Executive Summary
In this study, strategic analysis is done on Marks and Spencer. The internal and external evaluation of Marks and Spencer is discussed in the study. It is essential to study the internal and external environment in order to achieve a competitive advantage. Marks & Spencer is one of the largest retail chains in the UK, having prominence and fame all over the industry. The internal evaluation of the study is done by means of the value chain analysis, and the external evaluation of the study is done by means of the Porter Five Forces model. Then the ethical assessment of the strategy and evaluation of the strategy were done. Hence, the study ends with the concluding statement of defining competitive advantage by evaluating the internal and external environment. Thus, the study ends with the proposed recommendations in order to increase business integrity.
Strategic Analysis of Marks & Spencer
Introduction
This study incorporates the understanding of the strategic analysis of Marks and Spencer to achieve the best competitive advantage. The external and internal business strategy is done in this study by means of Porter’s five forces and value chain analysis.
Company Overview
Marks & Spencer is one of the prominent names in the UK in terms of multinational retail companies. It is listed on the London Stock Exchange as one of the prominent and fast-growing stock markets in the world. Its headquarters is in Westminster, London, and is part of the FTSE 100 Index. It targets home products, clothing, and other luxury products which attract consumers at large, and owing to its widespread popularity management of such a big name has decided to ensure its presence across the corners of the world. Since its inception in 1884, it has grown at a massive level, and that fact can be analyzed in the sense that it owns now nearly to thousand stores in the world. During the year 2017, it recorded revenue of 10622 million pounds and a profit of 115.7 million pounds, and all such figures are enough to justify its market standings and preference among potential customers. Currently, many small and large investors are associated with it, and even many multinationals are part of such a gigantic group. In 1998, it recorded massive revenue of above one billion pounds which not only maintained its position among industry segments but also truly realized its mettle and commitment of its management in the long run towards internal and external stakeholders (Eccles, 2015).
Vision Statement
Its vision is to create a standard against the competitors to achieve a competitive advantage
Mission Statement
Its mission are to make inspirational quality accessible to everyone
Values
The values of Mark and Spencer are:
- Quality
- Innovation
- Trust
- Unique Services
Business Strategies
This section of the study is incorporated into the business strategies followed by Marks and Spencer. The formulation of a proper business strategy is highly needed in order to achieve organizational results in an effective and efficient manner. Henceforth, this section of business strategies is divided into two parts the external analysis of the industry and the internal analysis of the industry. Marks & Spencer is one of the largest retail chains in the world and its presence across the globe continuously strives for excellence and innovation through providing quality products and services in accordance with the demands and expectations of valued customers. In this regard, comprehensive internal and external analysis of the company can be done in the following manner:
External Analysis of the Industry
The external analysis of Merck and Spencer is done with the help of Porter’s five forces. It is a tool to analyze business competition. Its role is to determine the industry attractiveness and competitive intensity interns of determining profitability. However, Porter’s five-force analysis of Marks and Spencer is as follows:
Threats of New Entrants
The threat of entrants is low because of the high entry cost in the market.
The threat of new entrants is low in the industry where Marks and Spencer works; it is due to the fact that in order to enter into the new cloth market is really difficult because of the high entry cost and product maintenance cost. Due to their significant knowledge in the field, Marks and Spencer has a cost advantage over the new entrant, and the distribution channel is also very strong. Thus, it has been observed that the threats of new entrants are low because of the huge required capital and the sensitive market reputation. It has been analyzed that the retail market has a high entry barrier because of the need for heavy capital investment. It is becoming very difficult for the new entrants to achieve economies of scale and cost efficacies in an industry where a big organization like Marks and Spencer operates (Islam, 2016).
Threats of Substitute
The threats of a substitute are high because of the high number of products available produced by the retailer at low prices.
The demand for the product by the particular class reduces because of product substitution. It is due to the fact that the customer is easily able to switch towards the alternative. The threats of a substitute are high for Marks and Spencer as the consumers are willing to pay a premium for the label. The consumer is willing to purchase the products at low prices. Therefore, the threats of a substitute are high Marks and Spencer in the industry. So, it is highly important for Marks and Spencer to stay innovative in the industry in order to fulfill customer demand.
The Degree of Rivalry among Competitive Firms
The degree of rivalry among competing firms is high because of the similar price and quality of products produced by other retailers in the industry.
