Marks and Spencer Company is trading in a highly competitive environment, especially in the United Kingdom. The retailer is working in business segments that have well-established corporations, especially in the apparel and food retail industries. This aspect has adversely impacted on its growth and development strategies in the UK. The company trades in products that are highly sensitive to slight changes in the market. For instance, the apparel industry is volatile since fashion and preferences dramatically shape the competitiveness of companies in the industry. The giant food retailing corporations such as Sainsbury’s and Tesco, on the other hand, have significant control over the market. They use economies of scale and cost leadership strategies to overcome competition. M & S’s corporate strategy is to diversify to other retail businesses. It is an approach to spread risks considering that the company’s major market is in the UK; struggling to overcome economic recession. Internal and external environments have significant effects on the operations of M & S. The company is enjoying political stability and social aspects that favour the business. However, the firm should penetrate foreign markets to overcome competition in UK markets. Marks and Spencer should also enhance its social networking since it increases its online presence. The action plans are critical since they drive M & S’s sales.
Marks and Spencer is a British multinational company that trades in the retail industry. Some of the organisation’s core products are home furnishings, clothes, and foodstuff. Currently, the company has subsidiaries in the Far East, America, and European countries. In this regard, the organisation’s key strategic business unit is the food segment that trades under the brand name “St. Michael” in the foreign markets. The establishment of Marks and Spencer has a history that dates back to early 1884. Michael Marks, the founder, incorporated the company under the United Kingdom Companies Act. At its early stage of growth, the company used low pricing mechanisms besides a focus on value and quality of its products. The strategy was successful and saw the company implement its internationalisation strategies (Mellahi, 2003). It holds about 17% of the UK clothing market. Trading in excellent and quality products is a source of its competitive advantage (De Wit & Meyer, 2010).
According to Johnson, Christensen, and Kagermann (2008), a strategic review of an organisation is essential in identifying opportunities within the internal and external environment of a business. It is a structured process that companies use to determine potential value-creating opportunities available to an organisation. Some of these aspects are creating a new market, improving performance, and product quality, to mention a few. Regarding strategic position, Marks & Spencer operates in a very competitive business environment. This aspect implies that multiple factors significantly impact the organisation in its internal and external environment.
Through diversification, the company has managed to distribute its risks to its businesses in different industries. Stern and Henderson (2004) corroborate that diversification is essential in present-day enterprises owing to the existence of a wide array of risks. The authors assert that diversification enables an organisation to maximise its returns. In this case, businesses react differently to the prevailing economic conditions. Marks and Spencer operate in many sectors that include beauty products, home, food, and clothing sectors that have large competitors.
Marks and Spencer Company is highly sensitive to economic, social, and technological factors. High sensitivity to these elements implies that the company has to keep up with industry dynamics. However, the British retailer operates in business segments that have many competitors besides its high sensitivity to the changing trends. The clothing segment, for instance, is volatile since fashions and customer preferences can quickly change (Tokatli, Wrigley & Kizilgün, 2008). Some of the key factors that dramatically impact M & S are changes in online trends. This aspect shapes online purchasing in the whole market. As such, technological changes affect the company since it does not have control over the element.
The company faces aggressive competition from retailers that offer low pricing mechanism and discounts. As such, the core values of Marks and Spencer are under attack from the retail competitors. Some of the significant retailers are Next Debenhams, Top Shop, and Warehouse and Gap. These business enterprises are attracting customers through their unique, trendier designs, and better fashion apparels with enhanced value. However, Marks and Spencer face competition from food chains retail businesses such as Waitrose, Tesco, and Sainsbury’s. These competitors are gradually shifting to readymade and frozen food products that are competitive in the UK markets. Accordingly, it is apparent that M & S Company is facing challenges in all its market segments. The company, however, has initiated implementing strategic investments to regain its market share. The management has also focused on the customer needs to overcome aggressive competition.
The analysis of factors affecting businesses uses strategic tools that identify opportunities, threats, weaknesses, and strengths. The environmental study involves identifying critical factors in the internal and external environment. In this case, the aspects have a significant influence on the performance and operational efficiencies of a company (Gupta, 2013). Therefore, it is argued that environmental analysis is an approach to determine opportunities and strengths that develop an organisation’s competitive advantages in the industry.
