes
Marks Spencer always has a value for continuous innovation in
order to maintain its brand position in the UK market. They also
maintained an overall separation between kids, men’s and women
section and have a distinctive range of products to meet the
customer demands. Their clothing business is categorised in such
a way that it became very difficult for other retailer companies to
launch substitute items and earn customer loyalty as well.
However, their food’s section is recently facing some competitions
with the comparatively new retailers like Tesco, ASDA and
Sainsbury. These mentioned companies have a similar range of
products in an affordable range of price. Marks Spencer is now
looking forward to emphasis more on their food products in order
to have a competitive advantage over its mentioned competitors
(Morgan et al., 2017).
Bargaining
power of
suppliers
The customer is bargaining power plays a vital role in the price
sensitivity of all the British retailer companies including Marks
Spencer. Customers have very low switching costs, as there are
many alternatives available in the UK market. Marks Spencer
needs to establish its customer loyalty in order to provide its
potential customers unmatched value that is very difficult to
bargain. This is because loyal customers do not tend to bargain
that much. Any further move towards disloyalty will cause a
significant effect on the company’s outlook. According to a British
research survey published in 2016, Marks Spencer had 40% of
shared values in their departmental stores. High share rates in this
department make it vulnerable by means of the amount of stock
surplus. Marks Spencer provides a thirty-five-day return policy to
the online customers, which gives scope for the customers
especially those shops online frequently from even other retailers
to think twice for switching.
Bargaining
power of buyers
Since the late twentieth century, the suppliers of Marks Spencer
were mainly British. However, the competitive pressure from
outside sources literally forced the brand to reduce its cost prices
weakening the supplier powers. Other switching costs for the
suppliers of Marks Spencer are quite low because the company
depends upon outsourced suppliers since then. Moreover, its pre-
tax profit counts also helped the suppliers to lower the bargaining
power. Marks Spencer had become the first British retailer brand
to earn an amount of £ 1 billion as pre-tax profit in 1998.
Table 2: Porter’s Five Forces Model applied on Marks Spencer
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(Source: Created by the learner)
Hence, from the above table, it is clear that using Porter’s Five Forces Analysis, the
external business driving factors of Marks Spencer and their effects on the market
sector is determined.
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