Strategic Management Report: External Environment Analysis of M&S

This report provides a comprehensive strategic analysis of Marks & Spencer (M&S), a British multinational retail company. It begins with an introduction to strategic management and its importance in guiding an organization towards its objectives. The report then applies a PESTLE analysis to examine the external environment, considering political, economic, social, technological, legal, and environmental factors influencing M&S. Porter's Five Forces model is employed to assess the competitive landscape, evaluating the threat of new entrants, bargaining power of suppliers and buyers, the threat of substitutes, and rivalry among existing players. The report further delves into M&S's mission and vision statements, assessing their alignment with market demands. It also explores the company's strategic competencies and capabilities using the VRIO model and value chain analysis to understand how M&S creates, delivers, and captures value. Finally, the report discusses possible strategies M&S could follow to defend its core business, culminating in a conclusion summarizing the key findings and recommendations.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Application of appropriate model in order to review the external environment....................3
The probable industry scenarios facing the company within its existing market domains....5
TASK 2............................................................................................................................................7
Mission and vision statement of the company whether fulfill the demand of marketplace...7
Company strategic competencies and capabilities.................................................................7
VRIO Model...........................................................................................................................7
How company creates, delivers and captures value within the industry .............................10
Value Chain Model...............................................................................................................10
TASK 3..........................................................................................................................................11
Possible strategies that company follow in order to defend its core business......................11
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
In context of management, strategic management is the process of continuous planning,
controlling, monitoring, assessing and analyzing all the essential requirements in order to meet
the goals and objectives of an organization. It is the process which assist the leaders and
managers in order to assess the current situation of the company, develop strategies according to
the requirement and implement them. Strategic management give overall direction and guidance
to an organization in order to attain their objectives effectively (Doz, 2017). In the present report,
Marks & Spencer is chosen as a base company. It is a British multinational retail company which
was founded by Thomas Spencer and Michael Marks in the year 1884. Headquarters of the
company is located in London, UK but on the other hand company have its stores across the
world. Marks & Spencer generally deals in home products, clothing, food products and many
more. In the present report various topics are going to be discussed which includes application of
model in order to examine the external environment. Along with this, various possible strategies
are going to be examined in this report. Apart from this, in this report company’s strategic
competency and capabilities are going to be discussed in detail.
TASK 1
Application of appropriate model in order to review the external environment.
In the present report, Marks & Spencer is chosen as the base organization which mainly
deal in clothing products, food items and home products as well across the world. It is the
company which has its business operations across the world and has currently approximately 959
stores in U.K. (Foss and Saebi, 2018). Apart from this, management team of the company
decides to examine the external environment for future growth. PESTLE analysis of Marks &
Spencer are as follows:
PESTLE Analysis: In the present context of Marks & Spencer, managers of the
organization adopt PESTLE analysis in order to examine the external market condition. External
environment highly affects the performance of an organization and has huge impact on the
growth of the company. Elements of the PESTLE analysis are going to be explained as follows:
Political Factor: It is the first and foremost factor which includes all the rules and
regulations set by the government. It has been identified that government formulate some
legislation which need to be follow by each and every organization in order to perform their

work effectively. If these rules and regulations are not implemented effectively within the
company, they will be fined and sometimes organization's forced to close down their business
functions. In context of Marks & Spencer, Political condition of the country is quite strong and
stable which assist the management team of company. This as a result help them in operating
their functions effectively within the marketplace (Grunig, 2013).
Economical Factor: It is the factor which includes employment rate, exchange rate,
interest rate which shows the overall economy of the company. Strong economy of the country
helps in enhancing the living standards of individual. In order to maintain the economy system of
the country strong, government reduces the tax rates so that it will give positive result to the
whole country. In the context of Marks & Spencer, it has been identified that labor cost of the
country is quite high which adversely affect the overall working of the company. Along with
this, some economic factor such as financial and inflation crisis may affect the overall
functionality of Marks & Spencer.
Social Factor: Social factors includes the beliefs, culture, values, lifestyle and
preferences of an individual living within the organization. It is very important to provide high
quality goods and services to the customers in order to satisfy their needs and wants effectively.
For this, it is very essential to examine the market in advance and provide goods accordingly. In
the context of UK, current lifestyle of the country is customer prefer western clothes which is
similar to the products offered by Marks & Spencer. Therefore, social culture of the country
positively affects the working environment of company.
Technological Factor: One of the most effective factor is technology in order to
maintain the growth of the organization. By using highly upgraded technology or equipment
managers will be able to provide high quality goods and services to their customers. Managers of
Marks & Spencer adopt latest technology which is RFID which helps in counting the available
stock on regular basis. This technology helps in manufacturing products according to the
requirements and reducing overlapping of work effectively. This as a result helps in increasing
the overall efficiency of the company.
Legal Factor: It has been identified that legislation changes on a regular basis which
highly affects the business functionality in both positive and negative manner. It is the factor
which is quite similar with political factor as both includes legislation and laws formulated by
the government. It has been identified that there are various laws and legislation which is

