Unit 32 Business Strategy: A Case Study of Marks and Spencer

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Business Strategy Zaida Aburto
Unit 32 Business Strategy
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Business Strategy Zaida Aburto
Contents
LO 1 Analyse the impact and influence which the macro environment has on an organisation and
its business strategies.......................................................................................................................3
Introduction......................................................................................................................................3
Company Profile..............................................................................................................................3
Mission........................................................................................................................................3
Vision:..........................................................................................................................................3
Objectives and Goals...................................................................................................................3
Core Competencies:.....................................................................................................................4
Business strategy and strategic context...........................................................................................4
Stakeholder Analysis.......................................................................................................................4
External analysis..............................................................................................................................5
Pestle framework analysis..........................................................................................................5
The appropriate frameworks used to analyse the macro environment........................................5
Porter’s Five Forces framework..................................................................................................7
Ansoff matrix of Marks and Spencer...........................................................................................8
BCG Growth/Share Matrix..............................................................................................................9
Explain the internal environment, what are strategic capabilities and what are the key
components of strategic capabilities..............................................................................................10
Explain and apply the appropriate frameworks.............................................................................10
SWOT analysis..........................................................................................................................10
McKinsey’s 7S model:..............................................................................................................13
VRIO..........................................................................................................................................14
Conclusion.....................................................................................................................................15
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References......................................................................................................................................16
LO 1 Analyse the impact and influence which the macro environment has
on an organisation and its business strategies.
Introduction
This report will critical analyses the impact and influence which the macro environment has on
an organisation and its business strategies and also an organisation’s environment and
capabilities. I will use the following farmwards internal SWOT analysis, the PESTLE analysis,
Ansoff Matrix, Porters Five forces formworks. For the purposes of this assignment we will be
considering the Business strategy of M&S.
Company Profile
Marks and Spencer is a British retailer which was incorporated in the years of 1894 and
operating in UK with total 900 stores. The company also has international presence and it is
operating in many countries in Asia, Middle East and Europe. The company operates in three
forms like, franchise, joint venture and owned. M&S is present in 59 different countries and
every week it service around 33 million customers from the 1382 stores. The company employs
around 83,000 employees. The key business of the company is clothing, food, home based
product, digital financing
Mission: The mission of this brand is that its products have a high standard of quality but
focused on delivering great value for money to be accessible to everyone.
“Making aspirational quality accessible to all”
Vision: it defines where and how the business has to be set up in the future in order to meet the
requirements of the shareholders correctly and efficiently.
“The standard against which all others are measured”
The Brand’s vision is to offer high quality services where some of its competitors may have
deficiencies, such as, the experience of their customers in their stores, the high quality of their
products, the concern of a good working environment for their employees and the care
environment.
Objectives and Goals
Objectives are the plans or the mission of a company in the short term.
“Marks & Spencer has six main objectives which are Profit Maximization,
Increase Sales, Market Leadership, Offering High Quality Services, Growth
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and Reward Shareholders. Profit Maximization is the most important
objective of M&S”.
Goals are very similar to the objectives but with the only difference that is a task or a long-term
plan.
Core Competencies: Core Competencies is the result of a solid brand with a high quality of
control, with clients loyal to the brand due to the excellent customer service and the quality of its
products. In order to differentiate itself from its competitors, it has created products of its own
brands and the appearance of a premium brand, always taking into consideration the prices of its
products to its customers and competitors.
“M&S core competencies resulted in the development of a strong brand, excellent quality
control and good customer service”.
Business strategy and Development of strategy based on BCG Matrix
Business strategy is the process of developing their mission, vision and goals by analyzing all the
internal and external factors as well as the resources to implement their plans and policies
(Balmer et al, 2001).
P1. Strategic planning for Marks and Spencer is very important to reach their objectives and
achieve their desired state very quickly. There are four types of activities an organization does.
They are:
 Important and urgent
 Urgent but not important.
 Important and not urgent
 Not urgent and not important
The Strategic plan of Marks and Spencer will help them to determine which of these activities
should get the highest priority and how to manage all these activities to get success. So the first
thing they need to do is to figure out the vision of the company where they want to go. Then they
should determine the reason of their existence that means the mission of the company named
Marks and Spencer and then figuring out the objectives of the company that will help them to
reach their desired state and fulfill mission and vision.
Stakeholder Analysis
People who have interests and rights in the organization are
called interested parties. Stakeholders should be taken into
account if you are concerned about the future of the
company. Organizations, social groups, communities or
individuals can be interested parties (Chorafas, 2016).
Source: (Köksalan, et al., 2014)
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They are two types that include the external and the internal stakeholders of an organization, as
illustrate in the figure at the top where shows the different types of stakeholder of a company.
However, these may change according to the type of company. To which M & S refers the
decisions are influenced by external shareholders such as, the government, shareholders, society
and also by the number of their employees and their managers in each store. Suppose it increase
in taxes, fair and Brexit issue then it will directly impact on M&S price, which directly
influences company profitability that links with shareholder wealth.
