M&S Strategic Report: Internal/External Analysis and Strategic Choices

This report provides a comprehensive analysis of Marks & Spencer's business strategy, evaluating both internal and external factors that influence its strategic decision-making. The analysis employs frameworks such as PESTLE, SWOT, Porter's Five Forces, and VRIO to assess the company's current position and identify potential competitive advantages. The report delves into the impact of political, economic, social, technological, legal, and environmental factors on M&S, along with an examination of its strengths, weaknesses, opportunities, and threats. Furthermore, it explores the competitive landscape using Porter's Five Forces, considering the threat of new entrants, competitive rivalry, the threat of substitutes, bargaining power of suppliers, and bargaining power of consumers. The VRIO analysis identifies valuable, rare, inimitable, and organizationally supported resources that contribute to M&S's competitive edge. Finally, the report discusses strategic choices, growth areas, and measures for ensuring profitability, offering insights into the company's strategic direction and potential for success. This document is available on Desklib, a platform offering a wealth of study resources for students.

Business Strategy
1

Table of Contents
Introduction.....................................................................................................................................3
Part A: The evaluation based on the internal and external factors which gives a path in strategic
decision making...............................................................................................................................3
Analyse the PESTLE and SWOT models for the company and also the company's resources
and abilties..................................................................................................................................3
External competition with the help of Porter's Five Forces model.............................................5
Identification and justification about company's current and/or potential competing benefit....6
Appropriate strategies and tactical goals for succeeding in all strategic goals...........................8
Part B: With relevance to the evaluation now typically justify the strategic choices for the
company...........................................................................................................................................9
Analyse the distinct types of strategic ways known by the company.........................................9
Analyse and suggest on the right growth areas and strategies..................................................10
Analyse the measures and ways for the given strategies that can be applied in the way to make
sure of profits............................................................................................................................11
Conclusion.....................................................................................................................................12
References.....................................................................................................................................13
2

Introduction
Business strategic management relates to formulation of plans and policies so as to be
competitive in market. A business analyse and evaluate various theories and frameworks in order
to devise constructive strategies to accomplish organisational goals. In this report, the concepts
related to strategic planning are broadly discussed in context to an organisation. The respective
organisation in this report is Marks & Spencer, it is one of the biggest leading retailer in UK and
it mainly deals in selling clothing. It was established in 1884 and is headquartered in London,
England. This report evaluates the impact and influence of macro environmental factors on the
company along with analysing its internal environment and capabilities. It includes discussion of
various models, theories and concepts which assists in understanding different strategic
directions available to the organisation.
Part A: The evaluation based on the internal and external factors which gives
a path in strategic decision making
Analyse the PESTLE and SWOT models for the company and also the company's
resources and abilties
Pestle analysis
PESTLE refers to a known framework which is utilized by businesses to examine factors
of external environment which directly or indirectly influence the working of an organisation.
The application of pestle framework helps Marks & Spencer in identifying aspects which affects
its operations. In context to Marks & Spencer, the analysis of pestle factors are discussed as
follows:
Political factors: These factors relates for the effects that authorial interruptions and rules
implies on operations of company. In context to Marks & Spencer, the company operates in UK
which promotes free trade to fulfil its export and import requirements. In political aspects, the
organisation is also likely to impact from consequences of brexit (Shtal and et.al., 2018). For
instance, if UK will decide to leave European union, then it would result in tariff barriers and
restrictions for Marks & Spencer.
Economic factors: It refers to factors such as inflation rates, demand and supply factors, interest
rates, prices of competitors and other economic factors. In context to Marks & Spencer, the
company is affected by discounting policies of its competitors and other retailers dealing in same
3