implemented by management team of Marks & Spencer within their organization. Some of these
laws are health and safety act, anti discrimination act and so on (Hair and et. al., 2012). This as a
result create positive working environment within the company which enhance the efficiency and
productivity of employees.
Environmental Factor: Organizational culture get affected by the external as well as
internal environment. It has been identified that it is required by the company to adopt
environment friendly raw material in order to produce high quality and Eco friendly goods and
services. In the present context of Marks & Spencer, it has been analyzed that company is
currently facing high pressure from the government of UK in order to enhance the environmental
condition. For this, company decides to renew their resources and work to reduce carbon
footprints up to 60% till 2022.
With the help of above mentioned PESTLE analysis, it has been identified that company
can expand their business activities as well as develop strategies on the basis of this analysis. It
will assist in developing effective policies and procedures for the organization. Apart from this,
PESTLE will assist in creating strategies according to the environment.
The probable industry scenarios facing the company within its existing market domains
In order to examine and analyzing the current situation of the company at the competitive
marketplace, Porter's five force model is used by the management team (Hill, Jones and
Schilling, 2014). It is strategic management tool adopted by every organization in order to
examine the position of the company at the marketplace. In context of Marks & Spencer,
managers of the company adopt this tool which includes five forces which are going to be
discussed below:
Threat of New Entrant (LOW): In context of retail sector, threat of new entrants is low
which enhance the overall profitability of a company. Therefore it will assist Marks & Spencer in
order to enhance their profitability at the marketplace. Also, managers can set standards for their
competitors which will reduce the change of competition. Along with this, they will be able to
set monopoly at the present marketplace which provide them assistance in order generate more
profitability.
Bargaining Power of Suppliers (LOW): It has been identified that almost each and every
company buy raw material from suppliers available at the marketplace. In context of Marks &
Spencer, bargaining power of supplier is low as company have large number of suppliers which

provide them raw material in their decided price. With this, managers of M&S can easily
convince its suppliers to work with them in future as it is large in size and can give suppliers
huge contracts (Hill, 2017). Positive support of supplier will also help them in producing
products according to customers’ requirement in the provided time frame.
Bargaining Power of Buyers (HIGH): Bargaining power of buyers are high as there are
large number of organisation which provide similar kind of products and services to their
customers. Customers wants high quality products at very low and affordable cost so they can
easily switch to another brand who provide them similar kind of products and services. This as a
result reduce the overall profitability and brand image of the company. Therefore, it is very
essential for the management team of Marks & Spencer to provide high quality products along
with affordable price in order to maintain strong position at the competitive marketplace. Also,
by adopting unique advertising techniques such as discounts, offers, coupons, company might
attract large number of customers towards their organisation.
Threat from Substitute (HIGH): When a company provide similar kind of products and
services and satisfy the requirements of customers, affects the profitability of companies dealing
in similar kind of product. In the present context of Marks & Spencer, it has been identified that
there are large number of substitutes available at the marketplace which creates difficulties for
other companies. Therefore, it will create complexities for the company in order to maintain their
brand name between competitors available at the marketplace. Apart from this, customers can
easily switch to other brand available at the marketplace which decreases the profitability of
company. Also, it will become difficult for the company to maintain their sustainability at the
competitive marketplace (Hitt, Ireland and Hoskisson, 2012).
Rivalry among the existing players (HIGH): Competition level in retailing sector is
quite high as there are ample number of competitor companies available at the marketplace
which highly affects the performance of industries. In order to reduce the competition level,
managers of Marks & Spencer decide to bring innovative and creative products in future within
affordable price so that they will grab attention of large number of customers. While covering
future analysis main competitors who can give high competition to Marks & Spencer are Tesco,
Sainsbury's, Asda etc. All these competitors will affect the profitability as well as market share
of the company. Therefore, it will beneficial for Marks and Spencer to collaborate with one of its
successful competitor at marketplace in order to sustain longer and enhance its market share.