The stakeholders are the people who are associated with the growth and development of the
company and they get influenced by the decisions which are taken by the organization. Many a
times these stakeholders are the customers of the company as well and the ethical working of the
organization ensures that the stakeholders are satisfied with the organization for the long term
sustainability in the business market.
External analysis
The strategic management and planning is required by the organization which can help them to
plan and monitor various strategies which can help them to meet the organizational objectives.
There are several factors which impact the working of the organization which is macro and
micro factors. The macro factors are those which are external factors which cannot be controlled
by the management and the organization has to make changes in the strategies as and when these
factors influence the organizational working (Frue, 2017).
In order to understand these macro factors for M & S we have to carry out the PESTLE analysis
which is as below.
Pestle framework analysis
The appropriate frameworks used to analyse the macro environment
The PESTLE analysis of the Marks and Spencer addresses the external and macro environmental
factors of the consumer goods. The PESTLE factors are given below:
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Figure: PESTLE Analysis
Source: (Balmer et al, 2001)
Political Factors
The opportunity for Marks and Spencer is that in most countries there is politically stable
condition and also there are on growth the free trade relations among the nations (Abimbola and
Kocak, 2007). It is operating in 58 different countries, so the political environment of each
countries greatly impacts, on the M&S. In United Kingdom Company is facing great challenges
to meet with the employment and due to the BREXIT, the European employees might face
problem for travelling to United Kingdom.
Economic Factors
There is opportunity and threat both in the rising of the wages in the developing countries. High
growth in those countries and economic stability in developed countries are also some
opportunity for Marks and Spencer. Opportunities to anticipate their competitions by putting
competitive prices and also increase promotional products. In UK Marks and Spencer is facing
economic crisis as its economy is in its down turn. Inflation rate has reached up to 3.3% in this
years and the currency exchange rate has decreased which make the company to invest more for
importing raw materials from the outside countries.
Social Factors
There is only opportunity for Marks and Spencer in the social perspective. The rising health
awareness, environmental factors and also the gradual dismantling of gender divination are the
opportunity for them. Clothing trends are changing rapidly however M & S should be
continually updating to satisfy its consumers and thus compete with its competitors in the
industry.
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In United Kingdom the customer’s purchasing power has decreased after few years of
continuous rise Office of National Statistics, 2018). Marks and Spencer is facing sale decline
from a long time.
Technological Factors
There is threat on the increasing R&D sector (Balmer et al, 2001). The constant changes in the
taste, preferences of the customers shows that the organization are conducting various research in
order to develop new technologies and products which can satisfy the needs of the customers and
reduces the cost of the products. There is both opportunity and threat in case of rising business
and the reducing the cost of transportation and the passage method because of technological
development. Technology can also have a positive impact on M&S since with online purchases
the company would avoid the construction of physical stores saving profits.
Marks and Spencer is always been concern for introducing new technologies and increasing the
numbers of digital store to make the customers get a good shopping experience
Environmental Factors
Society is more aware of the environmental problems and the importance of “going green”
Marks & Spencer has been the first to remove the artificial colures and flavours of all their food
and soft drinks range- April 2008 also Mark and Spencer have been the first to launch a school
clothes with recyclable products such as plastic bottles.
Marks and Spencer is considered as the only groceries who has successfully implemented the
environmental strategies and already ahead of the goal. Marks and Spencer has implemented
‘Plan A’ for achieving the sustainability goal and develop several initiatives to achieve these
goal.
Legal Factors
There is opportunity for Marks and Spencer for the rising of the complexity of the regulation for
nature, strong international patent rule and also the consumer right laws. Marks and Spencer
have effective implement all the legal factors all around the organization. Recently, it announces
that Muslim employee who do not want to service alcohol to any customers could transfer than
customer to another till. Marks and Spencer has presented a great example of following Human
Rights Act 1998 as religiously Muslim are not allowed to drink and sell alcohol.
Hence, the M&S need to design their strategies which are in line with these macro factors which
can help the organization to survive in the long run. These study of pestle factors shows that
there are certain positive factors as well as negative factors which can impact the working of the
organization and M&S need to design their strategies in such a way that these factors can
become the advantage for the company.
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Porter’s Five Forces framework
It is a model developed by Michael Porter (2008, pp. 25 - 40) This model can be very useful to
determine the interesting or attractive of a certain business taking into account five competitive
forces: competitive rivalry or competition, Bargaining power of buyers, Bargaining power of
suppliers, Threat of substitute and Threat of new entrants.
Figure: Porter’s five forces
Source: (Balmer et al, 2001)
Competitive rivalry or competition
The strong forces of the Marks and Spencer are the high number of firms, greater aggressiveness
of those firms and also the low substituting costs (Abimbola and Kocak, 2007). There are large
numbers of competitors of Marks and Spencer playing is business environment like, Aldi,
Sainsbury’s, Tesco, etc.
Bargaining power of buyers
The strong points of Marks and Spencer’s bargaining power of buyers is the low substituting
cost, good quality information and the weak point is the low number of individual buyer. In
United Kingdom the customer’s purchasing power has decreased after few years of continuous
rise Office of National Statistics, 2018). Marks and Spencer is facing sale decline from a long
time.