sector. Clothing stores and supermarkets follow tactics like selling similar products at low price
which affects customer base of the company.
Social factors: These factors refers to the cultural trends and demographic aspects which affects
the performance of an organisation in direct or indirect ways. For instance, the company is
fostering growth and expanding given that consumers nowadays are highly inclined towards
adopting fashion in their lifestyle.
Technological factors: Techniques and modern advancements used by organisations are likely
to impact its working critically. For instance, change in technology or obsolescence of any
technique implies an organisation to adopt new techniques or eliminate obsolete methods. The
adopting of techniques like self-checkout in supermarket stores and online shopping has fostered
growth and progress of the organisation.
Legal factors: These are the factors relating to legal compliance with laws and standards in order
to avoid any trouble in the course of organisational operations. In context to M&S, the company
ensures strict compliance with food standards in their supermarket stores. Moreover, it avoids
practices of consumer exploitation and works in interest of stakeholders to conduct their business
in ethical way.
Environmental factors: A business is socially obliged to conduct their business in a manner
which do not cause any harm to environment. In context to M&S, the company has pledged to
adopt more sustainable practices in order to reduce carbon emissions in the production process.
Swot analysis
SWOT is a business tool which helps an organisation in identifying its inner relative
advantages and disadvantages along with outside relative benefits and drawbacks as well (Teoli,
Sanvictores and An, 2019). In context to Marks & Spencer, this analysis would help in gaining a
better understanding of the enterprise's current position to identify areas which requires
immediate attention. Swot analysis of M&S is conducted below:
Strengths Marks & Spencer has been maintaining
its sustenance from a long time which
implies that it has a renowned brand
image and holds high reputation in the
market. The company owns a huge
Weaknesses
 It is claimed that Marks & Spencer
highly relies upon manual processes in
order to conduct its manufacturing
processes. This leads to incurring of
huge amounts of cost and is very time
4

base of loyal customers which brand
conscious and willing to pay demanded
prices to avail its goods and services.
consuming and requires a lot of efforts.
 Being a popular brand, various retailers
tries to imitate the company's products
through duplication.
Opportunities
 Due to maintenance of huge funds in
their reserve capital, the company has
the opportunity to expand its market in
new geographical territories.
 Moreover, it has the opportunity to
increase the magnitude of its operations
through promoting online shopping to a
great extent.
Threats
 The company posses threats of heavy
competition from other prominent
retailers and supermarket brands.
Moreover, the threat of discounting
policies of other retailers affect the
pricing decisions of company in
unfavourable ways.
 The company is often faced with
challenges of uncertain events or
unfortunate changes in external
environment which are beyond control
of the company.
External competition with the help of Porter's Five Forces model
This model is a strategic tool used by organisations for determining rivalries position that
it holds in the market. It evaluates five major forces which helps in devising strategies by
analysing existing position of the company. The application of this model in the relation to
marks & Spencer is stated further:
Threat of new entrants: In context to Marks & Spencer, the threat is so less of new entrants as
the company is carrying a high brand reputation which makes the entrants very hard to fight
against M&S because they will be needing a high investment to maintain the level of quality and
reputation like the company (Marshall, 2018). So the company is suggested to avoid the risk of
new entrants by bringing their focus on innovation in their goods and keep a low price strategy
so as to maintain their existing customers.
5

Competitive rivalry: In relation to Marks & Spencer, the competition is so hard with company as
it is clothing and fashion industry and it is enhancing their growth so well that they are giving a
variety in choice to the customers. So as to decrease the risks in this threat the organisation
should maximize their choices in products of textiles and give certain prioritized varieties in the
food products and home appliances through getting innovation in their company.
Threat of availability of substitutes: In context with Marks & Spencer, this threat is highly
tending to affect the clothing business is facing many rivalries and its simple for the customers to
go for same designs elsewhere with low prices. The food products which it offers can easily be
replaced by other brands like Tesco and Sainsbury's which provides best quality to the
customers. To reduce this risk factor the Marks & Spencer should continuously invest into
research and development to know more about their products and customer preferences for
boosting the profit making of company (Barletta, 2019).
Bargaining power of suppliers: In context to Marks & Spencer, almost many organisations have
the options of many suppliers which gives more options to the organisation. However, for
balancing the quality of goods that is given by M&S, at times the suppliers have to increase their
prices for supplies that are necessary to follow the production in company. So for minimizing the
risk, it is recommended to the company to enhance their third party producers who can function
according to the company's wants, hence their profitability would be relied on those suppliers.
This will reduce their bargaining power and would promote customisation of products.
Bargaining power of consumers: In context to Marks & Spencer, the bargaining efficiency of
the customers are moderate because the organisation has a high level of brand reputation and it is
very famous retailing sector. The customer are being brand conscious these days and hats a
benefit for the organisation, however the capabilities of substitute brands that gives goods in
little bit less price are the known risks for an extent. To get back to their customers the
organisation must give numerous price off to maximize the sales of the company in order to
increase revenues.
Identification and justification about company's current and/or potential competing benefit
VRIO analysis
VRIO analysis refers to a business structure utilized by organisations for analysing
significance of company's resources and thus helps in identifying competitive advantage
(Makadok, Burton and Barney, 2018). VRIO consists of mainly four elements knows as value,
6