With the help of Porter's five force model, managers of the company will be able to
identify the competition as well as current position of the entity at marketplace. Along with this,
it has been identified that there is large number of substitutes and competitors available at
competitive marketplace which affects the overall profitability and sales of the organization.
Along with this, in order to examine the current situation, Porter's five force model is used by the
management team of Marks & Spencer.
TASK 2
Mission and vision statement of the company whether fulfill the demand of marketplace
Mission Statement of Marks & Spencer: Mission statement of the company is to develop
aspirational quality of product which is reachable by everyone.
Vision Statement of Marks & Spencer: Vision statement of the company is to be the
standard against which other companies or products are being measured.
As per the current demand of the marketplace, Marks & Spencer provide western clothes
to their consumers which is high in quality and attractive. Therefore, vision and mission
statement of the company successfully fulfill the demand of marketplace in an effective manner.
Company strategic competencies and capabilities
VRIO Model
Resources Valuable Rarity Inimitable Organized What is the
result?
Strong brand
image
Strong brand
image
- - - Competitive
Disadvantage
Products Products Products - - Partially
competitive
Software Software Software Software - Competitive
advantage on
temporary basis
Personnel Personnel Personnel Personnel Personnel Competitive
advantage

VRIO analysis is a strategic tool used by companies in order to identify and evaluate
existing resources of the organisation so that they will be able to gain competitive edge. VRIO
stands for Value, Rareness, Inimitable, Organisation (Hitt and Duane, 2017). All these elements
are going to be explained in context of Marks & Spencer are as follows:
Valuable: It is one of the component which give and enhance the value of an
organisation as well as assist them in order to accomplish their goals and objectives in an
effective time period. In the present context of Marks & Spencer, some of the element which
comes under this factor are as follows:
 Strong brand image: Marks & Spencer have strong brand image at the competitive
marketplace which helps them to enhance their profitability and add value to their
company. Along with this, it will provide satisfaction to the customers by offering high
quality products.
 Products: Marks & Spencer provide high quality and effective products to their
customers along with the aim of gaining trust, loyalty by using advanced technologies.
 Software: Marks & Spencer adopt management software in order to manage their
business functions to manage the global business operations and to increase the overall
efficiency across organisational premises
 Personnel: Employees of Marks & Spencer perform their task in an effective manner
which helps the management team in order to attain their goals and objectives within
given time frame. Along with this, managers provide training sessions to the employees
on regular basis, so that they will be able to perform their task in an effective manner
(Keupp, Palmié and Gassmann, 2012).
Rarity: It is the element which helps in separating the company with their rival
companies. It has been examined that if an organisation wants to gain competitive edge at the
marketplace, it is required by them to place some extra efforts. In context of Marks & Spencer,
some of the rare elements are as follows:
 Products: Products of Marks & Spencer seems to be very rare as they create those
products and services by using upgraded tools and techniques. Managers upgrade their
technologies on a regular basis which becomes difficult for other rivalry companies
(Meyer, Neck and Meeks, 2017).

 Software: Software used by management team of Marks & Spencer in order to conduct
their operations effectively is quite rare and designed according to the requirements of
company.
 Personnel: Staff members of Marks & Spencer have unique skills and competence which
helps the company in order to accomplish their pre defined goals and objectives. These
skills of the employees are quite rare and not be copied by any other person.
Inimitable: Each and every organisation have some resources and elements which is
difficult for others to copy and imitate. In the present context of Marks & Spencer, one of the
major imitable resource are personnel of the company. Software: Management software used by Marks & Spencer is designed and created on
the basis of requirements of company. Therefore, it is not copied by any other firm.
 Personnel: With the help of regular training and development sessions, organisation will
be able to develop strong and positive relationship among the employees. Along with
this, it will provide various opportunities to them in order to grow in near future. Apart
from this, training sessions assist the employees in order to deal with difficult situations.
In the context of Marks & Spencer, staff members are imitable resources for the company
(Mudambi and Puck, 2016).
Organized: At the end of VRIO model, organised is the last element. There are some
resources which need to be organised effectively in order to accomplish the goals and objectives
of the company. In reference to Marks & Spencer, organised element of the company is
employees. Personnel: Staff members of the company are organised in such an effective manner,
which assist them in order to deal with complex situation arise within the business
organisation of Marks & Spencer.
How company creates, delivers and captures value within the industry
Value Chain Model
A value chain is a set of different activities and functions which is performed by an
organisation so that they can provide valuable products and services to the customers. It includes

