Strategic Management Report: Analysis of Marks and Spencer's Strategy

This report provides a comprehensive strategic management analysis of Marks and Spencer, a British multinational retail company. It begins with an introduction outlining the report's objectives, followed by a conceptual framework addressing key issues like pricing and competition. The report then delves into environmental analysis, utilizing PESTLE and Porter's Five Forces models to assess external factors. Capability analysis employs value chain analysis and VRIO criteria to evaluate internal strengths and weaknesses. A TOWS matrix is used to formulate proposed strategies, which are then followed by a strategic evaluation. The report concludes with a summary of findings and recommendations for Marks and Spencer's strategic direction.

Strategic Management

Table of Contents
1. INTRODUCTION.......................................................................................................................1
1.1 Objective of the Report....................................................................................................1
2. Conceptual Framework................................................................................................................1
2.1 Key Issues.........................................................................................................................1
3. Environmental analysis................................................................................................................2
3.1 PESTLE Analysis.............................................................................................................2
3.2 Porters forces....................................................................................................................3
4. Capability Analysis......................................................................................................................5
4.1Value Chain Analysis .......................................................................................................5
4.2 VRIO Criteria...................................................................................................................6
4. 3 Strength and weakness of Marks and Spencer's value chain...........................................7
5. Proposed Strategy........................................................................................................................8
5.1 TOWS Matrix...................................................................................................................8
5.2 Strategies..........................................................................................................................9
6. Strategic Evaluation.....................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

1. INTRODUCTION
Strategic management (SM) is one of the most important aspects for organisation. It
provides growth and development opportunity to the business. There are many strategies that are
considered by companies so that they can attain their goals and objectives in a better way. SM
covers formulation and implementation of initiatives that are considered by the top management
of business. Marks and Spencer is a British multinational retail company that is dealing in
clothing and food sector. This is effective in their services and they are providing the same to a
large number of people (David, 2011). In this report, there is an explanation regarding goals and
objectives, environmental and capability analysis, PESTLE, Porter's five forces model and
SWOT analysis with reference to the chosen firm.
1.1 Objective of the Report
The key objective of this report is based on following outcomes-
 To identify internal and external factors of environment that have impact over the
operation of Marks and Spencer.
 To determine and evaluate the essential success factors.
 To consider internal environment like VRIO Criteria, Value chain analysis and its
strength and weakness.
 To make the evaluation of current strategy of Marks and Spencer.
 To suggest alternative strategies that can be adopted by cited company.
2. Conceptual Framework
2.1 Key Issues
The key issue that is faced by customers of Marks and Spencer is that the price of their
products and services is very high which can't be easily afforded by every segment of users. It is
required for this company to make ficus on its pricing strategy so that they can offer its product
at minimal rate (HittIreland and Hoskisson, 2012). Many strategies are considered by cited
company in this regard. There is another issue that is faced by them i.e. High level of
competition. Different measures are required to be adopted by the firm so that they can secure
competitive advantage. There are many companies that are effectively providing their services
in market and this company has been criticised for its poor performance by its competitors.
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3. Environmental analysis
To make the analysis of external environment of Marks and Spencer, this report will cover two
key model that are PESTLE and Porter's five forces.
3.1 PESTLE Analysis
It stands for Political, Environmental, Social, Technological, Legal and Economical
factors that are within environment. These factors affect Marks and Spencer's marketing position,
low price theory and its business strategies. This report will cover the vast analysis of each factor
that create threat and opportunity for cited company to sustain in competitive era (Hill, Jones and
Schilling, 2014).
 Political
It covers political instability, governmental rules and regulations, pressure from trade
union and barriers. The amount that is charged by government for trading outside the territory is
the biggest political issue. It is required for this company to comply with EU regulations. There
are many changes that took place due to variation in political party and such changes have
sometime negative impact over the business.
