Marks And Spencers Business Strategy - Assignment Example

?MARKS AND SPENCER’S BUSINESS STRATEGY Table of Contents Table of Contents Introduction 3 Analyzing Marks and Spencer’s Strategy 3 Business Strategy 3 Business Environment and Strategy 4 Overcoming the Threat of New Entrants 5 Value to the Power of Buyers 5 Value to the Power of Suppliers and the Supply Chain 6 Management of the Threat of Substitutes 7 Overcoming Competitive Rivalry 8 Evaluating Marks and Spencer’s Business Strategy 8 Acceptability 9 Feasibility 10 Suitability 10 Conclusion 11 References 12 Appendix 14 Introduction Marks and Spencer is a British company which was founded by Marks in 1884 when it operated as a market stall. After the partnership of Mark and Spencer in 1894, the company changed its name into Marks and Spencer Plc. The company has a very humble beginning but it has grown significantly over time to become a leader within the business industry of its operations. The company has dominated the British market for a long time. Its dominance is attributed to the value and quality of the clothing products that it offers its customers with a view of gaining their loyalty to its products. Marketing Week, (2005, p. 9) reveals that it is through the value that Marks and Spencer has for the needs of the customers that shoppers have been obliged to desire its products as opposed to those of the competitors. With time, the company has grown and diversified its products significantly and in addition to clothing, the company provides its customers with furniture, food and loan services. This paper gives a critical discussion and analysis of the business strategy of Marks and Spencer Plc with a view of analyzing and evaluating the company’s strategy using Porters Generic Strategy Framework. Moreover, the company is assessed in terms of acceptability, feasibility and suitability toward all of its stakeholders. Analyzing Marks and Spencer’s Strategy Business Strategy In 1999, the glory that Marks and Spencer had in the market started to crumble. This was illustrated by the fall in profits. As a result of the failure that the company experienced, it has endeavored to apply the most suitable business strategy so that it would remain competitive within the market and maintain its glory. Davies (1999, p. 60) points out that Marks and Spencer adopted a Competitive Strategy Model and Value Chain so that it would recover from the previous failures and challenges and thus maintain its competitive advantage while remaining as the market leader of the industry of its operation. Kenny (2009) adds that it is through the Competitive Strategy Model and Value Chain that Marks and Spencer has regained its glory which is revealed by its current success and competitiveness in the market. The SWO analysis of the company which reflects its competitiveness is presented in Appendix 1. Business Environment and Strategy Datamonitor (2007, p. 1) demonstrates that the five forces of generic Strategies as postulated by Porter have been proved to be the most effective aids for businesses in the attainment of a competitive edge within the business environment. The key areas under which Porters Generic Strategy Framework analyzes businesses the power of suppliers, the power of buyers, the threat of substitutes, the threat of entry and the competitive rivalry. Grundy (2005, p. 195) explains that the business environment involves various forces which determine the success of a company and these include competition and economic, social, legal and cultural forces. The ability of a company to survive the challenges which the environment presents it with is determined by the implementation of a suitable business strategy which ensures that a competitive advantage is gained and attained. Beaver (1999, p. 325) recommends a Competitive Strategy Model as a way of allowing a company to overcome the environmental forces and thus become a market leader and the most competitive business in the market. Therefore the implementation of the Competitive Strategy Model by Marks and Spencer is the reason why it regained from previous failures and now become a market giant in the clothes industry. Overcoming the Threat of New Entrants Porter (2008, p. 78) illustrates that Porter’s Generic Strategy Framework presents the threat of entry as an environmental factor which defines the competitiveness and hence the success of a company. Marks and Spencer has differentiated its products to meet the needs and preferences of its customer and the market in general. Dess and Davis (1984, p. 467) reveal that it is through the differentiation of its products that Marks and Spencer has been able to block new entrants into its line of products. The business environment poses a threat to a business when potential entrant business invests in the same line and category of products and thus taking part of the market share. Nonetheless, it has been argued that new entrants into a certain business operation are healthy for business activities and it is an advantage to the consumers because it prevents monopoly by encouraging competition. Cullen and Parboteeah (2009) assert that through the Strategy Model, Marks and Spencer has caused an entry barrier to potential businesses which would enter into its line of products and services. Moreover, the company has won the loyalty of its customers by providing quality and as a result attained market leadership which is a threat to the new entrants into its