Marks and Spencer: Strategic Analysis and Recommendations Report

This report provides a comprehensive strategic analysis of Marks and Spencer (M&S). It begins with an introduction to the company and its operations, followed by an examination of its performance over several years, including sales and profit figures. The report then delves into M&S's existing strategies, including an assessment of core competencies using the VRIO framework. A detailed PESTEL analysis evaluates the political, economic, social, technological, environmental, and legal factors influencing M&S's operations in the UK. Furthermore, the Porter's Five Forces model is applied to assess the competitive landscape. A SWOT analysis highlights the company's strengths, weaknesses, opportunities, and threats. The report concludes with an evaluation of M&S's current strategy and provides recommendations for future strategic directions and suggestions for the board of directors, incorporating relevant references and appendices to support the analysis.

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TABLE OF CONTENTS
1.0 INTRODUCTION...............................................................................................................................4
2.0 PERFORMANCE ...............................................................................................................................4
3.0 STRATEGY ........................................................................................................................................7
4.0 THE VIABILITY OF CURRENT STRATEGY.................................................................................8
5.0 PESTEL ANALYSIS AT UK.............................................................................................................8
5.1 Political Factors...............................................................................................................................8
5.2 Economic Factors............................................................................................................................9
5.3 Social Factors..................................................................................................................................9
5.4 Technological Factors.....................................................................................................................9
5.5 Environmental factor.....................................................................................................................10
5.6 Legal factor: .................................................................................................................................10
6.0 PORTER FIVE FORCES MODEL .................................................................................................10
6.1 Competitive Rivalry......................................................................................................................10
6.2 Threats of Substitutes ...................................................................................................................11
6.3 The Power of Supply.....................................................................................................................11
6.4 The Power of Buyer......................................................................................................................11
6.5 Threats of Entry.............................................................................................................................11
7.0 ENVIRONMENTAL ANALYSIS .................................................................................................11
7.1 Strengthens....................................................................................................................................11
7.2 Weaknesses...................................................................................................................................12
7.3 Opportunity...................................................................................................................................12
7.4 Threats...........................................................................................................................................12
8.0 CURRENT STRATEGY IDENTIFICATION AND EVALUATION ............................................12
9.0 STRATEGY SUGGESTIONS .........................................................................................................13
10.0 SUGGESTIONS TO THE BOARD ...............................................................................................13
REFERENCING......................................................................................................................................14
APPENDIX 1 (P. 163).............................................................................................................................16
APPENDIX 2(P. 164)..............................................................................................................................16
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APPENDIX 3(P. 164)..............................................................................................................................17
APPENDIX 4(P.44-51)............................................................................................................................17
APPENDIX 5(P. 195)..............................................................................................................................24
APPENDIX 6(P. 59)................................................................................................................................24
Illustration Index
Illustration 1: Sales figure of Marks and Spencer for past five years........................................................6
Illustration 2: Profit figure of Marks and Spencer for last five year .........................................................7
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1.0 INTRODUCTION
Marks and Spencer (M&S) has cooperated for over 130 years in United Kingdom. They have
over 1000 stores all over the world including Russia, China, India and Middle East countries. It sells
food, clothing, home ware and footwear. In addition to this, Marks and Spencer sold product of
different brands. It consists of classic collection, blue harbour and many other brands. In this regard, as
per the latest report, it is assessed that Marks and Spencer is losing its share in clothing market. From
the analysis, it is identified that the clothing sales of retailer has slipped by 0.4%. Furthermore, the
market share of firm was recorded as 10.4% in the year 2014. Moreover, significant decline was also
seen in the profit of company. The profits recorded was 603 million euro (Marks & Spencer's share of
the UK clothing market continues to slide, 2016). This report is analyzing their strategy with macro and
micro environment, SWOT and giving out recommendation and alternatives in future.
2.0 PERFORMANCE
Year ended Turnover (£ M) Profit before tax (£ M) Net profit (£ M) Basic eps (p)
30 March 2013 10,026.8 564.3 458.0 29.2
31 March 2012 9,934.3 658.0 489.6 32.5
2 April 2011 9,740.3 780.6 598.6 38.8
3 April 2010 9,536.6 702.7 523.0 33.5
28 March 2009 9,062.1 706.2 506.8 32.3
29 March 2008 9,022.0 1,129.1 821.0 49.2
31 March 2007 8,588.1 936.7 659.9 39.1
1 April 2006 7,797.7 745.7 520.6 36.4
2 April 2005 7,490.5 505.1 355.0 29.1
3 April 2004 8,301.5 781.6 452.3 24.2
29 March 2003 8,019.1 677.5 480.5 20.7
30 March 2002 8,135.4 335.9 153.0 5.4
31 March 2001 8,075.7 145.5 2.8 0.0
1 April 2000 8,195.5 417.5 258.7 9.0
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31 March 1999 8,224.0 546.1 372.1 13.0
31 March 1998 8,243.3 1,155.0 815.9 28.6
31 March 1997 7,841.9 1,129.1 746.6 26.7
31 March 1996 7,233.7 965.8 652.6 455.8
Recently, M&S is expanding the stores in worldwide (Appendix 4) such as India and China.