rareness, imitability, organisation. The application of VRIO framework in context of M&S is
discussed below:
Valuable: This factor analyse whether the resources available to the company are valuable or
not. In context to M&S, its capital and funds, human resources, management and marketing
expertise are valuable resources of the company.
Rare: In context to M&S, the company owns huge capital and great potential in personnel which
are highly experienced. It is rare to find massive availability of funds in comparison to the
company (Novikov, 2018). Moreover, their staff is highly skilled and have great expertise as the
company has a very well established presence in the market.
Imitability: The produce of the company is difficult to imitate as it would be very expensive to
create replicas of M&S products. However, it could be achieved by other retailers through
product duplication which serves a major threat in disrupting operations of the business.
Organisation: The final element of the VRIO analysis is organisation which defines the
procedures, patterns and structure of company whether they are organised or aligned with
optimisation of resources. The company is a renowned brand and has been sustaining the market
since 1884 implying that it has organised structure and well defined processes to attain
maximum utilisation of resources.
The strategies of Porter's generic
It explains the adoption for tactics and strategies in order to improve on the basis of
competitiveness (Lynch, 2018). It suggests that there are mainly three strategical directions
available to an organisation in order to determine competitiveness. These three strategies are
discussed below:
Cost leadership: This is a competitive strategy which use economies of scale to reduce cost of
production. The main objective behind adopting cost leadership is to attract more customers
through offering commodities at slightly lower prices. This can be achieved by doing mass
production and maximum assets utilisation to cut costs of the organisation.
Differentiation: This market strategy is used when an organisation has to specialise their
products by adding quality and innovation to make their offerings more attractive and different
from others. The main aim is to attract more customers through providing valuable and unique
products that will increase the profit margins by inducing their sales. This can be achieved by
7

adding innovation to the products and doing more investment in research and development to
know the preferences of buyers better.
Focus: This strategy targets a narrow segment like a specific product line, regional market or
group of buyers. It is a combination of both strategies including cost efficiency and
differentiation strategy. In cost focus, the main aim is to reduce costs of a particular segment that
will lower the prices for customers. In differentiation focus, specialisation is done in a specific
segment by applying innovative ideas to a product to attract more customers which will increase
profits of the company.
Through analysing above strategies, it is suggested for Marks & Spencer to adopt the
strategy of differentiation and customisation in their products (Goni and et.al., 2022). The
clothing retail industry is full of potential rivals and thus customising in absolutely unique
fabrics and prints would help the company in gaining competitive advantage. It will boost the
sales of the organisation through inducing its customer base.
Appropriate strategies and tactical goals for succeeding in all strategic goals
Bowman's strategy clock
This business framework is effective in analysing various strategical positions in order to
implement changes in current strategies to increase competitive edge in the market (Valeri,
2021). The positions of bowman model are discussed below:
Low price and low value: Under this position, low pricing policies are the only method adopted
by companies in order to compete in the market. This implies inferior quality in products but due
to lower prices consumers are inclined towards buying them.
Low price: Under this strategical position, the companies are engaged in mass production of
goods which allows them to take benefit of economies of scale.
Hybrid: Under this position, companies attempts to gain consumer attention through adopting
combination of both aspects of differentiation and cost leadership. A hybrid model suggest
selling of differentiated commodities at reasonable prices.
Differentiation: Under this position, companies promote uniqueness and high differentiation in
their goods and services. Quality conscious consumers are more inclined towards companies
adopting this model in their strategical plan.
Focused differentiation: It focus upon high differentiation and implies highly perceived value
due to which consumers are wiling to pay whatever prices are demanded by the retailers.
8