Through identification and critical analysis of environmental factors, corporate managers can mitigate risk and uncertainties. Managers can initiate corrective measures to control the occurrence of unfavourable circumstances that may pose negative impacts to the organisation. Some of the tools for assessing the business environment are Industrial Life Cycle, Five Forces Framework, and PESTEL Analysis. According to Issa, Chang, and Issa (2010), PESTEL framework is essential in evaluating issues in the macro-environment. These factors shape the success or failure of an organisation’s strategies. Therefore, environmental analysis of Marks & Spencer shows critical factors that drive strategies besides its direct impacts on the company.
Political Environment: Marks and Spencer Company enjoys the existence of political stability in European countries. The United Kingdom and other EU member states have entered into multilateral trade agreements that foster the growth of cross-border businesses. This aspect has enabled Marks and Spencer to source its products from the entire European economies. In this regard, the element is beneficial since the company can access trade items at cheap rates. However, BREXIT will likely affect the organisation’s future business activities owing to market restrictions in the European member states.
Economic Environment: Marks and Spencer’s significant market share is in the United Kingdom and other European economies. The UK is gradually recovering from the brink of a recession that has negative impacts on its businesses. On the other hand, UK businesses are struggling to overcome competition from foreign companies. The United States, for instance, is struggling to penetrate international markets in Latin America and Europe. Marks and Spencer’s market is majorly based in Europe that is currently struggling with economic challenges. The company, therefore, is facing threats from emerging multinational economies such in Western Europe, Russia, India, and China.
Social factors: The United Kingdom has recently experienced a decline in food prices owing to changes in lifestyles. The population, on the other hand, has dramatically grown with the population of women exceeding that of the men. This trend in demographics is favourable to the company since it drives its sales. Bhardwaj and Fairhurst (2010) assert that the United Kingdom is a fashion hub, and, thus, this aspect suggests that Marks and Spencer have great opportunities to trade in stylish clothes that have high demand in the market. The ultimate impact, in this case, is an increase in profitability.
Technological factors: The observation of business trends in the UK shows that online shopping is taking centre stage in the fashion and retail food industry. This aspect is beneficial since it enables an organisation to spend minimum initial investment costs, especially in the stores. M & S’s competitors have implemented self-checkout information technologies to improve the efficiency of their operations. The approach also reduces queue time, and, thus, transforming businesses. Marks and Spencer are in an excellent strategic position to enhance its business in the wake of social media proliferation (Burt et al., 2012). It improves the shopping experience since potential customers can view products in the organisation’s display. As such, buyers can then place their orders online or visit the firm’s stores.
Environmental Factors: As the retail store increase, organisations are shifting to recycled bags. They are also using biodegradable packaging materials that do not have adverse impacts on the environment. These materials are relatively less costly than other constituents as such companies are getting cost benefits by using recycled bags. The UK laws and regulations are strict on the preservation of the environment, and, therefore, directly affect Marks and Spencer Company.
Legal Environment: The United Kingdom has strong labour laws than other European countries. The regulations follow provisions of human rights that require employers to treat workers with human dignity. The other host of regulations affecting Marks and Spencer are laws that govern packaging, production, and distribution. The state has also implemented consumer protection laws as an approach to enhance employee safety.
Business competitors have almost the same physical resources, but their utilisation significantly differs. In this regard, techniques that corporate managers seek to utilise resources for economic benefits varies across the industry. Marks and Spencer, for instance, have the same store sites in the United Kingdom as those of its key competitors like ASDA, Sainsbury’s, and Tesco. M & S Company has critical resources that directly shape its competitive advantage in the industry. Some of these resources are value for money products, own brands products, store sites, and displays. These forms of physical resources are the primary sources of an organisation’s income. Witcher and Chau (2010) noted that good management practices and competent leadership facilitate utilisation of scarce resources for organisational success.
Value for money products: Marks and Spencer has appropriately utilised its resources to add value to the underlying commodities. Currently, the organisation is retailing in its brands that have attracted significant customers in the market. Marks and Spencer’s products are competitive, and, thus, enable the company to survive in the industry. Besides, the company uses internally developed products. Moreover, the organisation also sources its commodities from different suppliers across the UK. However, the company is facing cost problems considering that a substantial proportion of its suppliers are from the United Kingdom that has high competition (Grayson, 2011).
