Strategic Business Report: Analyzing M&S's Macro and Internal Factors

This report provides a comprehensive analysis of Marks and Spencer's business strategy, focusing on both the macro and internal environments. It utilizes frameworks like Stakeholder Matrix and PESTLE to assess external factors such as political, economic, social, technological, legal, and environmental influences on the company's performance. The report also evaluates the internal environment and capabilities of Marks and Spencer using SWOT analysis and the McKinsey 7S model, examining strengths, weaknesses, opportunities, and threats, as well as key elements like structure, strategy, skills, and systems. Furthermore, Porter's Five Forces model is applied to understand the competitive landscape and inform strategic planning for sustainable growth and competitive advantage. The analysis aims to provide a clear understanding of the factors impacting Marks and Spencer's strategic decisions and future prospects.

Business strategy

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
P1 Suitable framework that analyse macro environment............................................................3
P2 Evaluate internal environment and capabilities of company by help of appropriate model.7
P3 Porter's Five force model......................................................................................................9
P4 Range of concepts to develop strategic plan.......................................................................10
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
The business strategy effective combination of actions and decision making that need to
be perform by business in achieving objectives of organisation. It is most important for the
company as it provides opportunity (competitive advantage, market expansion) for business
growth in strategic way. It is the suitable set of actions plans which provides suitable direction to
the business in minimising risk and maximum utilisation of resources. The business strategy
consist of emergent market, competitors, strengths and weakness that will help in developing
flexible environment of the company (Acuña-Carvajal and et.al., 2019). The proper planning and
development of business strategy needs effective skills of planning and business analysis on that
company can understand its functions of marketing, sales and distribution. The chosen
organisation for this report is Marks and Spencer that provide specialised services and products
(clothing, home appliances). It is founded in 1884 by the Michael Marks, Thomas Spencer and
deliver varieties of goods like clothing, beauty, home, furniture and so on. The reports highlights
analysis of macro environment that impact performance of company. It also evaluate internal
environment and capabilities of company by help the of appropriate model to examine strengths
and weakness of company. Through Porter's Five force model, company can examine its
competitive position in the market and develop strategic plan for company growth.
TASK 1
P1 Suitable framework that analyse macro environment
In context of Marks and Spencer, there are various environmental factors that impact
company performance. Marks and Spencer deals in dynamic environment of retail that keep on
changing on regular basis that is why company need to analyse the impact of macro environment
(Bernhardt, 2017). This will enhance company performance and efficiency level to fulfil
company objectives.
Stakeholders' matrix
The stakeholder is consider as several parties that is involved in the activities of business
organisation that is why any party that impact performance of Marks and Spencer is refers as
stakeholder. While analysing the stakeholder matrix, various dimensions are need to be arranged
and manage appropriately. In Marks and Spencer, most of the stakeholder are key players in the

form of company dimensions that are government, customers, employees, investors, competitors
and so on.
In the above figure, it has been seen hat level of importance and level of influence is
examine among stakeholders of Marks and Spencer. Customers has high interest and high
influence towards company products and services (Blackwell, 2017). Because they have multiple
substitute product which satisfies their specific demand so Switching interest of customer impact
company sales ratio. The government has low importance and high influence because they can
imposed laws and regulation like trade, tax which impact Marks and Spencer company
performance level as company need to follow these regulation in its operations.
The employees of Marks and Spencer are generating low influence but high importance
because they are very essential for company productivity (Cosenz, 2017). Employees directly
deals with the customers and become company important value but they do not have influencing
level as power is not in the hands of employee. Employees are regulated by the higher authority.
The suppliers of the marks and Spencer have low influence and low importance in Marks and
Spencer. There is no interest of suppliers in company profits and they are very loyal towards

