Marks & Spencer Business Strategy: Analysis & Recommendations

This report provides a comprehensive analysis of Marks and Spencer's business strategy, focusing on the impact of the macro environment and the organization's internal capabilities. It utilizes tools such as PESTEL and SWOT analysis to evaluate the external factors influencing M&S and its internal strengths and weaknesses. The report examines the political, economic, socio-cultural, technological, environmental, and legal factors affecting M&S, along with an assessment of its internal environment, including strengths in franchise agreements, international business, and brand recognition, as well as weaknesses like declining sales and supply chain challenges. The analysis also explores growth strategies and strategic directions available to M&S, considering factors like market competition and consumer behavior. The report concludes by summarizing the key findings and offering insights into the strategic challenges and opportunities facing Marks and Spencer in the current business landscape.

BUSINESS STRATEGY
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Contents
INTRODUCTION................................................................................................................................3
LO1...................................................................................................................................................4
ANALYSE THE IMPACT AND INFLUENCE WHICH THE MACRO ENVIRONMENT HAS ON AN
ORGANISATION............................................................................................................................4
LO2 ASSESS AN ORGANISATION’S INTERNAL ENVIRONMENT AND CAPABILITIES.........................9
LO3 EVALUATE AND APPLY THE OUTCOMES OF AN ANALYSIS USING PORTER’S FIVE FORCES
MODEL TO A GIVEN MARKET SECTOR...........................................................................................14
LO4 APPLY MODELS, THEORIES AND CONCEPTS TO ASSIST WITH THE UNDERSTANDING AND
INTERPRETATION OF STRATEGIC DIRECTIONS AVAILABLE TO AN ORGANISATION......................17
GENERIC STRATEGIES.................................................................................................................17
GROWTH STRATEGIES FOR M&S...............................................................................................19
STRATEGIC PLAN........................................................................................................................25
CONCLUSION.................................................................................................................................27
REFERENCES...................................................................................................................................28
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INTRODUCTION
A strategy is the term which provides direction and scope to the working structure of any
organisation. In this word, the advantages and configuration of the resources within a
challenging environment can meet the needs of the markets. It can further fulfil the
expectation of the stakeholders of the organisation (Favaro, 2015). There are a number of tools
which can assist in the strategic analysis of the external factors that influence the strength and
positioning of the organisation.
Marks and Spencer is a well-known British multinational retailing organisation. It specialises in
the selling of clothes, luxurious food products and home products. M&S was founded in 1884
by Thomas Spencer and Michael Marks in Leeds. The company is listed on London Stock
Exchange ranking on FTSE100 index (Gamble and Thompson, 2014). The business mission
statement is based on the M&S outlined clothing and food business with its core financial
objectives to maximise the preference of their shareholder.
M&S has currently 1483 stores around the globe, among which 615 only sell a food product.
Back in the early 20th century, the establishment of selling British made goods and policies were
entered into a long-term treaty with raise of pay for Supermarine Spitfire fighter aircraft. The
organisation followed those policies and treaty to set competitive advantage to the market. The
company consists 914 stores in the UK and beyond them, 222 are owned and 348 are franchises
stores which provide them with a platform to encounter with more than seven million
registered users across the global market.
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LO1
ANALYSE THE IMPACT AND INFLUENCE WHICH THE MACRO ENVIRONMENT
HAS ON AN ORGANISATION
M&S has expanded their business through establishing a best practice of retail in society. It is
western managerial giant through which the corporate objectives of business can be
determined as “Making aspirational quality and innovation which are accessible to all”. Marks
and Spencer can foreplay generic strategies through which strong tradition and corporate
responsibilities are integrated with all other operations at each level (Zhu and Chertow, 2017).
Multinational companies and firms who are establishing as subsidiaries and entities in foreign
countries or are depending on integration process of the subsidiary are generally originated
through Origin Company.
Macro-environment factors, as well as the influence of the economic factors, can set the
dimension to correlate with the dimension of research which is interlinked with intercultural
dimension and integration process. A macro environment factor involves the influence of
economic factors of the business through examining the inbound logistics, marketing, outbound
logistics and sales and services.
The company has established their entire business through Middle East, Asia and Europe
through spans of 59 territories and generate revenue of £1.2 billion in their last financial year
(Drucker, 2014). The company has suffered financial crisis from the past years but has
continued to be strong brand as they had maintained their premium pricing, backing and
continuous investment in advertising. The improvement in their sales and share prices has
reversed their grip and had outreach to the competitive retailers. They have also helped the
retailer to build a strong brand positioning through sustaining waste reduction and sourcing
and providing community care.
MISSION OF THE MARKS AND SPENCER
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The mission of the organisation is to be standard organisation against others in providing the
accessible quality goods to their customer. Further, their mission is to maintain the business on
strong values, innovation, Integrity and Inspiration (Goetsch and Davis, 2014).
