The Strategic Analysis of Mark and Spencer and Its Competitive Environment - Case Study Example

? MARKS&SPECER: STRATEGIC ANALYSIS AND COMPETITIVE ENVIRONMENT Introduction Marks & Spencer is one of leading retail business in United Kingdom. With over 21 million customers attending the stores every week, the business has emerged as one of the most productive business in United Kingdom local market. Thomas Spencer and Michael Marks introduced the business in 1884. Having existence for over one hundred and twenty years, Marks & Spencer is also one of the productive businesses in United Kingdom and in other parts of the world including India. The business headquarter is situated in the city of Westminster in United Kingdom. The company capitalises in the distribution high quality, stylish and great value home products and clothing. The business is also popular in selling food products, fashioned clothes, gifts, and home furnishing. The company has also establishment in financial service segment. In addition to coming up with effective means that can support its development, the business success can also be linked to its affordable prices of its products. In addition, the business vision is to offer great quality value and services. The business popularity is largely enhanced by its quality products as well as its ability to distribute products that meets international standards. The current success of Marks & Spencer can also be attributed to its effective and operational management strategies as well as it reliable and affordable promotion strategies (Burns, 2008, p. 12). Internal Analysis of the Firm Political stability in United Kingdom has proved to be effective in facilitating the success of Marks & Spencer. However, the Iraq civil conflict largely affects the activities and operations in Marks & Spencer. This is owing to the fact that, the business has several branches in Iraq. The political changes in United Kingdom have also affected the activities and operations of the business. So far, the public spending cut political decision has proved to have detrimental impact on the business success. United Kingdom’s economic trend has also proved to be useful in facilitating the success of Marks & Spencer. For instance, the current government increase in VAT has significantly reduced the company sales. The last year’s recessions has also largely affected the business operations and activities. The existing social situation in United Kingdom has also changed the customer concept in the market. This has forced the company to figure out and come up with new fashions that will meet the interest of its customers. In addition, the price sensitivity has produced a more competitive environment. Although a good number of the business products are old fashioned, the company has adopted new strategies of increasing its sales with limited loss. The new technology has also been vital in communicating new products to its customers. The company is currently relying on online services to promote its products in new markets. The new technology is also useful in identifying products that can meet the demands of its customers. Just like any other business in global market, Marks & Spencer has also been significantly affected by global warming. To counter the impact of environmental challenges, the company has introduced mechanisms that could be used to advance business operations. For instance, the business has embarked on a mechanism that aims at recycling plastic products. Marks & Spencer also sell legally acceptable products to its customers. In addition, the business sells high quality products that meet the set international and local standards (King, 2007, p.21). Compared to other competitors in the market, Marks & Spencer competitive rivalry is high. Studies have confirmed that Marks & Spencer faces high rivalry in clothing sector from new entrance in the market. The company is also facing huge competition in food industry for Sainsbury and Tesco. The company bargaining power of buyers is also high. This is owing to the fact that other huge retailers in their area of coverage surround the business. Compared to its competitors, the barging power of suppliers is relatively low. Due to concentrated purchasers, the power of suppliers has proved to be low thus affecting its operations. Marks & Spencer threat to new entry in the market is at medium level. This is owing to the fact that the company has established good reputations that has helped in the retention of its market position. In addition, the business threat to substitutes is high compared to its competitors. This fact is supported by the reality that there is increasing number of retailers who imports their products to other countries. Therefore, customers can buy the same products for cheaper prices from other distributors. Resources and Capabilities of the Firm Having being in operation for many years, Marks & Spencer has managed to have numerous resources. So far, the company has introduced various outlets in different parts of the world. Although most of its businesses outlets are situated in United Kingdom, the company has established numerous businesses outlets in other European countries. The company also anticipate extending its business operations in United States of America. Despite employing professionals from various parts of the world, the business has one of the most experienced and skilled managers in United Kingdom retail market. The organisation workforce is also a combination of skilled professionals from various professionals and cultural backgrounds. In addition, the business has huge amount of flowing capital that has helped it to emerge as one of the most productive business in United Kingdom. Currently, the business capital is estimated to be $ 987 million. However, owing to the current business trend, the business is expected to increase it productivity by more than two times in the next five years. Marks & Spencer also has over 703 stores in United Kingdom. The huge number of stores in United Kingdom has therefore posed a major threat to its competitors. The United Kingdom Marks & Spencer stores are also fully equipped with modern technology in order increase its effectiveness and efficiency. Equipping it store with modern infrastructural equipments has also played a vital in facilitating online marketing and promotion. On the other hand, the company has over 361 stores in over 40 countries in other parts of the world. The presence of numerous stores in various parts of the world is therefore vital in advancing the