Business Development Plan: Marks and Spencer Case Study

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Business Strategy
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Table of Contents
Introduction...................................................................................................................... 3
LO1.................................................................................................................................. 4
LO2.................................................................................................................................. 8
LO3................................................................................................................................ 10
LO4................................................................................................................................ 13
Conclusion..................................................................................................................... 17
Reference List................................................................................................................ 18
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Introduction
The scope for growth and expansion in the business environment is based on the
external and internal factors that provide companies to develop their strategic plans in
the competitive market scenario (Chang, 2016). A successful evaluation of the operative
environment for a business presents the opportunity to create a strategic plan for future
growth.
The study will provide an elaborate analysis of the external market elements that hold
the potential to influence the business procedure for Marks and Spencer (M&S). The
study aims to develop a detailed strategic management plan for the company through
an elaborate analysis of the UK business sector. The organisation established their first
functional unit in 1884 and currently acquires net revenue of £11 billion while employing
81,000 employees across their 1470 store locations (corporate.marksandspencer.com,
2019). The headquartered is in London, United Kingdom. “Thomas Spencer" and
“Michael Marks” have founded the company. “Steve Rowe” is the chief executive officer,
and Archie Norman is the chairperson of the organisation (marksandspencer.com,
2019). This company specialises in marketing home products, clothing as well as luxury
products.
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LO1
P1 Apply appropriate frameworks to analyse the macro environment for a given
organisation
The external business environment for M&S can be identified through the application of
an effective PESTLE analysis. This provides relevant information about the aspects
within the external environment that would help the company to form strategic plans
accordingly.
External factors Specifications Influence on M&S
Political The impending status of
Britain’s exit from the EU
presents the business
environment of the country
with an increased threat of
dissolution. The fluctuating
division of public and
government opinion
regarding the policies of
Brexit and formation of
new business rules is
another political factor in
the United Kingdom
(Menon and Salter, 2016).
The political turmoil
influences business
operations for the
company in varied ways.
M&S’s longstanding
reputation in the market
enables the company to
gain benefits through the
practice of varied
marketing strategy that
increases their sales and
profit. Expansion plans to
EU countries also enhance
the brand’s opportunity to
increase its market share
despite political upheaval
regarding Brexit. However,
the issue of modifications
in business laws for retail
organisations serves as a
disadvantage for the
company.
Economic The economic crisis and
reduced exchange rate for
sterling have affected
people’s buying power in
the UK society (Fethi and
Katircioglu, 2015). The
economic regression
influences pricing strategy
of organisations as well as
the government regulation
on pricing for retail
organisations.
The economic situation of
the country acts as a
disadvantageous factor
since the reduced
purchasing power of the
consumers requires the
company to price the
products within an
affordable range. The
increasing restrictions on
price cuts reduce the
scope of the organisation.
M&S’s lone advantage in
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the situation is the
organisational refusal to
compromise with the
quality of their products
attracts customers to the
brand despite the
economic crunch.
Social The social aspects of the
UK market sector rely on
the variety of symptoms
that enhance the people’s
opinion regarding
business. The economic
crisis, in combination with
recent sporadic racial
violence in the UK, has
inflicted people negatively
(Fernie and Sparks, 2018).
The security issues have
reduced consumer visits to
stores, and it affects the
business for retail
organisations.
M&S’s operations in the
UK environment were
affected in a positive way
due to the social
interaction the organisation
maintains through their
social media channels.
Customer relations are a
strength of the brand that
provides the business with
success in operations. The
lack of customers in M&S’s
stores due to violence
affected the employees’
confidence negatively,
which reduced their
performance in their job
roles. The presence of
effective employee
motivation tactics within
the operations
management of M&S
provides the company with
the successful endeavour
in business.
Technological The UK technology sector
is developing at a fast
pace and encourages
businesses to integrate a
better framework in their
operations to generate
better profit through
business (Esbjerg et al.,
2016). The integration of
RFID, supply chain
management tactics, e-
payments and online
shopping has provided the
business environment with
It can be considered
advantageous for M&S
regarding the technological
development in the
economy. The successful
implementation of RFID
provides the brand with the
opportunity to generate
appropriate knowledge
about the aspects of SCM
in distribution and
inventory management
(Pantano, 2015). However,
the increasing reliability of
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an enhanced scope of
profitability especially the
retail sector.
M&S towards digital
framework presents the
disadvantage of
increased security threat
through system hacks and
database crashes.
Increase in digital
technology provides a
certain extent of
dissatisfaction among the
staffs due to lack of
training and expertise
among the senior staffs
within the company.
