Marks and Spencer: Strategy, Enterprise and Innovation Analysis

This report provides a comprehensive analysis of Marks and Spencer's (M&S) strategy, enterprise, and innovation. It begins with an introduction to M&S, its market position, and the scope of the analysis. The report then delves into an in-depth examination of M&S's internal resources and capabilities, including its competitive advantages. This section utilizes VRIO, Value Chain, and SWOT analyses to assess the company's strengths, weaknesses, opportunities, and threats. The report further investigates the external environment impacting M&S, employing PESTEL, Porter's Five Forces, PARTS, and Value Net models to identify key drivers of change and their influence on entrepreneurial activities. The report concludes with a synthesis of the findings, offering insights into M&S's strategic position and future prospects. The analysis covers various aspects of the business, including customer service, innovation, brand management, sustainability, and competitive dynamics within the retail industry.

RUNNING HEAD: MARKS & SPENCER
STRATEGY, ENTERPRISE AND INNOVATION

MARKS AND SPENCER 1
Contents
Introduction................................................................................................................................2
Analysis of the organization’s resources and capabilities..........................................................2
Competitive advantage...........................................................................................................2
VRIO Analysis.......................................................................................................................2
Value chain analysis...............................................................................................................3
SWOT analysis.......................................................................................................................4
External environment analysis...................................................................................................6
PESTEL analysis....................................................................................................................6
Industry analysis.........................................................................................................................7
Porter’s five forces model......................................................................................................7
PARTS model........................................................................................................................8
Value net model.....................................................................................................................9
Conclusion..................................................................................................................................9
Bibliography.............................................................................................................................11

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Introduction
In this report, Marks and Spencer is chosen to fulfil the given requirements. Marks and
Spencer is based in United Kingdom. Michael Marks and Thomas Spencer founded the
company in the year 1884. It is a recognized multinational company offering wide variety of
food, clothing, and homeware (Marks and Spencer , 2019). It is a leading company as it has
1463 stores in 57 countries (Marks and Spencer, 2019). It is included in the ‘Lifestyle and
Retail’ sector and forms the part of top innovative companies in the United Kingdom (Fast
Company , 2019). The initial section of the report focuses on the resources and capabilities
that provide competitive advantage to the Marks and Spencer Company. Additionally, it also
involves the application of VRIO, Value chain and SWOT analysis. The next section
emphasizes on determining the key drivers of change in the external environment (United
Kingdom) and their impact on entrepreneurial activities of Mark and Spencer. In order to
identify changes and analyse the external environment, Porter’s five-force model, PARTS
and Value Net Model is applied. The key purpose of the report is to upgrade the knowledge
based on the given title. It also provides an opportunity to apply the managerial concepts on a
real life organization named Marks and Spencer.
Analysis of the organization’s resources and capabilities
Competitive advantage
It refers a company's ability to outperform rivals due to unique, high demand, or superior
quality products or services (Noe, 2017). Following are the points helping the M&S in
gaining competitive advantage.
1. It provides excellent customer service. Through digital channels, it provides 24*7
services resulting in early solution of customer’s queries and problems (M&S
Careers , 2018).
2. Innovation is highly essential to gain competitive advantage (Bessant & Tidd, 2011).
It lays prior attention towards brand management and innovation. Thus, it helps the
M&S in acquiring a place in the mind of the customers (Hodgon , 2017).
3. It has initiated the use of sustainable practices in its business activity. Thus, it helps
the M&S in emerging as a sustainable organization (Marks and Spencer , 2019).

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VRIO Analysis
This framework evaluates the resources of a business organization. These are as follows:
1. Financial resources
2. Human resources
3. Material resources
4. Non material resources (SMI, 2019)
Considering the human resource of the M&S, their total employees are around 80000
(Corporate.Marksandspencer, 2019). Its human resource is considered as its strength as they
assist the brand in offering quality service to its customers. Its human resource fulfils all the
four criteria of VRIO analysis. It is ‘valuable’ as it helps the M&S in generating revenue and
efficiently dealing with the customers. It is ‘rare’ as it employees highly skilled and educated
individuals that has the capacity to raise the revenue of M&S. It is inimitable as it provides
specific trainings to its human resource based on their personal development. Thus, making it
difficult for the competitors to attain employees similar to M&S’s (Glassdoor, 2019). Lastly,
it is organized as the M&S has developed effective rules, policies, and organization structure
that enable maximum utilization of its Human resource. Thus, M&S’s human resource
provides sustained competitive advantage to the brand.
Value chain analysis
It involves division of various activities of a business and analysing their contribution
towards the final product. As per the Value chain analysis, business activities are divided
under two heads:
1. Primary activities
2. Support activities (Business Jargons , 2019)
M&S primary activities include inbound logistics, operations, outbound logistics, marketing,
sales, and service. Considering marketing, M&S is highly engaged in promoting its products
via digital channels. It also develops the use of social media like Facebook and Instagram. It
has developed its profile to easily connect to its potential customers and provide them
information about current offers, discounts, and coupons on its products. It performs such
activity to attract customers and retain their attention (Joseph, 2019).
Human resource management, infrastructure, and technology are considered as M&S’s
support activities. This is because they assist in performing the primary activities.