business position and in increasing its competition over other competitors at international levels. Competitors and Its Competitive Position The Marks & Spencer resources are also valuable to its operations thus increasing its competitive position both at local and in international level. The business resource has also enabled the firm to employ value-creating strategy that outperforms its competitors thus reducing its weaknesses. The transaction cost that is linked to the business investment is not higher than discounted future rents. In addition, the company has employed rare concept to increase its market position. To be of value, the business resources are rare by definition. The company resources price also reflects the expected discounted returns thus increasing its competition advantages. The Marks & Spencer valuable resources are also managed and controlled by one department in the firm. The act of introducing one department to manage the company valuable resources has given the company competitive advantage. In addition, the company’s competitors have failed to replicate Marks & Spencer strategy of introducing an entity to manage its resources. The business current market position and shares is also facilitated by the fact that, Marks & Spencer has managed to sustain its products and business strategies. The company competitors have also failed to counter the organisation value-creating strategy with substitute. The prices of it products is also equivalent to its future rents. Market Details Studies have further observed that the Marks & Spencer current success is largely facilitated by its market position both at local level and at international level. So far, the business has dominated United Kingdom market and also in other global market. Based on the available information, it is also clear that the United Kingdom market has been incredibly valuable and useful in supporting its operations and in increasing its profitability. In United Kingdom, the company sells over 75% of its total production. The other 25% of its products are sold and distributed in other parts of the world including United States of America In textile and clothing industry, the company has dominated the United Kingdom market. This is especially the case in Northern parts of the country where the company has over 35% of the total market share. To increase its market position in this part of the country, the company has an initiative that aims at introducing new products in the market to substitutes them with other old-fashioned products. In food industry, the company has succeeded in dominating over 13% of its total shares. The company supply of food product has also proved to be effective and reliable means of increasing the business productivity and sales. At international market, Marks & Spencer market share is estimated to be slightly over 1.2%. Current Trends in the Market So far, the company business trend is increasing at an encouraging rate. The company is currently using its popular log to increase its sales and profitability. Although the company log was initially faced with numerous problems and challenges, the log has been labelled as the main pillar for the business success both at local level and in international market. Compared to its competitor, the business market trend has increased its productivity. Despite dominating the United Kingdom clothing sector, the company has also dominated clothing sector in developed countries such as United Kingdom and India. In general, Marks & Spencer has over 56 outlets in the entire European countries. In span of less than three years, the company’s sales have been increasing at a heartening rate. As a result, the company has a plan of establishing additional outlets in the country in order to increase it reputations and sales. In France, the company has established over five successful stores. These stores are located in France capital city, Paris and in other developed cities and towns in the country. Despite dominating European market, the Marks & Spencer products are also popular in other countries such as Bermuda, Armenia, people republic of china, Poland, Qatar, Saudi Arabia, South Korea, Spain, turkey and United Arab Emirates. Future trends in the market In future, the company aims at embarking on a well thought of initiative that aims at improving its market position at local market and in international market. To increase its sales in United Kingdom, the company has set aside resources that will facilitate intensive and detailed promotion and advertising strategies. The company also aims at utilising modern technology such as online promotion services as well as social media services in increasing its sales and productivity. Despite improving the image of its log, the company also has a plan of retraining all its employees and suppliers in order to increase the quality of its services and products. Training new recruits in the company will also play a vital role in improving the business market position in United Kingdom. Marks & Spencer also aims at opening new outlets and stores in other parts of the world. For instance, by 2016, the business has a plan of opening over 23 new stores in Southern parts of United Kingdom. In India, the company has a plan of starting over 80 new stores. This is owing to the fact that India is one of the most reliable business markets of Marks & Spencer. Conclusion In the light of the above analysis, it is clear that Marks & Spencer is one of the most successful businesses in United Kingdom and in other parts of European continent. Through adopting reliable business plan and strategy, the business has succeeded in venturing in new markets that has complicated social and cultural practices such as Indian and Chinese market. However, despite encountering these challenges, the business has succeeded in introducing various business outlets in the two countries. In future, the business aspires to expand its business operations in other parts of the world. By 2016, the business aims at opening over 500 outlets in various parts of the world including African countries. The company also aspire to offer training to its employees and new recruits in order to improve the quality of its services. References Burns, P, 2008, “Corporate Entrepreneurship: Building an Entrepreneurial Organization”, Basingstoke: Palgrave Macmillan. King, A. W., 2007, “Disentangling interfirm and intrafirm causal ambiguity: A conceptual model of causal ambiguity and sustainable competitive advantage”, Academy of Management Review, 32: 156-178 Read More