Business Strategy Analysis Report for Marks and Spencer (M&S)

This report provides a comprehensive analysis of Marks and Spencer's (M&S) business strategy. It begins with an introduction outlining the company's background, mission, vision, and objectives. The main body of the report delves into the external environment using PESTEL analysis, examining political, economic, social, technological, environmental, and legal factors influencing M&S. The report also explores the internal environment using SWOT and VRIO frameworks to assess the company's strengths, weaknesses, opportunities, and threats, as well as its resources and capabilities. Furthermore, the report evaluates competitive forces in the industry using Porter's Five Forces model and constructs strategic plans for the firm. Finally, the report concludes by summarizing the key findings and recommendations for M&S's strategic direction. The report highlights the impact of Brexit, changing consumer preferences, technological advancements, and environmental concerns on M&S's operations and strategic decisions, offering insights into how the company can secure a beneficial market position.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
TASK 1............................................................................................................................................3
P1 Application of suitable frameworks to analyse the impact of external environment on the
company and their strategy.....................................................................................................3
M1 Analysis of external environment to construct strategic management decision .............5
TASK 2 ...........................................................................................................................................6
P2 Analysis of internal abilities of the firm by using suitable models...................................6
M2 Evaluation of internal environment to determine strengths and weaknesses of firm's
internal abilities and structure ...............................................................................................8
TASK 3 ...........................................................................................................................................9
P3 Evaluation of competitive forces in the industry using Porter's five forces model...........9
M3 Construction of plans for the firm to secure advantageous market position..................10
TASK 4 .........................................................................................................................................10
P4 Application of various models and concepts to construct and interpret strategic planning10
M4 Strategic management plan which has tangible and tactical strategic priorities............13
D1 Application of environmental and competitive analysis to formulate useful set of
directions, aims and strategic operations ...........................................................................14
CONCLUSION.............................................................................................................................14
REFRENCES.................................................................................................................................15
(Books and journals).............................................................................................................15

INTRODUCTION
Construction of effective strategies involves the profound analysis of various internal as
well as external forces which impact the daily operations and output of the company. Strategies
constructed after gathering such information help the firm secure beneficial position in the
industry by focusing on their strengths and eliminating elements which reduce efficiency of the
organisation. The present report is based on Marks and Spencer which is one of the leading retail
organisations in Britain. The organisation was founded in London in the year 1884 and has a
strong international presence with more than 1400 outlets located in 29 nations across the world.
The given report includes analysis of internal as well as external elements which impact the
strategy of the company. Evaluation of competitive forces affecting the industry of the firm. In
addition to this, strategic plan for the company is provided in this report by using appropriate
models and constructs.
MAIN BODY
TASK 1
P1 Application of suitable frameworks to analyse the impact of external environment on the
company and their strategy
Background of the company: The organisation was founded by a collaboration between
Michael Marks and Thomas Spencer in Leeds, London and quickly grew to be come leaders in
UK retail industry. The firm is commonly known brand in UK which sells huge variety of
fashion, food and household products (Vargas-Hernández and et .al.,2021). The organisation
sells their products through both online and offline mediums which help the firm generate high
amounts of profits. Worldwide revenue of the firm for the year 2020 was 10,181.9 million GBP.
The organisation is facing various barriers to growth due to implementation of Brexit which
complicates relations between EU and UK.
Mission Statement: The firm's mission statement is to produce high quality goods accessible to
everyone.
Vision statement: The organisation's vision statement is to become stranded in front of which
their opponents are measured.
Business objectives:
 To increase profitability and sustainability of the firm