company and make sure availability of products to the target customer, that is why the do not
influence company revenue in negative terms.
The Pestle analysis help Marks and Spencer to understand the impact of macro
environment in its business performance. This model provide detail analysis of various
perspective (political, economic, social, technological, legal and environmental) that may impact
company profitability.
Political- The political factors are highly associated with the impact of government
actions like tax, tariffs, fiscal and monetary policies (Dobesh, 2018). Marks and Spencer is
gaining maximum advantages (Cost reduction) from free trade agreements by the government of
UK. It will decrease operating cost and enhance revenue level of company. In international trade
of Marks and Spencer, company is facing highest cost structure which is not good sign for
company profitability.
Economic- The economic factor directly influenced economic level of country such as
foreign exchange rate, inflation, economic growth and so on. The competitors are implementing
discounted pricing, which impact company profitability. Marks and Spencer concentrate on high
qualitative value of its products and services that causes heavy losses for company profitability
for short period (England, 2019). The financial crises impact price sensitivity of customers so
company need to evaluate and modify business strategy ( pricing strategy) to maintain balance
among sustainable sales and flow of market.
Social- The social factors includes cultural trends, perception, analytics of population and
so on. The Marks and Spencer have to deals with the perception and believes of the customers.
In starting phase company is not considered as youth fashionable brands provider but company
change this perception of mass audience with the help of marketing strategy (social media
campaign). They involve green practices (using environment friendly raw materials) in its
operation so that environment friendly user prefers to purchase company products. The positive
impact of using environment friendly raw materials has been shown in increased sales revenue of
company but negative impact also generated in its increasing operation cost.
Technological-The technological factor is associated with the innovation and technology
that is used by company in its operation process. The great technology advancement has been
seen by the Marks and Spencer is social media and online presence. Company take advantage of
online retailing by the help of mobile commerce and websites. They develop strong position in

online presence with the digital technology(social media and websites) and generate more sales
and revenue. As a results positive impact has been seen in its increasing sales volume because
company is targeting online user.
Legal- Lots of disputes has been faced by the Marks and Spencer in which recent one is
Frascati landlord disputes (financial) as change in trade of UK impact brand performance and
image. This will impact financial operations of company and influence its commercial activities
(trade of retailing). The company regulates laws of health and safety, discriminatory, Anti-
trust, employability law and so on because it will improve performance of employee and
maintain satisfied customers.
Environmental- The environmental factor is consider as organisation surroundings that
is associated with company external environment. The Marks and Spencer is known as
recognised brand so it is there responsibility to support sustainable retailing business practices.
They need to be very careful about its production process as they must involve sustainable and
green practices in business (Göbl, 2019). By utilising environment friendly resources company
can enhance its brand value in front of mass audience. Company take initiative of using
environment friendly raw materials to improve its revenue level. The company realised positive
impact on sales as customers start purchasing environment friendly products of entity.
P2 Evaluate internal environment and capabilities of company by help of appropriate model
For proper understanding of internal environment and capabilities of Marks and Spencer,
company examine its internal analysis. This will determine factors of company competency and
improve profitability ratio by involving viability, cost position and competitive market position.
The internal analysis of Marks and Spencer can be done by examining its strengths, opportunity,
weakness and threats.
Strengths- The Marks and Spencer is the recognised and well experience brand that is
established in past years. This is one of leading business of UK in retail and create partnership
with other brands around the world (Gonzalez, 2017). The company is well established brand
that deliver qualitative products to their potential customer in competitive market. It is the
multinational chain that deals in both online and offline channels. Both the channels of company
helps in expanding profits of company. Marks and Spencer offers variety of goods and services
to their mass audience so that they can fulfil different customer demands. The company is good
at maintaining healthy relation with farmers and dealers that will provides fresh products and