VISION OF THE ORGANISATION
The vision of the marks and Spencer is to investigate the economic, social and global
environment which is reliable for them. In order to explore the significance of international
trade and the European dimension for the UK business building, a sustainable future is
essential. By being a business that enables the customer to have a positive impact on well-being
and on communities.
GOAL AND OBJECTIVES
The strategic intent of the organisation is to expand their customer base through sustainability
plan. They will support to 1000 communities and 10 million people to live happier and healthier
lives through Zero Waste Business (Rothaermel, 2015). The objectives of the Marks and Spencer
majorly focus on-
 To build its brand
 To sustain customer interest in their food stores
 To introduce unique design and create unique clothing style
CORE COMPETENCIES
M&S core competencies result in the development of quality products and influencing as a
strong brand and good customer services. The reliability to generate the strong leadership
position to the firm with the development of core product is considered as the core
competency of the organisation (Rothaermel, 2015). It can be foreseen that the customer
benefits can imitate the competitors easily. Thus, leveraging on products and markets helps in
developing an attribute towards outperformance of the competitors and implementing
strategies accordingly.
IMPACT OF MACRO ENVIRONMENT FACTORS IN MARKS AND SPENCER
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The strategic business analysis of Marks and Spencer can be recorded through performing
PESTEL analysis in order to understand the impact of macro factors in the organisation. A
PESTEL analysis provides an extensive framework to investigate a non-controllable factor by
potential means in order to affect its operations (Morelli, 2018). These measures are likely to
minimise the upcoming risks factors and implications. They can be explained as:
POLITICAL FACTORS
M&S has been favourable in terms of product imports and export under the treaty with the
European Commission’s Free trade agreements. The company has, however; decrease their
cost of outsourcing their products. The working prospects of the business have been affected
after the British EU referendum on 23rd June 2016. It has resulted in a dip in the company's sales
and has increased their cost structure (Anton, 2015). Due to this, the company has to suffer
huge market share loss. The stalled growth in their international business has certainly
decreased profitability and has also affected their overseas operations. The business has
enormously suffered decline due to geopolitical instability and fluctuations in their local
currency. It has resulted in a decrease in consumer demand. The company has eponymously
intestate on their ethical “Plan A” which is based on the green strategy. This has set them into
dealing with the sustainable measures (Paul, et al. 2014). This flagship energy efficiency scheme
has resulted in providing them with a clarity in their business prospects. Initially it has affected
the company's effort but later on, it has outset their business behaviour.
ECONOMIC FACTORS
During the financial crisis in the year 2008, the company has suffered heavy loss in their
customer base as the competitors like Tesco, ALDI and other has offered them discounted
prices product. M&S has an emphasis on providing higher quality products and better customer
satisfaction. This has also however led to decrease in the sale for short-term and increase in
consumer confidence for the long term. The strategy has helped the business to maintain their
market share and achieving their targeted sales in the business (Rauch, et al. 2015). The impact
of Brexit has propounded on the sudden drop of the consumer confidence and fluctuations in
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the commodities prices. Further, it has negatively impacted on the performance of the stores in
the Middle East.
SOCIO-CULTURAL FACTORS
The factor that has affected the change in the value of population and producing high-quality
products has been affected. With the considerable development in the different generations,
customer preference such as Baby Boomer generation retiring and Generation X and the
Millennial has heavily shifted towards consumer behaviour and their shopping trends along
with channels and technology (Paul, et al. 2014). The two trends that are considered are green
consumerism and customers ethical concerns that contribute to the sustainable development
of the organisation. The introduction to the Plan A has helped the organisation to build
relationships with customers and suppliers. It has also added the organisation to operate with
redistribution partners effectively by organising community shop programme. Further, M&S has
also started a campaign through 1000 employees those who are indulging in community work
and charity action days. The programme named as “Spark Something Good”.
TECHNOLOGICAL FACTORS
M&S is in good strategic position after the proliferation of enjoying benefits by rising mobile
wave. This has increased their business trends and has also increased in speed of
transportation. People associated have seamlessly integrated online behaviour experiences and
physical experiences through setting a platform for the organisation (Goetsch and Davis, 2014).
M&S has launched their own web platform through which they provide services and products
to the people by serving them with deliverables. A predictive analysis of the replenishment and
adaptation of digital strategy result in first mobile approach and resolving the dis-comfortless
with the help of technology. The latest trends to access answer to their customer and meet the
needs of consumers can forefront to the technological development of the company.
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Figure 1: PESTLE Analysis
Source: (Anton, 2015)
ENVIRONMENTAL FACTORS
The formulation of the Plan A has resulted in the environmental and ethical practices
concerning towards the consumer pressure in the business. It has cradled on to grave their
suppliers and disposes on the strategic and tactical practices of the environment (Anton, 2015).
M&S has outset their business curve on reducing the waste and helping stakeholder's
communities. For this plan of action, M&S has been sourced from silver and gold sustainability
standard producers. The charitable activities have been continuously performed by the
organisation to set a transparent supply chain. The company has gained its rank ahead from
their competitors by increasing the development of sustainable products and services through
the implementation of the lucrative strategy.