This strategy has been popular in other rivals such as Tesco and Sainsbury as well.
The above figure showcases the sales of company for past five years. In this context, it can be
said that there is an increasing trend which is being assessed for the sales of firm. For example, during
the year 2009, company’s sales were recorded as 9022 million euro. However, its sales figure increased
to 10026.8 million euro in the year 2013. The difference was minute but still it can be said that the firm
is performing well in market.
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Illustration 1: Sales figure of Marks and Spencer for past five years

The above figure depicts the necessary variations in the profits of company. In accordance with
the given context, the profit of company was improved from 2009 to 2011. But, after 2011, a
significant decline was seen in the profit of company. This depict that the firm is not performing well in
market and hence require number of improvements.
3.0 STRATEGY
Before making the strategy, a manager of firm will formulate the goal for the company. This is
because; it is through an effective goal only the objective of an enterprise will be met. For example, the
firm has a goal to improve the sales of its company by 10% till the year 2014.
The goal which manager of cited firm has set will be achieved, if it has competency and
resources with regard to the same. Here, in order to evaluate the resource and competency of Marks &
Spencer, the tool such as VRIO can be used. The firm carries out the production of its goods and
services as per the specific needs and demands of its buyers. Furthermore, the Marks and Spencer has a
very good relationship with its supplier which provides several benefits to the firm. Thus, these can be
considered as two basic core competencies of the firm (Paliwoda and Marinova, 2007). The respective
core competency of firm is analysed with the help of VRIO framework. Its detailed explanation is
depicted in below: Value: The core competency of corporation is valuable as it enables firm with regard to take the
action towards all the threats which lead to hamper the operations of enterprise. For example,
the threat of sudden change in the needs and demands of the buyers will be undertaken by cited
firm by taking help from its supplier. This is because; with the help of supplier, firm can
perform the production of such product which is being demanded by its buyers.
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 Rare: The core competency of firm is not rare as it has been practised by many other rivalries of
firm as well (Haro and Menot, 2014). Imitable: But, the major disadvantage which is associated with the firm's core competency is
that it can be easily imitated by its competitors.
 Organisation: The firm has full ability with respect to exploitation its resources in an effective
way.
Overall, it can be said that there are some complications which are associated with cited firm’s
core competency, but still these are providing competitive advantage to the corporation. Furthermore, it
is helping firm with respect to attain high profits and sales in an effectual way (Schläfke, Silvi and
Möller, 2013).
4.0 THE VIABILITY OF CURRENT STRATEGY
M&S dropped rapidly on 1999 to early 2000 but then it rises again after 2007. According to the
figure 1-3, they have no significantly drop or rises in past five years. However, they do maintain stably
revenue these years. (Appendix 1-3). After Marc Bolland has been taken the CEO form Stuart Rose,
the revenue didn’t grow these years. Only Rose had kept M&S recovered only so far. Specifically, it
has been noted that “Bolland is pretty much following the same course as Rose: improve the core UK
operations, develop an online business worthy of the M&S name and expand internationally”
(MacDonald, 2011). They provide food and clothing and still not generate the sales in the high
spending power group.
5.0 PESTEL ANALYSIS AT UK
To be successful, organizations need to recognize around its environmental impacts and trends.
Pestel analysis can achieve this goal, and provides a complete picture of the surrounding issue in the
work of various forces. Pestel analysis of measurement based on external factors, the company's market
and potential; political, economic, social and technological. The macro environment consists of larger
forces that effect the micro environment included Political Factors, Economic Factors, Social Factors
and Technological Factors. (Kotler, 2005)
5.1 Political Factors
Marks & Spencer is headquartered in a stable political program, and there is no serious threat to
the UK. Terrorist attacks raised concern that the political situation on 2015. However, things have been
brought under control due to strict security system. The third consecutive term services which is the
current Labour team, has basically proven to be very effective and efficient. Tax system in the UK is
one of the most attractive in the low corporate and personal income tax among developed countries.
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Marks & Spencer is based in the UK which has a stable political scenario and there are no serious
threats to it. Terrorist attacks in July 2005 did raise concern over the political situation; however, due to
tight security measures things have been under control since then. The current Labour administration,
which is serving its third consecutive term, has generally proved to be efficient and effective.