Risking large margins: As per the name, it is a highly risky technique when the companies set
more margins except giving anything extra to potential buyers. Companies following this
strategy are often faced with the threat of substitutes and leads to shifting of preferences of
consumers.
Monopoly pricing: It refers to the situation where companies have the power to charge
extremely high prices and consumers are willing to pay. It happens when a good or service is not
owned by many retailer except a few. In short, monopoly companies charge higher prices as they
offer something which is highly unique and not possessed by any other brand.
Loss of market share: It implies the position where businesses set higher prices in exchange of
goods of low perceived value. This strategy is not viable in long run as it alienate consumers as
soon as they are familiar with low quality of purchased commodities.
From the above analysis of strategical positions under bowman model, it is recommended
for M&S to adopt hybrid model. This model is the most convenient and suitable in attracting
more consumers as it satisfy expectations of consumers in both aspects of utility and price. A
rational consumer is tend to buy a good or service when it is valuable and at the same time is
affordable. Through adopting hybrid strategy, the company would be able to increase the
customers through attractive prices and offering differentiation to buyers.
Part B: With relevance to the evaluation now typically justify the strategic
choices for the company
Analyse the distinct types of strategic ways known by the company
Ansoff matrix
Its a business framework which provides various strategical directions and growth
platforms to organisations (Siegel and Leih, 2018). This matrix is used in identifying different
alternatives available to it and the risks associated with them in order to make best strategical
decisions. The growth strategies of ansoff matrix are discussed below:
Market penetration: Under this strategy , an organisation aims to increase its profitability
margins through inducing sales in existing market with existing products. The main objective of
this strategy is to attract more customers and enhance market share without any additional
investment in products or market. An organisation can attain market penetration lowering the
prices and increasing promotional activities etc. This choice is not much risky as it concentrates
9

on the scale of existing goods in most established regions and therefore it is financial as the
funds are not used for research or expansion.
Market development: It focuses for continuing business with existing products while investing
in expansion of new markets in order to enhance its operational activities. Its main objective is to
grow market by extending a firm's geographical boundaries without adding any innovation in
current products or services. Thus it can be adopted through developing new areas or exporting
process into fresh territories etc. The risks associated to the strategy are slightly high as the
targeted markets are new to the company. There is always uncertainty in achieving more
customer engagement in newly developed markets.
Product development: In this strategy the organisation's objective is to introduce new goods and
services in already established markets in order to increase profit margins of the company. This
involves extending the product range and introducing the high choices to the known goods for
having an increment in customers and followings. Product development focuses on applying
innovative ideas to products through conducting research (Rascão, 2020). Also, it focus upon
knowing consumer preferences in order to add more varieties and extend product range. The risk
factor associated with this strategy is more as companies needs to spend on development of new
products. The viability of new product cannot be guaranteed and sometimes results could be
unfavourable.
Diversification: This strategy is a combination of both product development and market
development. It suggests expansion of markets while also engaging in creation of new products.
The risk is more in it because business is investing in a total new region fro maximising growth .
Initially establishing new products into new regions, a lot of effective things are to be ensured
and a research is needed to get expected consequences. This growth strategy is associated with
heavy investment and implies incurring of massive costs.
Analyse and suggest on the right growth areas and strategies
After evaluating the given growth strategies through Ansoff matrix, it has been
recommended for Marks & Spencer to implement market development. The company can
enhance its magnitude of operations through expanding into new markets. Marks & Spencer has
been successfully operating in 29 nations currently owing 198 franchised stores along with 19
most established outlets in Hong Kong. The company have great expertise and is familiar with
the concept of market development. The organisation can even expand its dimensions to
10