Bargaining power of suppliers
The bargain power of suppliers for the Marks and Spencer is a moderate force which includes the
moderate number of separate suppliers, number of them and the overall supplies. Marks and
Spencer has more than 1000 stores in United Kingdom so all suppliers want to engage with the
company
The strong force in the threat of substitute is the low substituting costs and the weak forces are
the little amount of the substitute availability and the low ratio of those substitute (Balmer et al,
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2001). There are various products are available that could use as the substitute as Marks and
Spencer products.
Threat of new entrants
The strong forces of the threats of new entrants are the low substituting costs and the weak forces
are the higher cost of brand growth and economies of measure (Drucker and Peter, 2004). The
investment is very high in this industry so it is difficult any company to enter in this business
environment.
Ansoff matrix of Marks and Spencer
The Ansoff matrix model is a marketing planning tool which helps the organization to design
and develop the strategy for its product and how they can achieve growth in the market. The
Ansoff matrix shows that a business is able to meet the success which is dependent upon whether
it is the newer market or products or in the existing market the product is newer. The various
outputs which are generated from the Ansoff Matrix help to design various growth strategies for
the organization.
Figure: Ansoff Matrix
Source: (Drucker and Peter, 2004)
Market Penetration
Focuses on the growth of products that are not new in existing markets, to increase market share.
M&S could penetrate the market by putting more competitive prices, participate in sales
campaigns and more aggressive sales promotions. In addition, Mark & Spenser could also
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expand the international free shipping on products purchased online (M&S.com) in order to
penetrate the online international market
Market Development
There is continuous growth in China and India for Marks and Spencer. So they could raise the
price in India and also develop the market here to earn more profit.
Product Development
Introduction of new products in existing markets. Marks & Spencer has launched two new
ranges of shoes in a variety of six colures for different skin tones.
“The two new styles include a pointed stiletto heel, which costs £19.50, and a platform court
shoe costing £25, both of which are available to buy in-store and online now”
(independent.co.uk)
The consumer goods of Marks and Spencer always see the bright side and get success (Abimbola
and Kocak, 2007).
Diversification
In this process companies diversify the products that they usually sell.
Marks and Spencer follow product and market development strategies to introduce new products
within the market and enter in new market. Marks and Spencer perform high level of research
and ensure continuous development of the products to ensure the product remain in its growth
stage.
BCG Growth/Share Matrix
BCG MATRIX TO SHOW STRATEGIC PLANNING
The Boston Consulting Group’s has designed the portfolio of the products which are developed
by the organisation which can help the organisation to develop the long term planning which
enables the organisation to understand the various growth opportunities that are present in the
market by reviewing of their product portfolio which can also contribute toward taking the
decisions such as where to invest, in which product and is it feasible to continue the existing
product or not. The Matrix is divided into four different quadrants which is based upon the
analysis of the growth of the market along with its relative market share which is as below:
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Source: https://www.smartinsights.com/marketing-planning/marketing-models/use-bcg-matrix/
1. Dogs: These are those products which has both low shares in the market as well as the
growth of the market. The Autograph range product which is one of the premium price
range products for both men and women clothing has low share in the market and has
lower growth for M & S. The organisation can develop the strategy to either remove this
product from the portfolio or they can continue with it which may help them to gain the
financial contribution.
2. Question Mark: These products are those which have high growth market but they has
lower market share. The Food products developed by M & S can be consider into this
quadrant as M & S has over 400 food stores in the UK Market which is not a major
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supermarket. Though the growth rates of the food products are very high but with the
presence of other bigger competitors in the food industry, M &S has lower market share.
3. Cash Cows: These products have low growth market but offer the high share to the
organisation in the market. The organisation is able to fetch maximum revenue from the
products which fall under this category. The Classic range offer by M &S has low growth
and high share in the market as the supporters for M & S classic range is relatively very
high in the market.
4. Stars: these products enjoy both high growth market and high market share which helps
the organisation to earn more profits for the company. It can help the organisation to
become the market leader. The products like Lingerie and ladies underwear which are
offered by M & S makes them market leader in the UK market as the organisation offers
variety of products under this category which help them to generate higher ROI for the
company (Hanlon, 2018).
M & S can focus on more on the products which are able to fetch more income for the company
along with that they can also develop different strategy to increase their income by identifying
various opportunities in the products that falls under question marks which can help them to
expand their product portfolio.
Explain the internal environment, what are strategic capabilities and
what are the key components of strategic capabilities
The internal environment of the business organization includes the elements that are found and
also available within the organization premises (Drucker and Peter, 2004). There are some
factors those are playing vital role in determining the internal environment of the business
organization. Some of the factors are
 Value System
 Mission and Objectives
 Organization Structure
 Corporate Culture and Style of Functioning of Top Management
 Quality of Human Resources
 Labor Unions
 Physical Resources and Technological Capabilities
The business organizations compete with other organizations for the maximum numbers of the
customers, market share and also for profit. The Evaluation of these capabilities begins with a
company capability profile, which examines a company's strengths and weaknesses in
four key areas:
 managerial
 marketing
 financial
 technical
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