line of products and as a result making the company to enjoy high sales by remaining at the top of the competitive ladder. Value to the Power of Buyers Jackson and Sparks (2005, p. 766) reveal that Marks and Spencer recognizes that buyers are the most important stakeholders of the business. This is because buyers consume the company’s products and services and in return provide the company with revenue. In this sense profits are realized and capital for the business operations attained by the company in sufficient amounts. The marketing strategy of Marks and Spencer focuses on convincing the buyer through appropriateness of marketing communication and campaigns. For example, the company has utilized technology to market its products to the buyers. This is due to the fact that buyers have been oriented to the advancements in technology. Miller (1988, p. 280) adds that the presentation of Marks and Spencer’s products during its market communication values the role of the buyer and thus aims at convincing customers that the products of the company are the most authentic in the market. Rodrigues, Maccan and Lenzi (2012, p. 137) show that the priority of Marks and Spencer is the buyer which has enabled the company to provide its consumers with stylish and classic clothes because these are the desires of the market. Since there are many categories of buyers, the company has considered the different needs in the market and as a result segmented its products with a view of satisfying needs and wants. Datamonitor (2007, p. 1) adds that the design and supply of marks and Spencer’s clothes aims at meeting the needs of different lifestyles. These illustrations demonstrate that the ability of the company to compete effectively in the business environment through its business strategy is attributed to the value which it has for buyers who comprise of the customers or consumers of its products and services. According to Ologunde and Akinlolu (2012, p. 241), it is through a simple pricing policy that Marks and Spencer has been able to provide competitive prices in the market. The company provides the buyers with affordability without compromising on quality. This has been made possible by the adoption and effective implementation of its Competitive Strategy Model. More importantly, the value that the company has for its buyers has enabled it to supply its products to the buyers according to the requirement and in the right condition. Value to the Power of Suppliers and the Supply Chain According to Datamonitor (2007, p. 1), the recovery of Marks and Spencer from its downfall is owed to the change of strategy which aims at gaining a competitive advantage by giving value to the power of suppliers and making necessary and timely improvements to its supply chain. Currently, the company has embarked in the use of international suppliers which was necessitated by its internationalization. By reconfiguring its supply chain, the company has been able to grow rapidly into the international market. Transparency has been a priority in the supply of the company’s products. Moreover, the company has facilitated communication with its suppliers and as a result good relationships have been created between the company and the suppliers. Marketing Week, (2005, p. 9) points out that it is through the value which a company bestows on its suppliers that goods reach the customers with convenience and efficient. This contributes to the attainment of the loyalty of the customers to the company’s products which are considered to be the authentic approach of meeting the desires and needs of the customer. On the flip side, inefficiency which results from the mismanagement of a supply chain leads to inevitable poor performance of a company. Management of the Threat of Substitutes Marks and Spencer is threatened by substitute products which its customers can acquire from its business rivals such as Sensbury and Tesco. Datamonitor (2007, p. 1) demonstrates that in the late 1990s, the company’s competitors provided value added foods which almost threw Marks and Spencer out of the food industry. It is through the implementation of the Competitive Strategy Model by the company that it was able to recover from the threat of the substitutes. Ologunde and Akinlolu (2012, p. 241) explain that companies are at a perpetual threat of losing customer loyalty to the substitute products which are produced by the business rivals. As a result the Porters Generic Strategy Framework is used to evaluate the business strategy to determine if they are applying the most appropriate approach to overcome the threat that the substitute products and services pose to the business. To effectively manage the threat of substitutes, a company must focus constantly at maintaining the loyalty of its customers. This is attained through providing high quality products at cost effective prices. Moreover, variety must be made available to the market in order to satisfy the different tastes and preferences of the consumers. Overcoming Competitive Rivalry Lahovnik (2011, p. 358) explains that Porter’s Generic Strategy Framework postulates that the ability of a company to overcome the competitive rivalry within the market is used to accurately analyze the effectiveness of its business strategy. The business challenges which Marks and Spencer faced in the past are attributed to its inability to overcome the competitive rivalry which existed in the food and clothing markets. Many