 Economical
There are some of the factors that are covers under economical factors as inflation
(price), business cycle as economic conditions and exchange values of currency. When some
changes arise in environment then it creates barriers in the performance of organisation. It has
vast impact over cost and profitability of company.
 Social
These are the factors that arise due to variation in social policy and norms like social
mobility. It is required for this business to fulfil social standards so that they can sustain for
longer period in market. This is import for this company to consider social interest as well so
that they fulfil the needs and wants of social group (Wheelen and Hunger, 2011).
 Technological
There are many technological variation that took place time to time. It is important task
for this company to consider it so that they can provide their product at large level.
Technological variation affects potential of current employees as well as organisation's
effectiveness. When there is variation in technological factors then it is required for business to
organise training programmes for its workers in this regard.
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 Legal
It is the duty of the company to fulfil all the legal criteria and legal norms so that they can
run their business more effectively in competitive market. It helps to create trust of the customers
on the origination's values and beliefs. When there is new rules and regulation implemented then
it is the responsibly of the company to comply with it otherwise it creates negative impact over
the business (Eden and Ackermann, 2013).
 Environmental
There are many environmental protection that are required to consider by Marks and
Spencer so that its manufacturing process can't affect environment. It is required for this
organisation to consider surrounding friendly system, proper wastage disposal. They should use
minimal leather stuff because it creates pollution and spoil environment as well.
Macro Environmental factors Threat and Opportunity
Political aspect High level of threat.
Economic Factor Threat is moderate and low.
Legal aspects Threat is high.
Technological factors Threat is low but good
opportunity for new market.
Social aspects. High Opportunity and low level
of Threat.
Environment factor Good opportunity and high
threat.
3.2 Porters forces
There are five forces that have impact over the business of Marks and Spencer. These are
the factors that are required to consider by them so that they can make specific measure of their
performance (Slack, 2015).
 Power of Buyer
The purchaser has power to influence the business of the company. If all the consumer collective
decide not to accept product and services of organisation then it may have negative impact it has
adverse impact over the future of the company. It is required to consider it effectively and
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provide product and services as per the requirement of buyer. The cost of the product is the most
effective element where it is required to make focus. The bargaining power ODF the buyer of
this company is high due to number of competitors in market which is a biggest issue.
 Power of supplier
There are many suppliers of this company who provide raw material and other utilities to them
so that Marks and Spencer can make production in effective manner. It is required for them to
make good relation with its suppler and consider their interest so that they can't create barriers in
future. Like cloth, threats, food material are some of the things that are supplied by suppliers to
Marks and Spencer. The influencing power of supplier is medium because there are number of
suppliers in market from where company can purchase their product (Hodgkinson and Healey,
2011).
 Threat of new entrance
The market competition is increasing day by day. There are number of companies that are
entering into market which is the biggest threat for the organisation. It is required for this
company to consider the entrance of new businesses in market and formulate their plans and
strategies by considering it. In present time, there are many new small business and ventures are
incorporated which is biggest issue in the operation of Marks and Spencer.
 Threat of Substitute
In present time, many substitute are available in market for every product. It is require for Marks
and Spencer to consider it and plan their strategies accordingly. There are many brands that are
providing better food and clothing stuff and it creates competitiveness in market. It is the biggest
force that influence the business of company. The substitute of food product and cloths are not
largely available so there is least threat (Ackermann and Eden, 2011).
 Threat of existing rivalry
It is the power and strength of market competitors. How many rival are of business, who are they
and is the quality of their product is better as comparison to your business. When competition is
intense, there is opportunity for the company to attract buyers through aggressive price cut and
high advertising campaign. If there are number of rivalry in market then there is chance that
people can move to other company where they find best deal. As the biggest issue is competition
so there is high level of rivalry which is most effective threat in this regard.
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Five Forces Level
 Power of Buyer High
 Power of supplier Medium
 Threat of new entrance High
 Threat of Substitute Low
 Threat of existing
rivalry
High
4. Capability Analysis
4.1Value Chain Analysis
It is the effective tool that is used to make the analysis of internal activities of the
organisation. It has main objective to identify that which activity is most suitable to the company
and which activity required some improvements to secure competitive advantage in market.