Environmental The growing trends of
supporting eco-friendly and
sustainable businesses in
the UK retail sector provide
organisations to develop
business plans that
integrate better practices.
Community involvement
and environmentally safe
business operations
ensure the environment of
the country is benefitted
through the competition
among the retail operators
(Wilson, 2015).
M&S attains success from
their operations in the UK
society through the
integrated operations that
are sustainable the brand
practices in the market
segment. The advantages
drawn by the organisation
through their operations
include the development of
sustainable business
practices that encourages
collaboration with local
farmers in marketing fresh
produce. M&S’s operations
in reducing their carbon
footprint by opting for
reusable packaging and
encouraging customers to
reduce plastic
consumption enhance the
company’s success rate.
The increased eco-friendly
business operations,
however, present a threat
to the success of the
company due to the
growing production costs.
The regulated pricing
strategy and increasing
costs of productions
provide M&S with a
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serious threat in their
functioning as a retail
organisation that conducts
sustainable business
operations that is profitable
as well.
Legislative The UK legal framework
requires the retail
organisations to adhere to
the terms of the Equality
Act, Health and Safety
regulations, as well as the
tenets of labour laws
(Downes, 2019). The retail
industry of the country
provides the majority of the
population with
employment opportunities.
The internal operations of
M&S are in adherence to
the legal tenets of
Employee Protection Act,
Equality Act, Health and
Safety regulations. The
company’s decision to
perform business in the
market as per the notions
of the legal framework of
the country is beneficial
for the organisation as this
enhances the brand image
of the company in the
competitive market
scenario. The growing
legislative frameworks and
regulations, however,
provide the company with
certain disadvantages in
their functional operations.
This is due to the lack of
employee relations within
the organisation. New
regulations are
implemented in the
business operations of the
company without intimating
the employees regarding
the benefits that can be
drawn from such
regulations.
Table 1: External analysis for M&S
(Source: Created by the learner)
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LO2
P2 Using appropriate frameworks analyse the internal environment and
capabilities of a given organisation
Strengths
 The market experience of the
company is high. Due to the
enormous experience in the
market, it has gained the trust of
the people.
 Marks and Spencer is a highly
recognized brand known for its
products’ quality (Ingrams, 2018).
 The organization has a worldwide
presence that has helped it to attain
profit from the foreign market
(Ahmed, 2016).
 The price range of the products is
justifiable as per the standard of
products.
 The cash flow of the company is
good; this has provided the
company with resources at the time
of need (Porter and Kramer, 2019).
 The organization has a record of
producing innovative products that
attract the customers and increase
the number of consumers.
 The company produces products as
per the trend of the market.
 The organization has incorporated
CSR to enhance the performance
of the employees.
 The company has a variety of
products that influence the buying
decision of the consumers.
 There are various brands of this
company, such as Autograph, Per
Una, Indigo Collection, Classic
Collection, and North Coast
(Bhasin, 2019).
Weaknesses
 The sales rate of the company has
been declined recently (Rahman,
2018).
 The organization does not cater to
the needs and requirements of
young people. Its products are
mainly for the older generation.
This has decreased the sales rate
and affected the perception of the
customers.
 The company is not advanced in
using the latest technology (Cole et
al., 2019).
 The financial planning of the
organization lacks a proper strategy
that leads to extra in investing.
 The marketing method of the
company is not desirable, as it
lacks positioning and segmentation.
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Opportunities
 The company should improve its
online features for selling the
products, as online shopping is the
latest trend of the modern era.
 The organization can develop its
website and inform the customers
about offers and discounts through
the online website (Caro and Sadr,
2019).
 The business should expand into
the regions of South Asian
countries for gaining popularity as
well as increasing its sales rate and
profit.
 The organization can use green
methods in producing products; this
would improve its popularity as well
as would be a cost effective
technique (Kane, 2017).
Threats
 The company has competitors such
as, Sainsbury, Morrisons, Tesco,
John Lewis, Amazon, and Asda
that would affect its growth
(bbc.com, 2018).
 The expansion of retail stores
would affect the company
negatively as they provide products
in a much discounted range.
 The political instability of the
countries it has been expanded into
would affect it in a negative way
(Deresky, 2017).
 The tax rates of foreign markets
would increase the cost of the
organization (Kieso et al., 2016).
 The promotion of sustainable
development by both the
government of the United Kingdom
as well as the community of the
country would affect its success
and popularity.
 The rise in wages of the employees
would increase the cost of the
organization.