 To reduce cost of the products
 To reach lower class consumers by offering affordable products
PESTEL Analysis of M&S
This is framework used for analysing various external elements which are affecting the
organisation. PESTEL analysis of M&S is conducted below which provides information about
several external elements affecting the business strategy and daily operations of the firm.
Political factors: The primary political element affecting the organisation is the unstable
political relationship between China and Britain as the firm is dependent on more than 300
Factories in China to supply variety of products. As a part of their Integrated review, British
government authorities are aiming to investigate dependency on Chinese firms for completing
supply needs in British organisations (Adyana and Hanani, 2020). This will influence the
strategy to reduce costs as the company has to find other countries for outsourcing their supply
activities.
Economical factors: The implementation of Brexit has introduced complicated tax and
trade structure between EU and UK. This respective organisation has to pay higher tax rate for
conducting business with EU nations. This will negatively affect the business strategy of the
organisation as it will reduce increase overall cost of their products. This along with recent
decrease in disposable income of the consumers will have a negative effect on the plan to attract
low income consumer by offering low cost quality products.
Social factors: In the recent years the organisations has lost their connection with youth
which is the target consumer base for their fashion products. This is another reason which has
impacted the profitability of the organisation and resulted in slow growth of the firm. This image
will alienate young lower income consumer from the brand and negatively influence the strategy
for attracting low income consumers by providing low cost products. Young people are the main
target consumers of the company, such reputation will result in the failure of business strategy.
Technological factors: M&S is aiming to incorporate technology which will simplify
and speed up their daily operations (Singh,Gaur and Agarwal, 2017). The firm is focusing on
creating technology operating model which will help the firm use advance technology to
complete various operations swiftly and effectively. Such technology will improve the speed and
quality of products delivered by the organisation. This will reduce overall cost of each product
without compromising on quality and help the company expand their customer base to low

income consumers. Increase in advancement of automation technology such as self checkout
technology will help the company complete their daily operations while reducing labour cost,
this will help the company achieve their business strategy.
Environmental factors:The organisation has started various initiatives in order to
construct a sustainable business firm and reduce harmful impact on the environment. The
organisation is focusing on creating systems which reduce plastic usage in their products and
ensure that each plastic product is recycled and reused by the company (Kreps, 2019). This will
help the company lower their costs as they will utilise recycled plastic from their sold goods. In
addition to this various environment friendly initiatives constructed by the company will
improve their brand image among environment conscious youth. This will help the company
connect with young consumers and market their low costs products to the youth from low
income background.
Legal factors: The absence of strict laws and systems which prevent selling counterfeited
products have reduced the growth of the company. Continuous sale of such products is a major
threat towards the success of plan to offer low cost products to low income consumers as such
customers prefer buying cheap counterfeits (HoLEE, 2020). Apart from this, the organisation has
faced various lawsuits in recent years. This has reduced the reputation of the company and
resulted in increased financial burden on the firm due to huge penalties resulted from legal action
against M&S.
M1 Analysis of external environment to construct strategic management decision
Various external elements play a deciding role in overall profitability and reach of the
respective organisation. The firm is highly depended on Chinese suppliers for completing the
demands of wide range of fashion and household products. Therefore, increasing conflict
between these nations has a direct impact on the business strategy developed by the M&S. Apart
from this various changes in social trends such as ignorance of young consumers toward the firm
is another external factor impacting business strategy of offering low cost products to
consumers from low income background (Johannsdottir and McInerney, 2018). Sale of
counterfeit products, and lack of disposable income in the hands of consumers also affect the
possibilities for success of the business strategy. The organisation neds to use technological
advancements in the field of automation to reduce expenditure on workers and increase
profitability by offering lower cost products. This will not only increase the profit margin of the

company but also help the organisation expand their consumer base to include customers from
lower income backgrounds.
TASK 2
P2 Analysis of internal abilities of the firm by using suitable models
Organisations use various framework to analyse internal environment of chosen firm
through strategic identification of strengths, weaknesses, opportunities and threats. In
consideration with current competition prevailing in market, Marks & Spencer have been using
swot analysis & Vrio framework tool to examine different factors of internal business
environment.
SWOT analysis
This framework is used by organisation to examine competitive position firm in specific
industry & what strategic plans are to be adopted for discovering future challenges. In context of
Marks and Spencer , the main products of company are home goods, food items, clothing and
edibles etc. These products are sold to individuals under own brand name of chosen company at
around thousand plus locations located in London, UK.
Strengths: This component of analysis discusses about different capabilities of chosen
firm that differentiates its brand from others in competitive industry. M&S is one of leading
retail multinational organisation in UK with effective partnerships globally. The good reputation
of traditional business is strong point of selected company that it has created a large customer
base over past years in retail industry (Mohezar, Moghavvemi and Zailani, 2017). Selected firm
has many other strengths such as affiliation with famous fashion designers promoting their
quality of goods, wide range of products and online delivery services across different domains
globally.
Weaknesses: With rise of competition in retail market, M&S have been facing huge
decline in sales due to weak distribution channel, unavailability of food or clothing products in
demand. Consumer awarenesses is very important in which company has been unsuccessful as
many people still have a perception that company offers clothing only for elders. This perception
has made respective firm incur huge losses. The manual functioning of staff employees also is a
drawback of selected corporation as processes are time taking.