LEGAL FACTORS
Following the impact of the Brexit on the company, it is likely to face major legal issues
regarding the supply chains, IP rights and international contracts and more (Gamble and
Thompson, 2014). Under the Health and safety regulations, consumer rights and other legal
factors organisation have set an initiative called "Behind the Barcode" through which different
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standards such as VAT rules, Online Home delivery services and in-store collection through
scanning a product has been published. The legal environmental practices of the organisation
are paramount on the expansion of ‘Simply Food' by the organisation. M&S has set a
framework to improve their remuneration work and provide greater transparency to their
stakeholders. For this, the company requires put a strategic plan in order to reduce the tariffs
and buying the power of the stakeholders in the market.
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LO2 ASSESS AN ORGANISATION’S INTERNAL ENVIRONMENT AND
CAPABILITIES
The internal capabilities of the organisation can be maintained through aiming at strengths,
weaknesses and opportunities and threats that are faced by the M&S. A SWOT analysis can be
performed through which assurance to the external environment can be maintained.
STRENGTHS
Marks and Spencer plc explores their business through different means of franchise agreements
and in-house stores. It has been recorded that there are around 1382 stores worldwide. This
provides a strong competitive advantage compared to organisation comparative to other UK
business (Favaro, 2015). They have expanded their international business to 59 territories
across the globe. Majorly operating territories are Europe, Middle East and Asia. This place gets
the benefits of retail business under joint ventures and franchise operations. It has been
foreseen that Marks and Spencer have explored their food and clothing business in the top
developing market such as India and other regions such as Hong Kong, Europe. M&S has
inherited with the geographical diversification international strategy in order to mitigate the
potential risks in other countries and accessing on providing more stability.
It has also been observed that the company has managed their business in the food sector
through maintaining their profit margin of the market to 3.5% (Rauch, et al. 2015). This has
outreach to distinctive and differentiated means of a specialised strategy that is consumer
focused. The customer-centric approach has marked them as an iconic brand and is considered
as one of the top brands in the UK. The innovation, brand building and high-quality value
products enables the growth rate to the top position in the online sector from last quarter.
WEAKNESS
Despite multiple initiatives that have been strategized by M&S to attract the number of
employees from rival companies has resulted in the decline of their shares in the market. This
attempt was however not successful especially for strengthening their clothing arm business.
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The business has faced steep fall in their upcoming year since 2005 (Rauch, et al. 2015). After
the second quarter of 2016, the company has however grasped the level of stability in their
business. The decline in sales has also resulted in the loss of many key employees leaving the
job and joining to their key competitors.
The company has to face a battle while hiring the new recruits as the expenditure has raised
the bars of the organisation. The investment in the recruitment, hiring, training and
development of the new employees has however resulted in facing risk through potential
contracts and business (Goetsch and Davis, 2014). The new employees were becoming readily
available for the competitors. They have also decided to implement a digital transformation
strategy through which the company can set their own web platform which has also
experienced technical difficulties and privacy breaches. This turns out to be a great loss in their
schemes related to the introduction of their members. It has temporary set a shutdown to the
website.
OPPORTUNITIES
The growth rate in the food business of M&S has outreach to highest peak comparative to their
other services. The sale of the food business has also utilised the trend of expanding its network
through Simply Food, convenience stores and planning the fastest food through the opening
programme. The current prospects of the business to engage their customers were done
through high street stores and online shopping. M&S has also launched number of clubs
through associating members in groups and called it as Sparks. They have also introduced
personalise shopping experience and loyalty schemes (Jayaram, et al. 2014). Some of the
launched initiatives are no monthly fee and £100 gift cards facility. This has also present
opportunities for the company.
THREATS
Once the biggest clothing giant M&S has faced a big slump in sales that has dropped them to
the third position after Primark and Asda. Due to this reason, there has been a phase in which
recession and other macro-environmental factors were weakened (Rothaermel, 2015). It has
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been experienced that M&S is still facing challenges in the Middle East. The instability in
political and economic conditions has an upraised threat to operations in Ukraine, Russia and
Middle East areas of franchise operations.
Figure 2: SWOT Analysis
Source: Hill, et al. 2014
Increase in the terror attacks in Europe has also impacted the targeted sales of their stores. It
has been also measured that safety measure has not been focused by the organisation which in
turn result in destroying of large stores (Rothaermel, 2015). The economic uncertainty has
resulted in restructuring their supply chains and also comprise of loss of 8 percent of the
workforce in UK's stores of M&S.
USE OF MCKINSEY FRAMEWORK TO ENLIGHTEN STRENGTHS AND WEAKNESS OF M&S
The use of the McKinsey 7-S framework model can be used in order to align the situations that
are enduring the strengths and weakness of the organisation. The McKinsey 7-S framework
applied to M&S helps in accessing their internal capabilities, strengths and weakness of the
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