companies entered the clothes and food market in the late 1990s and offered high quality products at a lower cost. Moreover, these companies provided buyers with fashionable clothing which were designed to keep up with the current fashion trends. E-J (2005, p. 26) illustrates that Marks and Spencer adopted the Competitive Strategy Model as a way of recovering quickly from failure to overcome the competition. Therefore the ultimate success of the company stemmed from its ability to maintain quality, affordable prices, provision of authentic and fashionable products and variety of goods and services to the consumers as a way of overcoming the competitive rivalry in the market. Moreover the application of appropriate marketing strategies and campaigns such market communication through the online media, the company has been able to remain at the top of the competitive ladder. Evaluating Marks and Spencer’s Business Strategy Marks and Spencer’s Competitive Strategy Model is the cause of its recovery from the business failures which it experienced in the late 1990s. Its current success can be evaluated in terms of acceptability, feasibility and suitability in line with its relationship with all of its stakeholders. Johnson and Scholes (1999) explain that a business strategy must be accepted by the company’s investors, business partners, the governing authority, the community, employees, the customers, management, suppliers and distributors. The acceptance of the market strategy by the company’s stakeholders is important because it determines their cooperation in promoting business processes. Barnes (2011) further illustrates that a business strategy must be feasible or attainable and suitable to fit into the business activities and environment. Datamonitor (2007, p. 1) emphasizes that the success of Marks and Spencer in the market is attributed to both its business strategy in conjunction with six fundamental principles (See Appendix 2). Acceptability The pricing policy which Marks and Spencer adopted in its Competitive Strategy Model is acceptable to the consumers who comprise of the most important stakeholders of the company. Moreover, the added value and quality which the company demonstrates though its products as a method of attaining customer loyalty and thus remaining competitive is purely acceptable by the consumers. This is reveled through the increasing sales which the company is experiencing since its recovery from business failure. Zott and Amit (2008, p. 5) illustrate that the business strategy which Marks and Spencer adopted is characterized by a design of structured principles, procedures and formulae for the business operations. These act as a guideline of ensuring quality and efficiency of service and delivery of goods to the consumers. The principles and procedures that the company adopted to attain a competitive advantage within the market are acceptable by its employees and the management. This is exemplified by the hard work and commitment which the company’s employees and management team has demonstrated in the recent past in serving the customers which has led to increased consumers satisfaction of the company’s good and services. Neal (2008) points out that the management of Marks and Spencer supply chain involves local control in which the customers were supplied with products and services in uninformed manner. This is acceptable to the suppliers and distributors of the company because it enables customers to be supplied with goods in accordance to their specifications, needs and convenience. Feasibility Grundy (2003, p. 174) explains that the feasibility of a company’s business strategy is a measure of its ability to accommodate the business operations at all levels. The growth of Marks and Spencer has led to the internationalization of its business operations. This growth demands that the company requires implementing a strategy which would help it to move up the competitive ladder within its new markets. Through the implementation of the Competitive Strategy Model the company has been able to attain an increase in the market share. In this sense, it is argued that the company’s strategy if feasible for an international business. Moreover the company’s products have been valued by the company’s customers in different markets across the world due to their quality. Hence it is conclusive that the business strategy that the company adopted is feasible in meeting the diverse needs of its consumers within different markets both locally and internationally. The feasibility of the Marks and Spencer’s business strategy is demonstrated by its ability to capture the loyalty of customer and an increase in sales in different parts of the world where its subsidiaries in clothing and food products operate. Suitability Ologunde and Akinlolu (2012, p. 241) reveal that the business strategy that Marks and Spencer has adopted is suitable to the corporate culture of the organization. The working environment and management of the company implements a top down approach and a working culture which shows concentration in the production of high quality goods and services for its customers. These are attributes of competition both within the organizational structure and with the external business environment. In the light of the above argument, it is true to point out that Marks and Spencer has adopted a suitable business strategy which is parallel to the competitive working environment and