countries where it does not own any offline stores along with remote areas. The company
possess abundance of financial resources and have knowledge in analysing commercial markets
with high potential. The enterprise is widely popular and owns a significant brand image in the
retail market. Its renowned image and goodwill would help the company in attaining more
consumer engagement in newly developed markets (Ansoff and et.al., 2018). The strategy of
market development would allow the company to increase its market share and brand awareness
in remote areas.
Analyse the measures and ways for the given strategies that can be applied in the way to make
sure of profits
After determining strategies through analysing various theories and business models, an
organisation must ensure effectiveness and constructive implementation of devised strategies. It
is highly crucial to evaluate outcomes of adopting a strategy in order to address shortcomings
and promote improvement (Barney, 2020). In context to Marks & Spencer, to monitor
determined strategies, key performance indicators are explained below:
Revenue growth: One of the main motive of a economic enterprise behind formulating strategies
is to increase revenues and attain growth in the market. In context to Marks & Spencer, in order
to check the effectiveness of its strategical development, it should examine the change in rate of
revenue growth. It would help the company in deciding whether the implemented strategy is
beneficial or not or it should keep following that strategy.
Revenue per client: Another way of determining constructiveness of a strategy is to examine
revenue generated per customer. In context to Marks & Spencer, this would help the company in
knowing how much it can earn through increasing its customer base. It is very important for the
organisation to keep record of its earnings in a clear and sophisticated manner.
Profitability margins: A strategy might not be very effective if it is not contributing in
increasing profitability margins of the company. In context to Marks & Spencer, the organisation
must focus upon continuously analysing rate of change in profitability margins. A constructive
strategy must be able to yield high profit margins through either minimising costs or maximising
revenues.
Customers retention rate: It is another key performance indicator which is crucial in analysing
potential of a particular strategy. For instance, through adopting product development a company
is gaining more customer attention. But it is equally important to examine for how long these
11

customers will continue buying from the company (Henry, 2021). Therefore, in context to Marks
& Spencer, it is recommended to continuously analyse their consumer retention rate. Moreover,
the company should focus upon receiving feedbacks from their buyers to know their preferences
better.
Consumer satisfaction: Consumer behaviour is the key to determine whether a strategy is
beneficial for the performance of an organisation or not. To evaluate effectiveness of strategy,
Marks & Spencer needs to determine consumer buying patterns and their preferences (Pareek
and Mukherjee, 2020). It should be examined that whether adoption of a new strategy is resulted
in maximum consumer satisfaction or not.
Conclusion
From the above report, it has been concluded that strategical management is a broad term
which analytically studies numerous theories and concepts. Pestle and swot model helps in
evaluating current position of an organisation in the market and the extent to which it is affected
by external factors. Moreover, developing strategies requires analytical idea of competitiveness
which is determined using porter's five forces. It has been evaluated that there are various
frameworks and strategic tools available to an organisation in order to devise constructive and
appropriate strategies. It has been analysed that effectiveness of strategy formulation is to be
measured through examining various key performance indicators. A constructive strategic plan
should be able to enhance business success and foster improvement.
12

References
Books and journals
Ansoff, H.I. and et.al., 2018. Implanting strategic management. Springer.
Barletta, W.A., 2019. Strategic Management of Research Organizations. CRC Press.
Barney, J.B., 2020. Measuring firm performance in a way that is consistent with strategic
management theory. Academy of Management Discoveries, 6(1), pp.5-7.
Goni, F.A. and et.al., 2021. Sustainable business model: A review and framework
development. Clean Technologies and Environmental Policy, 23(3), pp.889-897.
Henry, A., 2021. Understanding strategic management. Oxford University Press.
Lynch, R., 2018. Strategic management. Pearson UK.
Makadok, R., Burton, R. and Barney, J., 2018. A practical guide for making theory contributions
in strategic management. Strategic Management Journal, 39(6), pp.1530-1545.
Marshall, S.J., 2018. Strategic planning as sense-making. In Shaping the University of the
Future (pp. 413-436). Springer, Singapore.
Novikov, S.V., 2018. Strategic analysis of the development of high-technology manufacturing
facilities. Russian Engineering Research, 38(3), pp.198-200.
Pareek, S.K. and Mukherjee, S.K., 2020, March. Balanced Scorecard and Its Application
Through Strategic Management Perspective in Real Estate Industry. In International
Conference on Emerging Trends and Advances in Electrical Engineering and Renewable
Energy (pp. 69-77). Springer, Singapore.
Rascão, J.P., 2020. Strategic Management and Entrepreneurship. International Journal of
Strategic Decision Sciences (IJSDS), 11(1), pp.35-55.
Shtal, T.V. and et.al., 2018. Methods of analysis of the external environment of business
activities.
Siegel, D.S. and Leih, S., 2018. Strategic management theory and universities: An overview of
the Special Issue. Strategic Organization, 16(1), pp.6-11.
Teoli, D., Sanvictores, T. and An, J., 2019. SWOT analysis.
Valeri, M., 2021. Organizational Studies: Implications for the Strategic Management. Springer
Nature.
13