serve better experience of customers. The company provide latest design with innovative
features in retailing segments so that they can target mass customers.
Opportunity-The Marks and Spencer has great opportunity for going global expansion
as it is a well recognised brand which can easily expand its business market to other countries
such as India, Indonesia, Brazil and so on. The company should operates its business activities in
unexplored markets of company. Marks and Spencer has great opportunity to enhance their sales
ratio with the help of online platforms (Hawkey, 2017). They should explore more effective
features of online presence like social media and websites that will target appropriate target
audience from online platform. Company can enhance volume of sales and profits by the help of
market segmentation. It is the most useful process through which company can divide customer
base into several groups as needs and specification. With the help of customer segmentation they
can provide actual products and services on the basis of the needs of customers.
Weakness- Sales ratio of Marks and Spencer are facing declines on regular basis because
ineffective supply chain management because they fail to manage availability of all the products.
The company fail to accomplish actual requirement of customers demands and starts facing
decline in sales ratio. The perception of customers are not very impressive towards products of
Marks and Spencer (Jonson, 2019). Customers believes that company only provides clothes of
younger people but this is not true because company serves all categories of customers. The
Marks and Spencer some times operate its business activities on manual basis that consume lots
of time and money. So company still need to adopt latest technology (artificial intelligence) to
enhance time, cost and establishing more effective operations of company.
Threats- The biggest threat for Marks and Spencer is high level competition from other
brands like Tesco, Sainsbuy, Asda, Debenhams that is why company need to modify its business
strategy (cost leadership and differentiation) and modify to build strong position at global level.
Mckinsey 7S Model
The Mckinsey 7S Model is the effective model that can be used by Marks and Spencer to
evaluate company effectiveness in their industry. This model involves structure, strategy, skills,
system, shared values, style and staff that help company to maintain sustainability.
Structure-The structure represents units or division of business in organised way to
deliver accountable information. Marks and Spencer implement team based organisational

structure that will help company in dividing roles and responsibilities as per employees
capability. This develop cooperation and enhance company problem solving skills.
Strategy-It is the development plan for company sustainability in competitive market.
Marks and Spencer adopted cost advantage strategy of cost leadership that will help company in
developing low cost products from its competitors and create more profits.
System-This is the process of business activities that company deals in operating daily
functions and decision making (Karami, 2017). The Marks and Spencer concentrate on managers
and its organisational change (policies, procedure) to make sure suitable system is working to
achieve organisational goal.
Skills-It refers to ability of company employees and examine how they are performing to
achieve objectives. For enhancing capabilities and competences of Marks and Spencer
employees, company execute training programs to improve skills ( time engagement, critical
thinking, technical skills) that is required for enhancing company performance.
Style-This refers to the management style which is adopted by the top managers to
interact with the employees of company. The Marks and Spencer, adopted coaching style of
leadership which provide proper direction to the employees and push their maximum potential in
completing goal of company.
Staff-This will determine requirements of employee and examine how they recruit,
rewarded and motivated. Marks and Spencer motivates their employees by providing equal
amount of rewards (financial and non financial) as per work contribution. The company recruit
from both internal (promotions and transfer) and external sources (campus recruitment and
employment agency).
Shared values-It refers norms and standard which guide employee behaviour and
develop foundation for company actions (Keeler, 2020). Marks and Spencer shared value of
quality service, trust and innovation that improve company image in front of large customer
base.
P3 Porter's Five force model
The Porter Five Force model improves business strategy of company because it has
ability to observe five forces that may impact company profitability. This model includes five
force components that help is making strategic decision. It will build strong sustainable
competitive advantage and recognise profitable opportunity to enhance customer service sector.