Opportunities: This factor mainly focus on how company can meet up modern
challengers in market economy by adapting to relevant technologies or strategies. In relevance
with M&S, being a multinational brand can explore those countries or small town areas where
company can open up new stores enhancing productivity & profit margins simultaneously.
Selected firm have great opportunity to expand e-commerce platforms fro a huge customer base
of Internet users today through social media advertisements, online marketing campaigns etc.
Threats: There are a whole lot of competitors in retail market that may negatively impact
Marks & Spencer on strong grounds. These competitors mainly consists of Amazon, Lewis,
Morrisons, Next and Sainsbury etc. who have better upgraded technologies, modern online
awareness Internationally.
VRIO framework analysis
This is strategic management tool used for internal analysis of business environment
based on four questions consisting of value, rarity, imitability and organization (Kumar,Dabas
and Hooda, 2018). Following four questions denote potential of company resource in competing
with others in market with its uniqueness.
Product/
resource
capabilities
Product value Rareness Imitable Organisation Competitive
edge
Good market
reputation
Yes yes yes yes Competitive
advantage for
longer period
Leadership
roles
Yes yes No yes Strong
competitive
edge
Brand
awareness
Yes yes no Yes Sustainable
advantage
over
competition
Consumer
feedback
yes yes yes yes Realized
competitive

advantage
Valuable- In context of M&S, have various useful resources consisting of financial
investments mostly into new external opportunities. Selected organisation has good reputation
that gives more value to local products of company mostly preferred by domestic people.
Employees of M&S are an important asset to firm in terms of their loyalty, determination
towards work & teamwork abilities. Supply chain & patent rights of chosen corporation is a
valuable source for reaching out to maximum consumers with earning license revenue for quality
products.
Rare- In context with chosen corporation, financial resources are rare and are acquired
by very few large companies in retail industry (Nakhratova and et. al., 2017). Local products of
M&S are common that can easily be substituted with other competitive firms entering into
market. Some of other unique sources of selected entity are patent rights, skilful workforce and
huge network of supply chain.
Imitable- Financial resources of M&S are not easy to imitate by competitive firms as it
took prolonged period of time for firm to earn profits. Whereas domestic products are of not
much price that can be imitated by other organisations easily. Also potential employees of firm
can migrate to other companies providing them better career opportunities.
Organisation- Resources of company should be organized in such a way that individuals
can do optimum utilisation of organisational sources. In context of M&S, financial resources are
organized by managers so that they can be invested into correct places by systematic analysis of
risk factors. Patents of company are not fully utilized at their best potential by selected
organisation. Therefore, M&S can sell off its useful patent goods before date of expiration to
take its full advantage.
M2 Evaluation of internal environment to determine strengths and weaknesses of firm's internal
abilities and structure
The above categorisation of company threats, opportunities, weakness & strengths has
helped M&S evaluate organisational performances on a broad level. It has been analysed that
need e-commerce identity over internet is important for brand awareness among customers. The
rating of company over internet is requirement of every smartphone use in this modern era of
social media users (Sanito and et. al.,2020). It has also been analysed that there are a lot of retail

multinational companies with advance technology who have capability of beating M&S in
market economy. Therefore, selected firm needs to strengthen its distribution network
internationally. Also, company should use different techniques to bring out new products with
quality standards. Places where stores are shut down due to different customer perceptions also
require better management techniques to properly segment market according to customer needs.
TASK 3
P3 Evaluation of competitive forces in the industry using Porter's five forces model
Business organisations today have to face major challenges occurring in external
environment of company (Paes, and et. al.,2019). Therefore, chosen firm have used porter's five
forces model approach for understanding actual strength of organisation in current competitive
industry.
Porters Five Forces Model
This strategical tool help company take good business decisions by analysing existing
competition in market. In relevance with M&S, managers utilize this framework to build their
retail market with respect to potential opportunities oncoming in service sector economy.
Threat of new entrants: This step deals with analysing potential of competitors that can
be a threat to firms profitability. M&S have been using low pricing strategy to attract maximum
customers & provide them with new value preposition. Since entrants are many there is very
much risk that new companies may come with better innovative products for consumers.
Suppliers power of bargaining: There are a lot of suppliers in retail market from which
all firms can easily buy their raw material. Since raw material is easily available to all
companies, suppliers are in a position of dominance. In context of M&S, this factor lowers
profitability of firm as suppliers community have full authority to rise prices of product anytime
affecting profit margins.
Buyers bargaining power: Buyers have different preference as well as quick change in
perception for products leading them to switch towards substitute brands easily (Spina and
Spina, 2020). Hereby, M&S have come up with various discounting offers, coupons, gift
vouchers for retaining customers in long run. The primary focus of chosen firm is still
maintenance of good quality in their product for potential & loyal customers at large.