There are different activities of Value chain analysis as-
 Primary activity: This activity is performed so that cost can be reduced so that
organization can charge low cost from its customers for its product and services.
Inbound Logistic It is the important step where it is required for the company to key focus.
In this stage, the receiving and warehousing of raw material is considered.
Its distribution process for manufacturing activity is also covered under
this segment (Rothaermel, 2015).
Operations This is essential process where input is transformed into final product and
services so that it can be effectively available to customers. At this step, it
is important for the company to make focus so that they can provide best
product to people as per their requirement.
Outbound logistics At this stage, warehousing and distribution of final product is considered.
The cited company requires to put their finished goods in warehouse and
from their they can distribute their commodities to final user.
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Marketing and
sales
Here, the marketing of the product is done so that the demand can be
increased. When demand of final commodities enhanced then there is
increase in sales volume.
Service It is the after sales service. When the product is sold to the customers then
there are some of the ancillary services that are required to provide to the
user so that people can be satisfied at large (Gassmann, 2012).
There are some of the activities that are considered so that adequate support can be
provided to primary activities like-
The infrastructure
of firm
There are some of the essential elements that are effective part of this as
organizational structure, culture of the business, control mechanism.
Human resource
management
It is required for this company to consider best HRM policies so that they
can enhance the effectiveness of their services like qualified employee
recruiting, hiring, training, compensation and development.
Technological
development
There are some of the technologies that are required to consider so that
adequate support can be provided to value creating activities.
Procurement At this stage, purchasing of input like material, supplies and equipment are
considered.
4.2 VRIO Criteria
VRIO (Value, Rarity, Imitability and Organisation) is a effective tool in strategic planning and it
helps to make best business decision. This is the best way to secure competitive advantage. It is a
internal analysis which is used in identification and evaluation of resources ( Priem, Li and Carr,
2011).
 Value of Resources
There are number of resources are required that are valuable. It is required to value such
resources so that best output can be achieved. Resources helps the company in different ways
like internally and externally. If it is not effectively then it creates weakness to the organisation.
 Rarity of Resources
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It says how rare is the resources. If it is rare then it is the strength to the company because
competition will have hard time while using it. This is important for the above company to use
rare resources effectually so that they can secure competitive advantage.
 Imitability of Resources
Rare and difficult to acquire resources are hard to imitate. It provides competitive advantage.
This depends on the business to use it as power or crate opportunity or eliminate the effect of
threat. There are some of the resources that can't be copied and reproduce so it is important to
effective use.
 The value of Organisation
It is the last step of VRIO. If the resources pass effectually through above three steps then it
company has to organise otherwise benefits get slip. There is chance where organisation can
loose competitive advantage in market (Goetsch and Davis, 2014).
4. 3 Strength and weakness of Marks and Spencer's value chain
Strength Weakness
The main strength of Marks and Spencer is its
quality product and services. It is one of the
company that is providing their services in
effective way as comparison to its market
competitors.
Cost expenditure- This expenditure in
operation has been increased as comparison to
its past year data. Due to technological up-
gradation, the expenses get increase.
The Distribution channel is one of the key
strength of this company. They adopt effectual
distribution channel like coordination with
super market of UK. It is effective in providing
their services to large number of people.
More focus on cost reduction techniques may
create negative impact over the performance of
the company. There is chance where they may
compromise with quality.
The consumer of its commodities are very
happy because they give more value for money
as comparison to market competitors. They
provide low rate product.
Staff Requirement- Due to some changes in
market, it is required for this company to
employ adequate staff that create cost burden.
Key strategy- They are low cost operator
where they charge low price from its
Reputation- There are many market competitor
at present who are offering similar and even
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customers. They create high competition in
term of their cost.
better quality product. It affects the brand
value and reputation in market.