Own brands products: Marks and Spencer Company is using its brand name for a significant proportion of business products. In this case, the company has utilised resources in its disposal to improve product quality and its competitiveness. The other aspect is technological resources. Marks and Spencer, in this case, has an intangible resource in the form of information technology that facilitates displays and online shopping. Technological resources, according to Miller and Ross (2003), improve the efficiency of operations. Therefore, it is one of the approaches for an organisation to shape its reputation in the industry.
Stores Sites: Marks and Spencer Company has established store displays and warehouses that handle suppliers and storage of internally-designed products. These forms of physical resources have dramatically revolutionised logistics. Strategic management has effective rules, procedures, and practices that enhance the prudent use of resources (Haberberg & Rieple, 2008; McGee, Wilson & Thomas, 2010). Further, the company has implemented effective stock management approaches to make good use of its resources. The store sites have also facilitated e-commerce business in the organisation. This aspect implies that customers can potentially view Marks and Spencer’s products in display and thereby visit the nearest physical store for purchase.
According to Snyder and Ebeling (2002), competencies in an organisation refer to factors that differentiate a brand from other companies in the industry. The competencies of Marks and Spencer are product quality, cost leadership, and differentiation strategies. Firstly, the company enjoys economies of scale in its UK markets; as such, it sales both foodstuffs and clothing commodities on a large scale. Cost leadership is one of the core competencies in Marks and Spencer since it enables the organisation to trade at low costs. According to Whittington et al., (2017), effective leadership is critical since it impacts on people’s practices within an organisation. Secondly, the pricing mechanism and focus on the quality of products has emerged as a crucial competence for the company. Marks and Spencer currently trade in high-end products that meet customer expectations. This aspect is essential as it differentiates the company by positively shaping its brand image.
|Existing Products||New products|
|Market penetration||Product Development|
|Total focus on the UK retails.||Technological advancements|
|Development of new products||Product diversification.|
|Market Development||Market Diversification|
|Internationalisation; Venture into foreign markets.||Penetration to food, beauty, and home segment products.|
|Entry to new market segments.|
|Social networking strategies.|
|High distribution of stores.||High-end customers.|
|High-quality products.||Ability to improve technology.|
|Stability in the UK markets.||High accessibility to customers.|
|High profitability.||Growth in the e-commerce business.|
|Excellent differentiation strategies.||The existence of significant suppliers.|
|High reliance on UK suppliers.||Intense competition.|
|Poor marketing plans.||New entrants that have better technologies.|
|Firm’s inability to utilise technologies.||High production costs.|
Johnson and Scholes Model is a critical tool in evaluating strategic options that are available to an organisation. Managers use this technique to assess the viability of options. The three primary decisive factors that guide decision-making, in this case, are acceptability, feasibility, and suitability. Managers use these factors to respond to options available for their entities. As such, it is the basis for evaluating whether organisational tactics and behaviours merge the worthy of accepting or rejecting a strategy (Wu, 2010). The two primary actions that Marks and Spencer are reviewing against the criteria are social networking and internationalisation.
Internationalisation: This policy initiative is viable for the organisation considering the financial capability of Marks and Spencer. Currently, the retailer organisation depends on the UK markets that have significant competitors. There is a need for the company to venture into international markets as an approach to diversify risk and to minimise dependence on a single market. The plan is acceptable provided that the Marks and Spencer meet all the legal requirements to enter the foreign markets. The strategy is also feasible in that the company has options, and, thus, can settle on financially viable internationalisation techniques.
Social networking: The approach entails the use of social networks to drive the organisation’s sales. The company, in this case, should exploit social networking sites such as Facebook to increase online sales. The action plan has high acceptability since it is a form of investment that triggers sales. The company already uses social networking, but there is a need for improvement. This aspect implies that social networking has a high suitability. It also requires little financial investment and operating costs, and, therefore, it is a feasible action plan.
The Ansoff and TOWS Matrix are essential tools for determining strategic directions for business enterprises. From the analysis of matrix factors, it is recommended for the company to undertake social networking and internationalisation practices as a technique to develop competitive advantages. The action plans are suitable, feasible, and acceptable based on their evaluation against criteria.
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