` Threat of substitute goods or service: Customers of new generation try using new
products with innovative technologies making their life easier. This makes introduction of
substitute product or service with better facilities launched by new competitive firms suffer
traditional companies profitability.
M3 Construction of plans for the firm to secure advantageous market position
Innovation helps organisation develop new products that can attract new customers in
retailing business. In context with Marks & Spencer, have adopted different strategies to
overcome challenges faced by company in business environment. Firstly, building strong
relationship with multiple suppliers will help organisation break monopoly at times of rise in
price of raw material.
Secondly, in order to deal with large customer base, selected company has to come up
with innovative products on consistent basis to reduce switching of customers to other brands.
M&S have used strategy of research that means understanding of costumer wants on what
services or goods they wish to get (Kang and Kim, 2017). This approach has helped chosen firm
be service oriented rather than product oriented. Lastly, examination of all external forces has
created a need for chosen firm to collaborate with new competitors in market for increasing
market share in industry of retail business.
TASK 4
P4 Application of various models and concepts to construct and interpret strategic planning
Strategic plan: The plan for increasing profitability and sustainability of the firm involves
reducing costs of their products and offering low priced goods to attract consumers from low
income background. In order to maintain sustainability the firm is required to construct recycling
structure which will not only lower costs of the firm but also increase sustainability.
Objectives:
 To increase profitability and sustainability of the firm
 To reduce cost of the products
 To reach lower class consumers by offering affordable products
In order to achieve various objectives present in this business strategy various
frameworks need to be considered by the company (Gauthier, 2017). This will give the

company information about the most suitable directions that the company needs to take so that
their strategy yields successful result.
STP Analysis
Segmentation:M&S segmentation technique involves assortment of consumers on the
basis of their products. The organisation delivers wide range of products for men women and
children along with banking and energy services for consumers who need financial services. In
order to achieve objectives of business strategy the organisation needs to segment their
consumers on the basis of their economic background. This involves offering low priced goods
to consumers from lower economic background.
Targeting: The firm currently targets consumers from elite and upper middle class
background with emphasis on young consumers fro their clothing lines. The organisation neds to
offer environment friendly with affordable prices in order top target young consumers and
shoppers from every financial position.
Positioning: The organisation aims to position their high quality and high price products
in the reach of consumers from every income section of the society by giving occasional
discounts and seasonable offers. In order to increase profitability of the firm, they need to
position their products for consumers from lower middle class sections of the society.
Bowman's strategic clock: Bowman's strategic clock is framework which provides
information about various options available for positioning product in order to secure
advantageous position in the industry (Gauthier, 2017). Various options present in this model in
relation to the business strategy for M&S are provided below: Low price and low added value:This stage of the framework does not offer the
organisation a competitive position due to low quality products along with low
differentiation. The respective organisation can not afford this strategy as profits are
generated by producing large amount of low quality products and offering them at
minimum price. Low price: This phase involves offering products at low price in order to attract high
number of consumers. This strategy provides low profit margin and is based on
manufacturing high amounts of product in order to gain medium profitability despite low
profit margin.