5.2 Economic Factors
Marks & Spencer needs to be analyst the economic through roughly. It is vital to consider in the
short and the long term economic conditions such as GDP, employment levels, inflation, interest rates
and other issues. It should have a marketing plan which included the strategy, to take all of these
problems encountered, and to ensure the sustainability of the competitive position. UK's current
economic situation is conducive to low to moderate interest rates indicates economic health. A healthy
and good economy is the sign of citizen’s income as well as good business. It needs to focus more on
the young generation fashion arena because they actually spend most of their disposable income on
clothing. The economic aspect includes the factors such as unemployment rate and GDP of the country
etc. All these given factors tend to influence the work of enterprise. For example, majority of citizens
within country are unemployed as they lack the necessary skills which are required with an aim to
achieve the goals and objectives of enterprise. In the given situation, recruitment and selection process
of Marks and Spencer will be impacted. This is because; in this circumstance, it will become difficult
for the cited firm with regard to fulfil its needs related to the employees in an effectual way (Singh and
Munjal, 2012).
5.3 Social Factors
Impact on corporate social and cultural vary from country to country. M&S not only focus in
the UK, but where in the whole world's 30 regions are operating a diverse socio-cultural arena. The
management team needs to be addressed, such as consumer favor and preferences, attitudes to foreign
products and services, the time, the consumer can be specifically used for recreation, aging population
amount and mortality. Taking into these factors will be equipped with the appropriate organization to
meet the needs of the consumers. (Mr. Gadget, 2011). In addition to this, cited firm has products for all
age group buyers. Thus, it can be said that it tends to target all types of customers.
5.4 Technological Factors
Since M&S is a worldwide retailer, online shopping is necessary nowadays. However, the
delivery has an issue such has no one can reach if goods delivered. And also, for online shoppers, items
cannot be trying on or see the real items and quality. The firm must streamline its operation as per new
and latest technology. This is because; if it does not perform, then in the given situation also, it
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becomes difficult for the cited firm with regard to maintain its competitive position in the market in an
effectual way.
5.5 Environmental factor
The firm should make significant actions towards protecting the natural environment of the
country. This is because; through this way only, Marks and Spencer can gain the trust of its supplier.
This will assist firm in the process of improving its sales and profits (Larsen, Tonge and Lewis, 2007).
5.6 Legal factor:
It is required by the cited corporation that it should abide all the legal laws and regulations
which are prevailing within the country. This is because; if it does not abide them, then for the firm, it
becomes very difficult task in terms of carrying out its operation in an effectual way.
Marks and Spencer used the differentiation tactic in order to compete with the competitive
business environment. In this regard, it is assessed that firm offers wide range of products.
Furthermore, the goods and services which firm offer changes as per the needs and demands of the
citizens of specific nation (Giovanni, 2012).
6.0 PORTER FIVE FORCES MODEL
Figure 1.
(Rodrigo, 2012)
6.1 Competitive Rivalry
M&S is a retailer of selling food, clothes and household and is extremely fierce. The
competitors with this sector included Tesco, Asda and H&M or Zara is one of the competitors among
clothing retailer. As M&S keep differentiate itself to position to a high quality and worth to buy so it
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started to cut off the price. However, it took the risk to downgrade their brand value. Thus, it can be
said that the company faces intense competition from the competitors.
6.2 Threats of Substitutes
As M&S provide food and clothes, there’re no direct substitutions can be replaced. A
Substitution can take the place of M&S and reduced the demand of the products when consumers
prefer to another alternatives. Tesco might be one of the major substitutes and a lot of stores selling
high quality food and beverage. They are one of the largest supermarkets in UK. H&M or Topshop also
their substitutes in UK. They provide low-cost products and up to trend fashion. Hence, it can be stated
that the threat of substitute product is moderate for the cited firm.
6.3 The Power of Supply
M&S has large amount of suppliers and also they have their own brands on some preserved
food. They have well reputation so it can maintain well on the supply chain. High bargaining power
can get a better offer for supply and logistic. This is low for the supplier of cited corporation. This is
because of the presence of number of suppliers who are ready to deliver product which is being
demanded by the enterprise (Carpenter, Sanders and Harling, 2012).
6.4 The Power of Buyer
The threat of buyer is high because alternatives retailers have a lot around. Customers can
choose other with lower price with almost the same quality. They have to maintain good quality in
order to sustain the growth rate. In addition to this, different competitors of Marks and Spencer offer
same type of products which it delivers to the respective. Thus, it can be considered as another most
crucial reason behind high bargaining power of buyers.