Threat of new entrants- The new entrants in retail contributes innovative technology
concept and unique business idea that will develop ultimate pressure on the performance of
Marks and Spencer. As a results company have to develop low pricing strategy of its products
and services. Marks and Spencer also concentrate on cost reduction so that they can deliver more
proposition value to their customers (Learn, 2017). The company need to manage its challenges
and develop barrier to protect competitive advantage.
Threat of substitutes- The profitability of Marks and Spencer gets highly suffered when
any new or exclusive products and services introduce in the market that meet actual requirement
of customers. In retail segment, Marks and Spencer face heavy threat of substitutes because it
competitors like Sainsbury, Asda, Tesco are providing same category of valuable products at
very affordable cost.
Bargaining power of suppliers-Each retailer company purchase its raw material from
several suppliers that is why they are in the dominating position that may impact market
profitability ratio of the company. In the segment of customer services, supplier consist strong
position of the negotiation that will fluctuate the price of Marks and Spencer. The powerful
position of Marks and Spencer supplier impact company profits at lower level.
Bargaining power of buyers-The buyers are very demanding of the Marks and Spencer
because they are in the strong position. They wants to purchase valuable products and services at
affordable price. This will develop pressure on Marks and Spencer because they have to
provided affordable products with maintaining quality of the respective products (Legum, 2019).
It will impact company profitability in the long run and found some difficulties in maintain
sustainability. The smaller and effective consumer base has capacity of high bargaining power as
they always in search of Heavey discounts and offers.
Rivalry among existing competitors- The Marks and Spencer faces high intense
competition among rivalry of its current competitors. So company need to decrease their price
level to improve its profitability ratio. The Marks and Spencer executes its business operation in
high competition of retail sector. This competition will impact company revenue at high level
and influence long term sustainability that helps in improving internal environment and
capabilities of company.

P4 Range of concepts to develop strategic plan
The Porter's generic strategies is known as effective framework that will help Marks and
Spencer in recognising its potential market and develop strategic plan to gain competitive
benefit. This model includes strategies of cost leadership, differentiation, cost focus and
differentiation focus that Marks and Spencer can applied in its products and services to capture
market share.
Cost leadership-This strategy involve capturing great market share of the industry by
becoming more cost conscious to gain mass audience. The Marks and Spencer must become low
cost producer as per the norms of retail industry because this will enhance their customer base.
By applying this strategy, company can reduce cost and overhead expenses in order to exploit
economies of scale (effective production). Reduction in operating cost will help Marks and
Spencer to achieve aim of lowest cost producer. This will help them to increase maximum profits
and capture high market share of customer as compare to its competitors.
Differentiation- The differentiation strategy consist to develop different range of
products and services to attract potential customers. By this strategy Marks and Spencer can
achieve competitive advantage as they can target mass audience by delivering them
differentiation products and services (Norton, 2019). Company must made some changes in
designing, features, durability in order to create differentiation products from its competitors. It
charge premium cost of products and services as company have to develop unique and add extra
features.
Cost focus- In this strategy company recognise particular segment and then provide low
cost products to specific segment. The cost focus refers on developing lowest cost advantage in
niche market segment. The Marks and Spencer will get narrow scope of profit creation because
they need to charge high price of popular products that is why this strategy is not effective for
company.
Differentiation focus- The differentiation focus strategy includes unique range of
products to target only niche markets. For this Marks and Spencer need to recognise its niche
market where they can provide differentiated products to particular market. Through this strategy
company can ensure innovative products at high price and satisfied specific needs of particular
segment.

The customers are very price sensitive, they want affordable products and services with
premium quality otherwise they can switch company products. For marks and Spencer Cost
leadership is best effective strategy through which they can expand market share and improve its
customer base. This strategy enhance ability of company to produce low cost products by cutting
overhead expenses. It will help company to provide low price products at best quality as compare
to its competitors. The cost leadership is the best strategic plan that will improve respective
company performance and they can easily win their competitors.
CONCLUSION
From the above report, it has been concluded that effective business strategy provides
suitable direction in analysing capabilities and environment of company. The respective
company develop strategic plan with the help Porter's generic model. During this model
company experienced, cost leadership is the best strategy through which they can capture market
share. This strategy helps in providing low cost products by cutting overhead expenses in order
to attract price sensitive customers. The Porter Five Force model help respective company in
gaining competitive advantage and improve their performance level. The company profits gets
affected by new entrants as they introduce innovative products and increase competition level.
As a results company need to focus on quality and product differentiation features to decrease
level of competition. The internal and external environment of respective company is examine by
SWOT and PESTLE model. The company is managing its weakness (technology) and threats
(competition) by improvised strengths (recognised brand) and opportunities (market expansion).

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