various activities such as marketing, designing, distribution and so on. If management team of
Marks & Spencer, apply value chain strategy in the organisation includes primary as well as
supportive activities (Priem and Carr, 2012).
Primary activities: It is one of the most important activity the first activity for an
organisation which includes, inbound and outbound logistics, operations, services, marketing and
sales. All these activities are explained below in detail:
 Inbound logistics: Under this, marketing team of the company examine trends, demands
and preferences of the customers and then convey the information to the management
team of Marks & Spencer.
 Operations: This is the stage, which includes all those activities which is performed by
the employees of Marks & Spencer. In this, employees perform their work in order to
convert raw material into finished goods.
 Outbound logistics: It is the stage where management team of Marks & Spencer select
distributor in order to deliver goods to the consumers.
 Marketing and sales: Under this, management team of Marks & Spencer adopt effective
advertising strategies as well as distribution channels (Sparrow, Hird and Cooper, 2015).
 Services: This is the phase where company provides after sale services to their
consumers if they face any kind of problem related with the product.
With the help of above mentioned primary activities, it has been concluded that all the
above mentioned activities help in attracting large number of customers towards the
organisation. Also company provide after sales services which will assist them in order to satisfy
their customers and retain them for a long period of time. Outbound logistics helps in providing
goods and services in an effective manner and within specific time period.
Supporting activities: It refers to the activities which helps the primary activities in order
to perform their work in an effective manner. It includes procurement, infrastructure, HR
management, technological advancement. Some of these are explained below:
 Technology development: With the help of this, management team of Marks & Spencer
will develop effective products and services. Along with this after examining the
requirements and demands of customers, company use upgraded technologies in order to
enhance their sales.

 Human resource management: It is the strategy which is used by Marks & Spencer, in
order to hire and recruit new and skilled employees so that they can perform their task in
an effective manner.
It has been concluded that, secondary activities are conducted to support primary
activities. Effective HR management, use of upgraded technology helps in attain goals and
objectives of the company effectively. Along with this, if company uses latest technology then
they will be able to produce high quality products and services. This as a result helps in attaining
organisational goals and objectives within specific time frame.
TASK 3
Possible strategies that company follow in order to defend its core business.
Porter's Generic Strategies Model: It refers to the model which describes how an
organization pursues competitive advantages at the market place. Position of a company within
the industry defines whether a firm comes under profitability or not. Under this strategy,
differentiation and cost leadership take competitive advantages in broad marketplace. On the
other hand, differentiation and cost focus strategies are adopted in a narrow marketplace (Tan
and Ding, 2015). One of the major aim of these strategies is to help the organization in order to

acquire competitive edge. In context of Marks & Spencer, managers adopt this strategy which is
going to be explained below:
Cost Leadership: It refers to the strategy where firms decide to provide low cost products
and services to their customers within whole industry. It has been identified that sources of cost
advantages are largely depends upon the structure and size of the company. Under this strategy,
managers of the company decide to provide products and services which are low in cost but
satisfy the requirements of customers. In the present context of Marks & Spencer, it has been
identified that company launches new product at the market place which is men's wallet.
Therefore, in order to attract large number of customers towards their organization, they might
use cost leadership strategy which mainly focuses on selling low cost products.
Differentiation Strategy: This is the strategy which mainly focuses on development of
goods and services effectively. Apart from this, managers of the company examine the strategies
and policies and then formulate their own strategies in order to beat the competition. Companies
can render the offerings in order to treat in different way within the industry. In order to make
the product different from others, companies need to adopt various unique attributes. Marks &
Spencer can offer can adopt this strategy by introducing a new product with unique features such
as security lock system in wallet. With the help of this system, no one will be able to open the
wallet except the owner. This as a result will help in grabbing attention of large number of
customers.
Focus Strategy: Under this strategy, organisations mainly consider all these strategies in
order to focus niche market segment. Along with this, it has been identified that focuses mainly
select a specific group within the industry and then develop their policies and strategies in order
to gain profit at the competitive marketplace. Here, focus strategy is divided into two main parts:
cost focus and differentiation focus.
 Cost Focus: In this type of strategy, management team of Marks & Spencer mainly
focuses on enhancing the internal efficiencies of organisation because of the external
forces. For instance, managers might adopt this strategy where they provide products and
services which is quite low or affordable in price. This will assist them in enhancing their
profitability.
 Differentiation focus: According to this, it is essential for the organisation to mainly
focuses on differentiating their offerings from competitors so that it will be beneficial for