 The imitation of the features of
products of this company by other
retailers would affect the business
negatively.
 New technologies used by the rival
companies would harm the
business of Marks and Spencer
considerably because they would
be able to increase the sales rate
by luring the customers with
innovative technologies (White and
Samuel, 2019).
Table 2: SWOT analysis of Marks and Spencer
(Source: Created by the learner)
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LO3
P3 Apply Porter’s five forces model and to evaluate the competitive forces of a
given market sector for an organisation
The effects of five forces differ as per the industry. The five forces are
Figure 1: Porter’s five forces
(Source: Taken from the support)
“Threat of new entrants”
The organisation will face the risk of new competitors if it does not have a firm
establishment in the market. The new competitors will extract the profit of the existing
companies if the existing ones’ performance has failed in satisfying the customers
(Arshed and Pancholi, 2016). “Marks and Spencer” do not have a risk of new
competitors, as it is a well-established company. The new entrants would not be able to
affect the business of Marks and Spencer negatively because of its prominence and
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popularity. Therefore, it can be said that the threat of new entrants to the company is
low.
“Marks and Spencer” should develop some strategies to control the force of new
competitors. However, the risk is low to the business, yet the new entrant's provision of
products to the customers in less price can affect the buying decision of the customers.
The organisation should provide the customers with products in an affordable range to
attract them as well as to maintain their loyalty towards the company.
“Rivalry among existing competitors”
It takes various forms such as in price reduction, service development, and products
innovation. Rivalry in any industry affects the profitability of the organisations, as the
customers would get various options for purchasing products (Martin, 2018). The size,
as well as the owner of the rival companies, would largely affect the organisations. The
slow growth of the organisation would give the opportunity to the rival companies to
increase its profit. The force of the rivalry to the “Marks and Spencer” is high due to the
powerful competitors on the retail industry. Some rival companies such as, “Asda”,
“Sainsbury”, “Tesco”, and others that provide high-quality products to the customers at
an affordable range. This can influence the business of “Marks and Spencer" in a
negative way.
“Bargaining power of buyers”
The powerful buyers, on the other hand, can reduce the range of prices of the products
as per their demand and economic status. The bargaining power of the buyers is high
in “Marks and Spencer” organisation. This is because the products are made as per the
demand of the consumers after proper market research. The customers have the power
to mould the business of the company either positively or negatively. The success of the
organisation depends on the purchasing decisions of the buyers. Without taking
considerations of the economic status of the customers, the company would not be able
to make sufficient sales that would harm its growth and limit its success.
“Marks and Spencer” should concern about the needs and requirements of the
consumers and produce the products that would influence their buying decision. The
organisation should consider the economic status of the society before setting the price
range of goods. This would increase the profit of the business as well as is essential for
its survival.
“Bargaining power of suppliers”
The suppliers hold the value of the products for their benefits by charging the price of
the products at a higher range. They could limit the services or quality for extracting
more values from the organisations. The powerful suppliers can squeeze the profitability
of the companies and can affect their management of cost that would affect the cost
price of the products (Fabbri and Klapper, 2016). The bargaining influence of the
suppliers is low in “Marks and Spencer”. This is because there are many suppliers of
the company in various parts of the world. Due to the organisation’s presence in
different regions, the number of suppliers is more. They serve the company products
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and raw materials that are used to manufactured goods. The organisation has many
options to choose the suppliers; in this way, the suppliers do not have much bargaining
power. This would affect the company positively as the suppliers for their survival would
provide the products to the company at a considerable range of price. The organisation
would not need to pay extra to the suppliers for performing functions of the business.
This would decrease the expenditure of the business and affect the organisation
positively.
Marks and Spencer should maintain a good relationship with the suppliers so that they
would provide the raw materials to the company at the justifiable range. Supply chain
management would reduce the cost of the business; this would help increase the profit
of the organisation.
“Threat of substitute products or services”
The substitute for products performs the same functions. In some industries, substitutes
are developed to manage the cost of the products while in some substitution cannot be
made (Spacey, 2019). However, the quality of substitute products is not as same as the
original ones. The threat of substitute products is low in “Marks and Spencer”. This is
because the organisation’s food products cannot be met by substitute goods. The food
products cannot have substitution, so the organisation does not have the risk of
substitute products.
“Marks and Spencer” should improve the quality of products so that there would not be
need of any substitution. It should increase the nutritional value of food products to lure
customers into buying them. This would not only improve the health of the customers
but also would enhance the image of the brand of the company. The profit of the
company would increase, and the organisation would not have the threat of introducing
substitute products for the survival of the business.
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