 Hybrid: This stage of the framework involves offering quality products at affordable
prices with high added value in order to attract consumers from every economic
background (Feng and Saginov, 2018). The organisation needs to utilise this strategy by
offering low price products without compromising on quality and increasing perceived
value of the products through their sustainability programmes. This will increase the
consumer base of the company and help them achieve objectives of their business
strategy. Differentiation: This phase involves offering products relatively higher price and giving
consumers value through extensive and distinct branding strategies. This increases value
of the product in the mind of the consumers and helps the company generate profits
despite relatively high price of goods. Focused differentiation:This strategic position involves selling profits at high price and
gain profits by converting products into status symbol (Bele, Panigrahi and Srivastava,
2020). This strategy is aimed at elite consumers and alienates customers from low
backgrounds. Risky High Margins:This strategic position involves selling products at high price
without offering added value through branding or marketing campaigns. This strategy
reduces the profitability and consumer base of the company. Sue to the risk associated
with this strategy, the respective firm need to avoid using this positioning strategy for any
of their products. Monopoly pricing:This positioning strategy works for organisations which are the sole
business offering certain product. As M&S does not operate in a monopolist industry this
strategy is not helpful in achieving various objectives of their business strategy.
 Loss of market share: The organisation in this situation offers their products at average
market price without any additional value constructed from branding strategies. This
results in reduced profitability of the company as the consumers purchase alternate
available in the market (Ekanem, 2017). Therefore, this strategic position is not suitable
for the respective firm.
The most suitable strategic position for the M&S is the Hybrid position as it allows the firm to
offer products at lower price in order to capture consumers from low income backgrounds. In

addition to this the firm will be able to increase value of their products through their
sustainability programmes.
Promotional tactics of M&S
Product: The organisation offers variety of clothing, food, home décor and beauty
products. Along with this the organisation offers energy and banking services through their
subsidiaries. Such variety of products and services will help the company achieve their business
objectives as it large consumer base.
Price: The organisation follows premium pricing which includes offering their products
at high price in order to attract consumers from the elite sections of the society. The organisation
needs to utilise competitive pricing policy in order to expand their consumer base and improve
profitability.
Place: The organisation has more than 1400 outlets across the globe and has
implemented various policies to enhance sustainability at these stores. This will reduce energy
wastage and overall costs of the company which will increase the profitability of the firm.
Promotion: The organisation promotes their products by informing consumers about
their CSR initiatives (Bele, Panigrahi and Srivastava, 2020). This will not only improve the
reputation of the company among climate conscious youth but also reduce energy costs of the
firm.
People: The organisation has trained their employees to help the company achieve
various CSR goals such as increasing sustainability of the firm. This will enhance the brand
value of the enterprise among young consumers. In addition to this the company needs to utilise
various automation technology to reduce labour costs and improve profitability.
Physical Evidence: The company is improving their manufacturing process continuously
in order adopt sustainable practices such as constructing systems to use recycled plastic and use
energy saving technology. This will not only reduce cost of the company but also build an
environment friendly image of the brand.
Process: The organisation sells their products through both online and offline mediums
which has improved the response rate and reach of the firm. Apart from this the company needs
to use advance technology to reduce environmental harm caused from their delivery procedures.

M4 Strategic management plan which has tangible and tactical strategic priorities
M&S needs to implement a strategy which focuses on attracting consumers from low
income backgrounds by offering goods at affordable prices (Barrow, Barrow and Brown, 2018).
In order to reduce overall costs of the firm. Investment in energy saving technology which
increases sustainability of the firm is necessary. The organisation can reduce labour costs by
using automation technology to replace workers. Promotion of various sustainability initiatives
will help the company attract young consumers while also reducing the overall costs of the
company. This will expand the consumer base of the organisation and help the company achieve
various objectives of their business strategy swiftly and effectively.
D1 Application of environmental and competitive analysis to formulate useful set of directions,
aims and strategic operations
The above analysis have broadly impacted business environment and market competition
arising in retail industry. The strategic analysis of internal & external environment of chosen
firm give organisational managers a view of what are current market trends as well as needs
according to firm's capable resources (Xu, 2020). Environmental analysis on other hand help
chosen company identify external treats of new entrants, new technologies or dynamic change in
prices. Detection of these threats help manager develop new strategies for future productivity &
profitability of selected corporation. Market researchers of M&S have identified opportunities in
form of innovative products, prospective consumers, market segmentation, technology up
gradation and increase in market share than others in competition market.
CONCLUSION
From the above report it is determined that in order to construct an effective strategy the
organisation needs to conduct detailed evaluation of various internal as well as external factors
affecting the company. Internal analysis helps the company gain information about their
capabilities and flaws. External analysis reveals information about various elements which are
not in the control of the organisation, this helps in construction of policies to overcome the
negative impacts of such elements. Competitive analysis helps the company understand their
position in comparison to their opponents which is useful in formulating effective business
strategies.

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(Books and journals)
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