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Considering Human resource management, it lays prior attention in recruiting individuals
with better communication skills. It recruits individuals with same country where the retail
store is established. Thus, it performs such functions in countries like India and Australia
(MARKS & SPENCER, 2019).
SWOT analysis
It is framework determining the Strengths, Weaknesses, Opportunities, and Threats of a
business organization (Gürel, 2017).
Strengths
1. Its established goodwill and brand value is count as its strength. This is because it
helps in attracting more customers. Further, it assists in easily gaining the trust of new
customers (Humphries, 2015).
2. As mentioned above, it is engaged in multiple product line including clothing and
food. It counts to its strength, as failure and loss in one product line will not result in
overall business failure (Marks and Spencer, 2019).
Weaknesses
1. M&S focuses on upper class and upper middle class customers (Rai, 2019). Thus, its
targeting strategy limits is customers.
2. The customers did not show high satisfaction level for its products. Thus, it faces
problem in making future sales to such customers (Trustpilot, 2019).
Opportunities
1. M&S decision of market expansion (India) develops a chance of enhancing global
customer strength (The Economic Times , 2016).
2. The increasing number of retail stores, develops an opportunity for M&S to increase
its overall sales (The Economic Times , 2016).
Threats
1. M&S attains certain degree of threats from its competitors including Select, Primark,
and Monsoon (Owler, 2019). This is because these brands offer similar products
resulting in limited market share.

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Figure 1: M&S major competitors
Source: (Owler, 2019)
2. Any form of bad publicity develops a threat for M&S of losing customers.
Figure 2: Marks And Spencer reviews
Source: (Trustpilot, 2019)

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External environment analysis
PESTEL analysis
It is a framework used to analyse the external environment of a country. It is mainly useful in
attaining better knowledge about the international country’s environment. This aid in getting
essential information regarding weather the country offers a favourable external environment
or not (Grant , 2016). It is performed to develop strategies to fully retain the benefits of
favourable factors and minimize the negative impact of unfavourable factors (Johnson et al.,
n.d.).
Political factor: The government charges a corporate tax rate of mere 20% (Heritage , 2019).
Thus, having less tax burden assists the Marks and Spencer to save adequate financial
resources for entrepreneurial activities. Additionally, the government provides a high trade
freedom to the business organization. Thus, it also benefits the M&S in easily developing
entrepreneurial activities in international market.
Economic factor: The gross Domestic Product of the United Kingdom is marked at $2.9
trillion with a growth of 1.8%. Its Per Capita Income is $4418. The unemployment and
inflation rate is 4.3% and 2.7% (Heritage , 2019). Thus, United Kingdom provides a fine
economic environment to Marks and Spencer.
Social factor: According to the buying habits, a major population of United Kingdom is price
sensitive (Statista , 2014). Additionally, they rely heavily on fashion and lifestyle brands
(Dogan, 2013). Thus, United Kingdom provides an intermediate social environment to Marks
and Spencer.
Technological factor: Globally, United Kingdom ranks third for attaining better technology
and innovation development. Its technology has helped the M&S in operating via social
media platform including Facebook and Instagram. Further, it aids in providing 24*7 services
to its customers. Thus, United Kingdom provides highly favourable technological
environment to Marks and Spencer (KPMG, 2019)
Environmental factor: It is examined that United Kingdom does not attain healthy
environment as it is facing issues including water pollution (Smith , 2015). In order to help
the government and emerge as a sustainable organization, M&S is using entrepreneurial
activities to contribute to a healthy environment. It is developing the reuse of waste material
to 25%. It is also using sustainable raw material. It has also developed a sustainability