management structure. More importantly, the Competitive Strategy Model is the most suitable business strategy for the kind of products that the company deals in. Syrett (2007) explains that the clothing and food product that Marks and Spencer deals in are characterized by a highly competitive business environment. This is demonstrated by the many businesses and companies which have sprouted in the clothing and food industry. Moreover there are business giants in the food and clothing industry which Marks and Spencer has to compete with. In this sense, it is arguable that the company’s corporate strategy is very suitable for the kind of goods that it provides to the consumers considering that the food and clothing industries is a highly dynamic and fast changing industries. Conclusion It is through the adoption of a Competitive Strategy Model as the most appropriate corporate strategy that Marks and Spencer was able to recover from the failures which it experienced in the late 1990s. The suitability of the company’s strategy in addition to its acceptability to all of the stakeholders has in return led to growth of the company within the food and clothing industries. Moreover, the company’s business strategy is feasible within its modern internationalization of its business and supply chain. The analysis and assessment of the company’s business strategy in relation to Porters Generic Strategy Framework has illustrated that that the company’s current success has been attained through its competitiveness in the business environment. References Barnes, R. 2011, Marks and Spencer, London, United Kingdom, London Beaver, G. 1999, "Competitive advantage and corporate governance--shop soiled and needing attention! The case of Marks and Spencer plc", Strategic Change, vol. 8, no. 6, pp. 325-325 Cullen, J, and Parboteeah, P 2009, International Business: Strategy and the Multinational Company, Routledge Datamonitor, 2007, 'Marks and Spencer Group, PLC, SWOT Analysis' Marks and Spencer Group, PLC SWOT Analysis, p. 1 Davies, G. 1999, "The evolution of Marks and Spencer", The Service Industries Journal, vol. 19, no. 3, pp. 60-73 Dess, G, and Davis, P 1984, 'Porter's (1980) Generic Strategies as Determinants of Strategic Group Membership and Organizational Performance', Academy Of Management Journal, 27, 3, pp. 467-488 E-J, W. 2005, "Transitioning from charity to community investment at Marks and Spencer", Corporate Responsibility Management, vol. 1, no. 6, pp. 26-29 Grundy, T 2003, 'CHAPTER FIVE: Marks and Spencer and the business strategy gurus', Gurus on Business Strategy pp. 174-192 Grundy, T. 2005, "Business strategy re-engineering and the bid battle for Marks and Spencer", Strategic Change, vol. 14, no. 4, pp. 195-218 Jackson, P. and Sparks, L. 2005, "Retail internationalization: Marks and Spencer in Hong Kong", International Journal of Retail and Distribution Management, vol. 33, no. 10, pp. 766-783. Johnson, G and Scholes, K, 1999, “Exploring Corporate Strategy”, Fifth Edition, Prentice Hall, Harlow, UK Kenny, G 2009, Diversification Strategy: How to Grow a Business by Diversifying Successfully, Kogan Page Lahovnik, M 2011, 'Strategic fit between business strategies in the post-acquisition period and acquisition performance', Journal for East European Management Studies, 16, 4, pp. 358-370 Marketing Week, 2005, "Analysis: Is up the only way left for Marks and Spencer?” Marketing Week, , pp. 9 Miller, D 1988, 'Relating Porter's Business Strategies to Environment and Structure: Analysis and Performance Implications', Academy of Management Journal, 31, 2, pp. 280-308 Neal, M. 2008, "A Muddle at Marks and Spencer", Barrons, vol. 88, no. 27, pp. M7-M7 Ologunde, A, and Akinlolu, A 2012, 'Business Strategy as a Measure of Organizational Performance', International Journal of Business and Management, 7, 1, pp. 241-253 Porter, ME 2008, 'The Five Competitive Forces That Shape Strategy', Harvard Business Review, 86, 1, pp. 78-93 Rodrigues, L, Maccan, E, and Lenzi, F 2012, 'Innovation Strategy for Business to Business Market Penetration', International Business Research, 5, 2, pp. 137-149 Syrett, M 2007, Successful Strategy Execution: How to Keep Your Business Goals on Target, Economist in association with Profile Books, Inc Zott, C, and Amit, R 2008, 'The fit between product market strategy and business model: implications for firm performance', Strategic Management Journal, 29, 1, pp. 1-26 Appendix APPENDIX 1: Marks and Spencer SWOT Analysis illustrated by Datamonitor (2007, p. 5) Strengths Weaknesses 1. Strong market position 2. Strengthened international and financial Operations 3. Strong brand equity 1. Geographic concentration 2. Limited online transactions 3. Weak cash position Opportunities Threats 1. Property strategy Increasing online sales 2. Competitive pricing Demand for healthy food 1. Slump in the UK retail spending in 2007 2. Intense competition 3. Rising labor wages in UK APPENDIX 2: Mark and Spencer’s Fundamental Principles (Marks and Spencer Group plc, 2008) 1. Offer customer high quality goods and services 2. Encourage al suppliers to implement modern technology and techniques 3. High quality control by working with the suppliers 4. Customer services which provide friendliness, comfort, convenience and help to the queries of the consumers 5. Efficiency in the operations and procedures of business activities 6. Good interpersonal relationships and effective communication with all stakeholders Read More