6.5 Threats of Entry
It has high difficulty to enter the market. M&S has build up high reputation. And also gained a
long heritage and established for over hundred years. It is hardly to set up a successful chain around the
world since M&S already very mature in the industry. (Appendix 5). In addition to this, there are many
legal complications that are also associated with the given industry. Thus, it is due to the presence of
given aspect, threat of new entrant is moderate in the retail sector.
7.0 ENVIRONMENTAL ANALYSIS
7.1 Strengthens
Marks and Spencer is a well-known brand across UK and also has over 400 stores in
worldwide. It built up a good reputation and brand image especially among over 50+ age’s women. It
has sustainable loyalty for customers. M&S has very good quality and their brand has been
synonymous with reliability, value and quality. M&S is regarded as setting the standards to other
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retailers while have tried over the years. Until now, M&S is the UK’s most enviable records of success
one of the best managed companies for growth and profits.(Unkown,2013) It has strong sales of food
and also making use of the technology through online selling. (Appendix 6). These all can be
considering as the major strengths of company which tend to enable it with respect to achieve high
profits and sales in the environment which is highly competitive.
7.2 Weaknesses
Weaknesses are one of the issue making the business dropped in past few years. M&S is
positioning in female fashion and targeting over 30years old women. The outdated fashion trend
decreases the volume of young aged women customer. Another problem it appears is too high cost. As
the crisis on 2009 in Europe, people have less disposal income and spending less on luxury products. it
can compare with other lost cost rivals like Topshop, Next or H&M.
7.3 Opportunity
The online channel is growing rapidly nowadays. Using internet shopping becomes daily life
for people. Convenient delivery, easier selection and various view of products and comparison made
business better. Increasing the stores network can extend the market in order the increase the revenue.
Market segmentation can divided to different group of interest and taste of consumer. It will also
decrease the maintenance cost but increase the profit compare to mega stores. In addition to this, cited
firm has the opportunity with respect to get entry in the market which is not being targeted by the firm.
Furthermore, it has the chance to introduce new products and services in market.
7.4 Threats
Strong competitors is one of the threats in M&S. The fashion retailer such as Next, Gap or
H&M. The food stores in UK such as Tesco and Sainsbury. These are also providing high quality and
value-added products to develop customer’s loyalty. Furthermore, constant changes in the needs and
demands of the buyers are being considered as one of the major threats of the company. However, firm
can use its core competencies with an aim to take the action towards the threat in an effectual way.
8.0 CURRENT STRATEGY IDENTIFICATION AND EVALUATION
From the above analysis, it is assessed that Marks and Spencer has the goal improve its profit
by 10% till the year 2014. Here, with an aim to attain the respective goal, firm is taking help from
different marketing means such as placing advertisement in television and social networking sites etc.
Here, by complying with the given type activity only, firm can attract large number of buyers towards
its products and services in an effective way. Thus, the given practices will assist firm in the process of
attaining the above mentioned goal (Turki, 2011). In this context, an evaluation is being carried out
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with an aim to assess that whether firm has achieved the respective objective or not. In this regard,
from the 2014 net profits status of company it is assessed that firm has earned the profit of 474 million
euro. This indicates that the firm has not achieved its goal to improve the profits of firm by 10%. Thus,
it can be said that the strategy which firm has employed will be proved as ineffective or not working
properly.
9.0 STRATEGY SUGGESTIONS
From the conducted analysis, it can be said that the corporation must use cost focus tactic. In
this regard, it should make efforts with regard to reduce the cost which is being invested by the firm in
an effectual way. Here, by applying the given tactic firm can attain its goal of increasing the profits of
firm by 10% in an effectual way. But, the suggestion given will lead to brought several changes within
enterprise which is generally being resisted by the employees. Hence, it can be consider as one of the
major disadvantage which is associated with the suggested tactic (Carpenter, Sanders and Harling,
2012). Generally, the stores are spacious and it has quite a lot of spaces are empty. The management
team can redesign each store or cut some floor space in order to putting more products or reduce the
rental expense. Besides to maintain the good quality, up-to-dated fashion is very important to face the
competitors. To increase the new items on selves more frequent can increase the customer visit the
stores again more often. It can also adapt the season change suddenly so they can switch to warmer or
cooler clothing. On the other hand, also keep attracting the cash of rich 30+ years old female
demographic.
10.0 SUGGESTIONS TO THE BOARD
The strategy to make use of different advertisement tactic has not work well. Thus, it is
recommended to the firm that it should use the cost focus tactic as mentioned above with an aim to
accomplish the goals and objectives of the enterprise. If this is done, the goal which firm has set out
will be met in an effectual way.
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