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

? Strategic Analysis of Mark & Spencer and Its Competitive Environment Report Marks and Spencer are a major U.K. multinational affiliation that has its headquarters in Westminster, London. It owns approximately seven hundred retail stores in the U.K. and another 361 stores that exist in more than forty dispensations globally (M&S). It has its specialty in the retailing of attire and food products. M&S is a chief retailer whose founders are Spencer Thomas and Marks Michael. This retailer prides in its specialty as a provider of women’s attire and lingerie, and high quality food retailer. This company is also renowned for exemplary quality value for men’s clothes that have unique and classic models. Notably, M&S competes in the highly competitive market for domestic products and the food selling industry, in comparison with other food-selling retailers, who sell products from fresh groceries and meals, both readily and partly. The company has substantially invested in online marketing to maximize its sales of domestic products. M&S is the foremost company in the Britain that inculcates self-client service. It is advancing in men’s wear and children’s wear market at a high rate. Approximately, each week, the tally of shoppers that visit M&S exceeds twenty million in the totality of all M|&S retail stores. To serve such a huge number of clients in M&S’s six hundred stores in Britain, the affiliation employs a workforce body of seventy five thousand staff globally. The M&S store receives significant competition from its rival stores. The extent of rivalry in the company immensely augmented with entry of similar firms into the ritual of attire; where such companies as the Oasis and Gap provided contemporary fashion, whereas companies such as Matalan and George introduced the same merchandise at low prices. The augmented rivalry that struck M&S in the 1990 epoch was because of their clothing in stock being notably common and their competitors stocking diverse fashion and minimized the competitive advantage of M&S (Collis 2008). This intimidated the identity of their brand that had been an emblem of reliable, quality, and reputation. The rivalry further increased by M&S’s fixed costs such as labor costs, warehousing expenses and a substantial proportion of their costs of operation. Relating to supplier ability, the company chiefly sourced its merchandise from British based suppliers who were ever available (M&S). The suppliers are set to differentiate their merchandise to fit the quality specifications of M&S, which induced their aptitude to stock quality merchandise consistently. Their relations with the suppliers induced a boost to their competitive advantage. The aptitude to differentiate their input affected their ability to source huge volumes of apparel that encouraged their suppliers to experience the benefits of this unique differentiation. The purchasers in the M&S context are sensitive to fashion and sustainability of design. The upper-end consumers place a great value on their favorite attire and are willing to remit premiums on attire that appeals to them. On the low-end of the pyramids, the consumers are also sensitive to price and M&S was on an augmented risk of draining market shares to affiliations that declared low prices for matching products (Harney 2012). The attires on offer from this company also seem to have close substitutes in the market, a fact that compromises their market edge. The consistency in generating fashion and quality that appeal to clients would elicit a brand loyalty among such clients; as evidenced by the company holding a significant clientele before its eventual decline. This loyalty is at stake when a disconnection results in the companies losing touch with dynamic clientele preferences. The industry where M&S functions demands that operators maintain the virtue of inculcating innovations to keep on point with dynamic clientele preferences. This is because of the ease with which rivals can replicate existing designs or produce close substitute merchandise. The aptitude of the industry to provide substitutes to the merchandise that M&S provide is a significant threat; if the affiliation does not stand ahead of the competition in comprehending and satisfying their market type. The threat of new entry by new affiliations depends on how properly M&s and other competitive brands can create the customer brand loyalty to their merit. The access to distribute links also offers M&S a competitive merit, hence posing as a hamper to new firms willing to enter into the industry. The loophole that requires sealing is the impaired understanding of client preferences and needs because this serves as a great launch pad for a new firm entering the market (Harney 2012). The company’s external environment influences the M&S strategy direction. Strategic direction is the action plan that grants the company an achievement of its goals and strategy. M&S strategy direction lies in the notion of becoming the world’s most sustainable retail firm of the year 2015 (M&S). Despite the fact that there is no established benchmark avenue to compare the globe’s most sustainable retailer, this action plan is admirable to offer numerous services and a huge tally of commitments. To hit this target, the business development office in M&S spearheaded a Plan A based on five strategies (Grieves 2010). The physical boundaries of the firm do not limit the business. What occurs outside does not affect the M&S Company’s strategic direction and the firm has to react properly to handle the situation effectively. The extrinsic forces such as political, social, economic and technological forces that affect the company’s strategic direction of the firm’s business is beyond the reasonable control. Thus, sometimes the affiliation has to alter its strategic direction to handle the situation and achieve the ultimate goal. It is clear that the M&S political environment exhibits legal and administrative factors that affect the company’s strategic direction because of some legal and administrative restrictions such as people suing the company for its presumably harmful outfit. The soft factors support the business to achieve the final destination. However, difficult conditions bind the organization to alter the company's strategy to realize the result. M&S has to operate within the framework that the legal government in the country postulates. An alteration in the political setup may affect the M&S strategic direction because it has to observe the new legal and administrative stipulations by the new administration (Jackson 2002). In the social arena, public trends assume a pertinent role in the strategic alignment of M&S. Dynamics in attitudes, beliefs; lifestyles among others affect the company to alter its strategy that would enable it to satisfy the demands of clients in a dynamic atmosphere. The population, religious and cultural matters offer new opportunities in the market for business growth. The core change in technology presents the new standard to compete in the marketplace, and this situation completely alters the company’s strategic alignment of the firm to achieve business targets. Technological advancements open up opportunities to grow the business via exploiting unmet demands (Collis 2008). The rate and cost of innovation are key factors that