It has been analyzed that Marks and Spencer have been working in a highly competitive market where the degree of rivalry among competing firms is high because of the similar price and quality of products produced by other retailers in the industry. It is because the competitors in the market have been attempting to control the market. Due to the fact threat of substitute products, buyers and suppliers are focusing on grabbing the market. Marks and Spencer has been facing this serious issue as many of the other related companies have been entering the market and offering similar quantity products at reasonable prices. Oasis and Gap have been covering the market by offering highly fashionable products at reasonable prices.
Bargaining Power of Buyers
As the customer’s price is sensitive, then the bargaining power of buyers is high.
The bargaining power of the buyers is very high. It is due to the reason that consumers seek classical clothing and, therefore, become price sensitive. In addition to this, Marks and Spencer has misread the target and failed to achieve the deserted target. It is because the consumers in the UK are not willing to pay any premium prices in support of the British products but rather willing to pay a low price for the high-quality products. However, it has been observed that a product-oriented strategy is needed to satisfy the customer. Therefore, it is the essential duty of Marks and Spencer to focus on a consumer-oriented strategy. Various buyers and other groups are also present in the industry to which Marks & Spencer belongs, and these have the potential to compete with it. Products that are offered by these competitors are also in a position to pose threats to products and services offered by Marks & Spencer.
Barging Power Suppliers
Due to the concentrated purchases of British suppliers, the bargaining power is low.
The bargaining power is low due to the concentrated purchases of British suppliers. Hence, most of the suppliers of Marks and Spencer are from British. The production of Marks and Spencer is directly linked with a few UK suppliers. However, it has been observed that most of the manufacturing of Marks and Spencer is reliant on the UK supplier so the power of the supplier is significantly low.
Internal Analysis of the Industry
The Internal analysis of the Industry is done by means of the value chain analysis. Marks and Spencer can be analyzed in the process of value chain analysis in order to determine the presence of various factors embedded in it, and these can be summed up in the following aspect:
Value Chain Analysis
It is very critical for the association to center around the esteem chain investigation of the association. It encourages the organization to distinguish its essential exercises so as to increase the value of the firm. Value Chain Analysis is an incorporated procedure that enables the organization to achieve a competitive advantage (Wilson, 2015).
The company enjoys sound financial resources being one of the largest multinational retail chains in the world, and its financial strength can be judged from the fact that it enjoyed nearly 10000 million pounds profit in 2017, and such a massive figure is enough to cement its market base and credibility among various stakeholders at large. As per VRIO capabilities exist in view of profitability and other prospects prevailing in an organization that the business of Marks and Spencer to adjust to changing business environment. Marks and Spencer enjoys sound human capital, and it also includes skilled and competent team members having renowned qualifications and exposure across the corners of the world. For managing various aspects of an organization it has to target areas like payroll, professional development, human resource management, training and specialization, and other areas which are considered part and parcel of today’s business environment at large. The capability of Marks and Spencer as per VRIO, is able enough to compete with other competitors, and the same is also on the favored side for the business of Marks and Spencer. Marks and Spencer enjoys a sound repute across the corners of the world and its credibility can be judged from the fact that it has retail outlets of nearly 1000 in the world and also it is in the process of expansion and adding more and more products and services for its valued customers just to ensure its image and market base apart from the fact that it is inevitable for survival and sustainable position among industry segments and professional circles. Capabilities of business are at cheap rates applicable to its policies and aims as per VRIO, and the same are detrimental to its products and services. Management of Marks and Spencer continuously believes in the fact that in today’s competitive environment, without learning and professional development of human capital from top to bottom, it is not possible to achieve maximum output at large, and in view of these aspects also being among the largest retail chains in the world it targets on regular basis learning and development of its employees and others so as to move in line with changing business trends into the world. Since the business of such a setup covers consumer and domestic products, therefore, it is also imperative to mention here the fact that without learning and development, it is not possible to achieve stupendous progress and developments in a highly competitive environment (Kay, 2015).
However, the Primary Activities of Marks and Spencer’s on the basis of value chain analysis are as follows:
The inbound logistics of Marks and Spencer is very strong as it has achieved the supply chain award. The supply chain activities of Marks and Spencer are sustained and sufficient enough to create its significant position in the market. However, due to having strong control over sustainability, Marks and Spencer has gained a major advantage over its competitors.
Operations
Mark and Spencer have been working to improve the experience for customers. They have been focusing on delivering a unique experience to the customers in order to inspire them. It enjoys sound recognition among valued customers across the corners of the world, and even on the streets of the UK, it is considered a preferred and recognized brand that delivers quality products and services at a rapid pace.
Outbound Logistics
Mark and Spencer have been focusing on investing in warehousing activities as it enables them to sustain a competitive advantage in the industry. In addition to this, Mark and Spencer have been emerging with a small warehouse system in order to make the supply chain and distribution services more profound and effective.
