Strategic Analysis of Marks and Spencer's Business

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BUSINESS STRATEGY
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Table of Contents
Introduction...................................................................................................................... 3
LO 1................................................................................................................................. 4
LO 2................................................................................................................................. 8
LO 3............................................................................................................................... 11
LO 4............................................................................................................................... 14
Conclusion..................................................................................................................... 22
Reference List................................................................................................................ 23
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Introduction
“Business Strategy” is a significant thing for the business organisation that is necessary
for them to perform to fix a strategy for the business. This will enable the organisation to
work properly that will help them in solving different aspects of the business. The
assignment will consist of the influence of the macro environment on the organisation
that is selected by them. The assignment will also throw light on the internal
environment of the business to check the feasibility of the business. This will help the
business organisation to understand the “strengths, weaknesses, opportunities and
threats” of the business. The assignment will also consist of the “models and theories”
that help the business organisation in performing well. The assignment will also throw
lights on the different matrices like the BCG Matrix and Ansoff’s matrix. Along with
these, there will be presentation of porters’ five forces in the assignment. These are
such things that will be present in the assignment that will help them in solving many
problems of operations of the business.
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LO 1
P1 Apply appropriate frameworks to analyse the macro environment for a given
organisation
Background of the Organisation
The business organisation that is selected for the research is “Marks and Spencer’s”.
This organisation is operated from the United Kingdom. This multinational organisation
has their setup in number of countries. The headquarters of the organisation is located
in Westminster, London, United Kingdom. They operate in the field of selling home
products, food products and clothes (Marksandspencer.com, 2019). The business
organisation was founded in the year of 1884. The founders of the organisation are
Michael Marks and Thomas Spencer. There are total of 979 stores in the whole of
United Kingdom and there are total of 615 food products that are sold by the business
organisation. As per the reports of 2019, there are total of 1463 stores of Marks and
Spencer’s worldwide. According to the reports of 2018, the revenue earned by the
business organisation is £ 10698.20 million; the operating income of the business
organisation is £ 676.60 million; the net income of the business organisation is £ 29.10
million. The employees working under the organisation is 80,787.
There are number of missions that are set by the business organisation Marks and
Spencer’s. These are provided below:
1. Delivering goods that are of high quality
2. Offering prices that are affordable in nature
3. “Good value for money” received by the customers
4. Providing products that are of very good quality in relation to food, clothes and home
products
The statement of vision of Marks and Spencer’s is “to be the standard against which
others are measured”.
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There are different kinds of SMART objectives that are present for the business
organisation Marks and Spencer’s. These are significant for them to perform different
objectives that are present for them and they need to follow this aspect. The SMART
objective stands for “Specific, Measurable, Achievable, Realistic and Time Bound”.
These will be explained below in relation to Marks and Spencer’s.
“Specific”
There are generally two types of goals present in the business. It has been seen that
there is a difference between a goal that is specific in nature and a goal that is general
in nature. The “specific goal” for the business organisation Marks and Spencer’s is to
setup their business in all parts of the world. A proper plan should be made by the
business organisation for the areas they want to expand.
“Measurable”
It is necessary for the business organisation Marks and Spencer’s to measure the goals
in relation to their performance to check for their progress in “attaining the goals”. They
need to perform this activity so that they can keep a track of the things they are doing
and check those with the goals that are set for them to achieve.
“Achievable”
This is necessary for Marks and Spencer’s to set goals that are achievable for them.
They should not make any goals that are void for them and they cannot achieve. It is
necessary for the business organisation to analyse the condition of the market and set
the goals for their fulfillment. The goal that is set by the business will be easy for them to
achieve in the present scenario.
“Realistic”
It is necessary for the business organisation Marks and Spencer’s to set such goals that
are realistic in nature. It has been observed that the business organisation has set a
very realistic goal for them to achieve within the next five years. This realistic goal is
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needed by the business organisation to achieve so that they get proper results from the
market.