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program named ‘Plan A’. In this plan, it focuses on minimizing the food waste by 2025. It
has also pledged to adopt a ‘zero waste model’ (Sustainable Brands , 2017).
Legal factor: The government of United Kingdom lays prior attention in protecting the patent
rights of the business organizations (Heritage , 2019). Thus, Marks and Spencer can easily
develop innovation in its products and business activities without having fear of imitation by
small traders engaged in fashion retail industry.
Industry analysis
Porter’s five forces model
1. Industry rivalry: M&S faces high competition from brands like Next (Felsted, 2010).
Thus, mediate competition prevails for M&S in the lifestyle and retail sector.
2. Bargaining power of the customer: Customers of M&S attain average bargaining
power. This is because about 73% of the UK population is price sensitive (Statista ,
2014).
Figure 3: U.K. population buying behaviour
Source: (Statista , 2014)
3. Bargaining power of the supplier: M&S attains low threats because suppliers do not
hold scarce resources. It is involved in offering clothing and food products that does
not involve the use of any scarce resource for its production.
4. Threat of new entry: It faces low threat from the new entry in the fashion and retail
industry. This is because M&S has established goodwill and brand value in the
market. Moreover, government lays prior attention in regulating the retail industry
(Butler, 2019).

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Figure 4: M&S tops in Customer loyalty index
Source: (CSM, 2019)
5. Threat of substitution: M&S attains adequate threat of its product substitution as
competitors like Next are giving attractive discounts (Independent , 2019).
PARTS model
‘PARTS’ is a management framework focuses on five factors. These are mentioned below.
1. Players: According to this element, M&S has customer, suppliers, competitors, and
Complementors as the major players in the industry. Occasionally, suppliers and
competitors team up to drive up the price.
2. Value: Suppliers add value by timely supplying the essential goods at time.
Competitors add value by reducing the chances of monopoly resulting in fair prices.
3. Rules: The M&S can change its company policies. However, it cannot alter the legal
rules set by the government like Industry standard (Zott, 2011).
4. Tactics: M&S uses better customer service, and develop better relation with suppliers
to attain more customers and quality raw materials (M&S Careers , 2018).
5. Scope: The prime location of the M&S is United Kingdom (Owler, 2019).

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Value net model
It is strategic framework identifying the four major players involved with the company. It
states that Customers, suppliers, competitors and complementary members are the four main
parties (Kähkönen, 2012).
1. Customers: Marks and Spencer has high customer strength as it has customers from
the global market as well. Their presence is highly essential as the revenue is mainly
earned from them. Previously, it has earned £3.5bn on clothing and £5.9bn from Food
products through customers. Through international customers it has earned a revenue
of £936.6.m (Corporate.Marksandspencer, 2019). Therefore, a customer acts as the
main player.
2. Competitors: Despite being a recognized and reputed brand, Marks and Spencer faces,
mediate competition from brands like next and Primark. Their presence is also
essential as they motivate the Mark and Spencer brand to offer better quality products
to the customers.
3. Suppliers: The total suppliers associated with the Marks and Spencer is around 2000
(Marks and Spencer , 2019). In order to attain timely and quality raw material, Marks
and Spencer lay prior attention in maintaining cordial relation with the suppliers. This
is because any form of quality issues will result in poor sales, loss in customers trust,
low customer satisfaction, low brand image, and reduced profit.
4. Complementors: As mentioned above, Marks and Spencer is engaged in selling
clothing, home products, and food products. Thus, Business Process Organizations
acts Complementors of M&S. It will assists in timely solving the customers queries
and complaints (Kähkönen, 2012).
Conclusion
The report summarizes the title ‘Strategy, enterprise and innovation’. It is analyzed that M&S
is a recognized international brand from United Kingdom. Its high brand value, established
goodwill, efficient relation with suppliers, better customer service, sustainable approach,
efficient human resource, brand management and innovation helps the M&S in building
competitive advantage. From VRIO analysis it is assessed that Finance and Human resource
is its key resources. From value chain analysis, it is analyzed that it lays prior attention in
marketing and human resource management. Its human resource, goodwill and multichannel
presence counts as its major strength. Its weaknesses include use of old techniques and

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unsatisfied customers. Similarly, market expansion in India, increasing number of stores
offers future opportunity. It also attains certain weakness as it focuses on only specific
economic classes, competitors, product imitation, and bad publicity. From the external
environment analysis, it is examined that United Kingdom offers fine environment to perform
entrepreneurial activities. From industry analysis, it is recognized that retail and fashion
industry offers average business environment to M&S. From the analysis of Value net model,
it is assessed the Customers, competitors, suppliers and Complementors has a key role in
M&S company. Lastly, PARTS model states that customers, suppliers and competitors, all
are major players for M&S.
It is concluded that M&S is at fine position in business. Additionally, it is laying higher steps
towards adopting strategies for innovation through sustainable practices.

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