Creativity- This company has introduced many
services so that they can increase their market
share as well as crate more option to generate
income.
Leadership- At present, this company is
loosing their leadership style in market due to
threat of new entrance (Killen and et. al.,
2012).
5. Proposed Strategy
5.1 TOWS Matrix
TOWS is a acronym of Threat, Opportunity, Weakness and Strength. In this Threat,
Opportunity are external factors where as Strength and weakness are internal factors.
It enables the company to match its strength with opportunity so that maxi-maxi strategy
can be developed. Like strength of the organisation as brand loyalty and brand recognition can be
used to grab new opportunity to launch new product.
On the other hand, the vulnerability of the organisation to threats which is based on its
weakness. It helps to facilitate new development of strategy so that the threat of the organisation
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Illustration 1: TOWS Matrix

can be eliminated. It is mini-mini Strategy. Like: It covers the development of strategic alliance
and to withdraw some of the strategy from the market (Bryce, 2017).
In mini maxi strategy, the organisation make the identification of some market
opportunity so that they can outsource some aspects of business operation. It helps to over come
the weakness where there is lack of skills within the company.
At Maxi-mini strategy, it is required for the company to eliminate threats of their
business by proper utilizing its strength. There are some of the grates strength to the company
that can be used so that company can eliminate future threats.
5.2 Strategies
Business level Strategy
It is the strategy that is considered by the organisation so that they can provide maximum
value to its customers. It helps to gain the competitive advantage in market by using core
competencies in specific, individual product and services (Vogel and Güttel, 2013).
Cost leadership strategy is being sued by this company so that they can provide product and
services at low cost. This strategy helps to remain competitive even with rivalry, new entrants,
suppliers' power, substitute products, and buyers' power. In this the manager of the company
decide to cost control measures and reconfigure the value chain as Needed.
Corporate level strategy
It is related to strategic decision that organisation considers. It has influence over
organisation. Financial performance, merger and acquisition, HRM and proper allocation of
resources are considered in this strategy.
Combination of both the strategy
Marks and Spencer will use combination of both the above mentioned strategy so that
they can secure competitive advantage in market. It is important for them to consider cost
leadership strategy as well as merger with other leading company so that they can provide their
best services to large number of people (Boyd and et. al., 2012).
6. Strategic Evaluation
To measure the effectiveness of an organisation it is very important to conduct SWOT
analysis. SWOT refers to strength, weakness, opportunities and threats. This can be required by
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firm to make certain changes in entire strategy. There are three criteria by which key success can
be evaluated. These three key elements are:
 Suitability: In this firm can identify whether the strategy which has been chosen by
organisation can able to solve certain issues or not. The strategy which is prepared by
marks and Spencer should give benefits to society, make economic sense and suitable for
environment.
 Feasibility: Feasibility is another element which comes into picture while evaluating the
strategies which are formed. Feasibility is related with the resources that are required to
implement strategies. Firm should have all essential resources so that they can implement
strategy in easy way. Resources which are needed can be funding, people, time and
information. There are different tools by which feasibility can be analysis such as
cash flow evaluation, break even and resources development analysis.
 Acceptability: Acceptability refers to satisfaction of stake holders regrading the strategies
which are made. It is very important that strategies which are formulated should be
agreed by all stake holders. Stake holders are having certain expectation from business
like outcomes. So it essential to meet these expectation. For acceptability evaluation there
are tools such as stake holder mapping and what if analysis (Harrison and John, 2013).
These are elements which firm need to keep in mind so that strategies which are made
should be evaluated whether it going to work or not.
CONCLUSION
As per above study it can be concluded that strategy management is one of the important
thing that provide assistance to the company. The Marks and Spencer is the effective company
that consider various strategy and always try to propose new strategy. It is required for this
organisation to use Business strategy as cost cutting and corporate strategy like Merger so that
they can secure competitive advantage in market.
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