“Time Bound”
This is necessary for the business organisation to have proper timing for the goals to be
achieved by them. The time that is present for Marks and Spencer’s to achieve their
goal is for five years. They need to achieve the objectives within the speculated time.
To analyse the macro-environment, it is necessary for the organisation Marks and
Spencer’s to use the “PESTEL analysis”. This is necessary for the business
organisation as this provided the condition of the market along with the organisation.
“PESTEL analysis” stands for “Political, Economical, Social, Technological,
Environmental and Legal”. The description of the same will be provided below:
“Political”
It has been observed that doing business in the United Kingdom is very easy now as
there is free trade between the United Kingdom and the European Union (Nandonde,
2019). This has made it easy for Marks and Spencer’s to sell their products in the
countries of European Union as well.
“Economical”
This very significant part is affecting the business organisation Marks and Spencer’s the
most. It has been observed that the competitors of Marks and Spencer’s are giving
attractive discounts to the customers, which is reducing the base of customers for them
(Dowell et al., 2016). This is affecting them the most as because they provide quality
products to their customers but they do not change or reduce the price.
“Social”
It has been observed that the business organisation Marks and Spencer’s is not
performing well in the market. It is seen that the organisation is marked as a “non-trendy
store” as it is not following the latest trend that is being present in the market (Woods
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and Linsley, 2017). This is affecting the working of the business and reducing the
customer base.
“Technological”
It has been observed that in today’s world people tend to shop from the mobile
applications that are present. This is seen that Marks and Spencer’s has a mobile
application for the people to buy products from the application (Thompson and
McLarney, 2017). This will help the organisation to grow properly so that the issues are
solved and they give proper service to their people. This has evolved due to the
technological advances that have occurred in the world that has helped Marks and
Spencer’s to grow.
“Environmental”
It has been observed that they are using fresh products in the production of their food
products. This is helping them in increasing the base of the customers in the domain of
food. This is necessary for them to work properly so that they increase the base of their
customers and increase the revenue in this part.
“Legal”
It has been observed that Marks and Spencer’s had faced disputes in relation to the
finance of the business with “Frascati landlord.” This significant thing has been seen in
the business. Other than this, there are no legal aspects for the business organisation.
M1: Critically analyse the macro environment to determine and inform strategic
management decisions
According to Booy (2017), he stated that the use of PESTEL analysis in the business
help them to analyse in a proper and simple framework. This is significant for the
business organisations to perform as this helps them to work properly. On contrary
Benoit (2016), stated that the use of PESTEL analysis makes the business organisation
to “oversimplify the information” that has been received by them.
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LO 2
P2 Using appropriate frameworks analyse the internal environment and
capabilities of a given organisation
SWOT analysis of Marks & Spencer is as follows:
Strength
 High recognition of the brand:
Due to its prolonged establishment,
the company has gained a massive
population’s trust and faith on them.
That is why it has become easier for
them to sell their products.
 Wide range of products: Marks &
Spencer have a wide range of
products including lotions and
creams, body wash, fruits and
vegetables and others. Thus, it
offers their customers a one-stop
place to get all the commodities that
are required by the consumers in
their daily schedules.
 Large number of stores and
outlets: Marks & Spencer have
nearly 900 stores across the world
and more than 250 stores in near
about 38 countries. This shows how
much their business is expanded
throughout the world. Thereby, the
figure depicts their strength of brand
establishment and reputation.
Weakness
 Bad publicity as non-trendy
store: Marks & Spencer has a bad
reputation in keeping old fashioned
and outdated materials in their
stocks. This disappoints the
consumers, as they do not get the
updated and modern products in
their stores. Thus, the company
must look into ways of exiting the
old stocks and welcoming the new
stocks in their stores.
 Manual working increases the
costs: Marks & Spencer have a
drawback in using old techniques
rather than using advance
technologies. This decreases the
overall efficiency of the company.
On contrary, it gives other
companies to raise their markets
and come in competition with the
existing companies.
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 Popular brands of Marks &
Spencer: There are various big
brands like Blue harbour, North
coast, Autograph, Per Una of Marks
& Spencer which boosts the market
value of the Marks & Spencer.