Marketing and Sales
Mark and Spencer have been focusing on the digital divide in order to convince customers to make purchases frequently. They have been working on lean start-up technologies in order to improve the customer shopping experience.
Services
In order to have customer loyalty, it is essential to deliver the best services to the customers. Hence, the focus of Mark and Spencer is always on providing the best services to the customers as it is a curriculum to maintain customer loyalty. In this regard, it has maximized the product availability; it is offering a free shipment to the customer on making purchases of 50 euros. Marks and Spencer being one of the oldest market brands, now enjoys countless opportunities and growth prospects by rendering the best services to the customer. This helps them to achieve organizational growth and to sustain a competitive edge.
Ethical Consideration
Ethical consideration is one of the most important aspects to focus on to achieve the maximum output. The role of the fulfillment of ethical obligations enables the organization to increase its business integrity. However, the ethical dilemmas of Marks and Spencer are based on the following aspects:
- Publishing of reports by the company in 2016 and 2017 clearly indicates the fact that the management of Marks and Spencer is very much adhesive to human rights and values such aspects at a substantial level internally, and it is very much appreciable for corporate setup, which is running business operations at a massive level.
- The organization also adheres to the UN Charter for Human Rights and the same has been justified by its commitment and will since it is also inevitable in view of challenges posed to it by social and cultural values and competitors prevailing in the world.
- Concern for ethical auditing and also social and moral values for human capital while being part of the organization are indeed worthy aspects that clearly demarcate the difference between it from the rest in a prominent manner (Doyle, 2014).
- Here at Marks and Spencer, the management of an organization is committed to an investigation of any identified breaches from work ethics and standards adopted in the industry and recommended by regulators and also put solutions to these accordingly so as to maintain a sound position among industry segments at all.
- It also strongly believes in collaboration with others for support and protection of human rights in the corporate environment, either in collaboration with other industries or even regulators, and such aspect is quite evident from its policies and commitment as evident from available facts and figures at large.
Evaluation of Strategy
The evaluation of strategy has been done on the basis of the theory of Jonson, et al (2017) strategy. This strategy is based on the four different dimensions stated as follows:
Suitability
The concept of suitability enables Marks and Spencer to follow the best suitable strategy that helps them achieve the maximum output. Therefore, a sustainable environment is highly needed in order to achieve a competitive advantage.
Acceptability
The acceptance of the business environment leads to sustainable achievement. Recently the company has also introduced new products in view of changing patterns prevailing across the corners of the world and the same proved instrumental in reshaping its potential to adjust to a new environment. Therefore, change acceptability is highly needed (Burt, 2015).
Feasibility
It is essential for the organization to make feasible strategies to accomplish the organizational goal. The point of feasibility in the strategic implementation enables Marks and Spencer to achieve the organization’s goal and sustain its competitive advantage.
Final Thoughts
Conclusion
Marks & Spencer is one of the prominent names in the UK in terms of a multinational retail company and the same is also listed on the London Stock Exchange as one of the prominent and fast-growing stock markets in the world. Its headquarters is in Westminster, London, and is part of the FTSE 100 Index. It targets home products, clothing, and other luxury products which attract consumers at large, and owing to its widespread popularity management of such a big name has decided to ensure its presence across the corners of the world (Jones, 2016). As per Rumlet strategies of Marks and Spencer cover four aspects, and these are consistency in policies of an organization and consonance, which reveals that its management is well aware of external trends. The feasibility and advantages of these strategies correlate with each other at comprehensive levels. Recently the company has also introduced new products in view of changing patterns prevailing across the corners of the world and the same proves instrumental in reshaping its potential to adjust to a new environment. In the near future, its management has the mindset to extend business towards Asia and other territories, and these are positive aspects on the part of Marks and Spencer.
Recommendations
Hence, at the end of the study, the following recommendations have been proposed.
- Marks and Spencer must spotlight the possibility of the correct preparation of all laborers and subordinates keeping in mind the end goal to have a business code to be actualized at Marks and Spencer.
- Marks and Spencer ought to keep an entire aware of the considerable number of exercises to roll out the improvements in a particular time span (Grant, 2015).
- The Marks and Spencer must spotlight the correct technique usage altogether to keep up the uniqueness of The Marks and Spencer. In a request to guarantee the business achievement in a prospective way, it is the basic obligation of Marks and Spencer to fuse with legitimate methodology usage and furthermore keep up the social duty and appropriate business morals and code.
References
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