Opportunity
 Market segmentation: Fashion is
the new trend of present
generation. Moreover, there is a
huge demand of traditional wears in
Asia. Thus, the company can look
for profit and business expansion in
these areas.
Threats
 Competition from other brands:
Now a day the company is facing
tough competition from other
brands like Zara, Uniqlo, Gap and
others. Therefore, the company
must be aware of these brands and
keeping on developing their market
reputation.
Table 1: SWOT Analysis of Marks & Spencer
(Source: Created by the leaner)
M2 Critically analyse the internal environment to asses strengths and
weaknesses of an organization’s internal capabilities structure and skill set.
According to the Perez (2018), Brand recognition is advantageous because it creates
awareness among the people and helps to maintain a consistency in the market. Perez
also mentioned that brand recognition also helps in building customer loyalty and trust
with the company. However, on contrary Keller and Brexendorf (2017), says that Brand
recognition is disadvantageous because sometimes it creates negative hallmark among
the consumers in case of any unintentional fault from the company’s side. Furthermore,
large number of stores is also advantageous in context to strength of a company.
According to Medema and Fischbach (2015), large number of stores can attract more
number of consumers and helps in diversifying their products. On the other hand,
Grudin (2017), mentions that large number of stores will require more number of
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managers and employees. This will result in complex management processes and may
often harm the entire company’s reputation in case of wrong publicity.
According to Uva et al. (2018), manual working helps in correcting of errors. Moreover,
manual working is always accessible and consumer friendly. However, as argued by
Goudeau and Croizet (2017), manual working is time taking, less efficient and chance of
data losses. As opinioned by the author Andaleeb (2016), market segmentation helps
in product modification, identification of profitable areas and others. On contrary,
according to Rubery and Piasna (2016), market segmentation leads to management of
large inventories, increment in the expenditure of promoting and distributing the
products and many more. In context to competitive market, Song and Wang (2018),
mentioned that competition in the market leads to more product upgradation and
modification. However, Arce-Urriza, and Cebollada (2017), are arguing this by
supporting that strong competitive market often leads to fall of a well-established
company in context to fast modification and improvement.
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LO 3
P3 Apply Porter’s five forces model and to evaluate the competitive forces of a
given market sector for an organization
This is necessary for the business organisation Marks and Spencer’s to work efficiently
in the market. For doing this, it is necessary for the business organisation to perform the
“five forces model” of Porter.
Figure 1: Porter's Five Forces Model
(Source: Berry, 2017)
The description of the five forces of Porter will be explained below in relation to the
business organisation Marks and Spencer’s.
“Bargaining power of the buyers”
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It has been observed that the “bargaining power of the buyers” is very high in this
aspect as there are other companies and the customers can always move to those
organisations to buy those products (Arshed and Pancholi, 2016). This will reduce base
of customers for the organisation. This is necessary for the business organisation to
serve their buyers well.
“Bargaining power of the suppliers”
This is another important aspect that needs to be followed by Marks and Spencer’s. It is
seen that this is generally low for the business (Stanford and Agamben, 2016). It has
been observed that if the suppliers are not satisfied with the service and price of Marks
and Spencer’s then they will not provide the organisation with raw materials. This is
necessary for the organisation to provide good service to their suppliers so that they
provide raw materials to them.
“Threats of Substitutes”
This is another important aspect of the business necessary for them to work properly. It
has been witnessed that there are no threat of substitutes that are present in the market
in the domain of clothing, food and home products (Porter and Kramer, 2018). These
are necessary for the business organisation to perform well as the “threats of
substitutes” are very high for the business.
“Threats of new entrants”
It has been observed that there is a moderate “threat of new entrants” so the business
organisation needs to perform well in the market to work properly and provide good
service to their customers so that they stay loyal for their business.
“Industry Rivalry”
The competition of the industry is very high. There are number of organisations of the
same domain in which Marks and Spencer’s operate. These are main reason for the
business organisation to perform well in the market to retain their customers so that
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