fashion the M&S Company for or against its merit. M&S inculcates exceptional VRIN framework strategies that embody its best practices as sources of immense competitive merit. M&S continues to make it in the apparel industry regardless of other rival firms copying or imitating its capabilities. The resources that M&S possesses have an immense value and relative costs of rival firms do not match M&S’s. Its assets have great worth, aiding the company to use them without competition. Collaboration with unique partners and generation of rare resources makes M&S to be outstanding and unique. Its resources are rare in that other rivals cannot imitate or procure. M&S uses this for its competitive edge. Moreover, its resources have no close substitutes. This maximizes its competitive nature in the apparel market. The presence of competitive market players is a threat to M&S, Alteration in the strategic alignment and business plan may influence the firm to reorganize the business strategy to businesses and clients. At times, the organization introduces new business plans that capture the existing market. M&S offered a second version of plan A through adding new commitments to achieve the status of the globe’s most sustainable retailing company by 2015 (Grieves 2010). The alteration in the strategic alignment of M&S is not a light task because numerous associated factors have to undergo a transformation. On the market trends of M&S, it is notable that there was minimal economic growth in the U.K. during 2012 and 2013. There was a GDP augmentation of only 0.3% in 2012 (M&S). Rates of vacancy remained substantial, and throughout the year there were a significant number of retailers that vacated from the business. Increasing petrol prices and energy costs squeezed household budgets significantly. Random weather affected shopping styles of M&S customers when the U.K. experienced March as the wettest month of the season. The resultant footfall decline of 3.7% caused M&S to fight hard with its competitors to earn consumer preference (M&S). M&S engaged in increased promotional activities on the streets to promote their business. There were remarkable events of national celebration during the year when the Olympic Games and the Diamond Jubilee that heaved the mood of people. This factor, however, was short-lived and could not translate into increased retail sales for M&S. Consumers mostly to transcend economic waters, and this boosted their confidence. High profile administrations and the hazard of the recession meant that their confidence lurked low (Jackson 2002). The issues of wellbeing, health and trust on the part of customers were notably effective of M&S sales. Based on key competencies and distinctive capabilities, M&S experiences a competitive edge in the retail market. One of its distinctive capabilities is architecture. Considering the architecture, M&S possesses numerous designs that fit in the competitive market and those that appeal to its customers and demands of emergent groups. It produces stylish, fashionable, and trendy apparel designs that emerge as the company’s sub-brands. With a healthy relationship between clients, manufacturers and designers, M&S collaborates with those organizations to innovate and deliver fashion-driven merchandise for all consumers (Collis 2008). M&S already has a healthy reputation in the market and a knowledge-based merit. Its brand awareness is diverse and appeals to all populace with regard to its customization ability that drives it to seek customer satisfaction. With its skilled workforce and partners, it has a knowledge-based merit over its competitors such as Zara, H&M, River Island and Top shop. Having such an advantage grants this company a major capability to create its unique niche where shoppers can enjoy different selections regardless of the costs, which is a competitive advantage. Resources can dictate affluence of a company. Resources dictate the strategic capabilities of a company. It is clear that M&S experienced a decline in the success because it lacked sufficient resources and the ability to utilize them. M&S possesses intangible, human, physical and monetary resources (Jackson 2002). Human resources include the workforce and their skills. Notably, M&S managers received internal promotions and did not consider introducing fresh ideas. Inadequacy in staff also contributed to bad management. To avoid this, it ensured the promotion of external skill and talent to maximize good management and eventual profitability. After M&S made substantial changes to its management and strategies regarding utilization of resources, there has been a significant change in the company’s performance. The restructuring was top-down, and alterations to its capital structure have since the time augmented M&S company’s potential earnings and profitability and reputation. The company revived and tapped into the qualities and values that its clientele originally associated with their favorite brands, but which the company had sabotaged in the past years. M&S is now at the high end of the competitive edge of retailing firms in the U.K. The M&S Company has seen positive trends in their business after considering a change in their strategy. This has earned the company, its manufacturers, retailers, suppliers and customers a profound satisfaction when doing business. It has begun retailing excellent products of high quality, maintained a progressive working relationship with its workforce through better payment than other workers from similar companies, carved a niche in high streets throughout the U.K., created an exemplary good reputation, held a substantial market share and maintained a lifetime relationship with its partners (Grieves 2010). Numerous opportunities are available for this apparel retailing affiliation. Notably, M&S shall be apt to keep track of its competitors via entering into e-business while providing its clients with an option of conducting their shopping online (Collis 2008). The company will currently make, and into the future, rapid alterations in technology to keep a stride ahead of its potential competitors. M&S will have the opportunity to inculcate product diversity via production and retailing of foodstuff. Clients shall have a wide range of choice between cuisines of international standards. The company will classify and diversify the market segment by age of its clients and serve different age cohorts with ease. This will undoubtedly enable the company to expand its retail stores and promote the entire apparel industry. Portfolio Marks and Spencer is a major British transnational retailer with 703 stores in the Britain and 361 stores extend across more than 40 nations. While, it is predictable that every week, the tally of people who shop in M&S exceeds 21 million all through the Britain to offer service such a lofty number of valued clientele shopping in 600 stores in Britain. The corporation employs more than seventy four thousand employees worldwide. The outside forces such as political, economical, social and technical that affect the strategic bearing of organization’s commerce transcends control. The M&S store experiences significant competition from its rival companies. The extent of rivalry in the company immensely increases with entry of similar firms into the ritual of attire. Such rival companies include Oasis and Gap provided current fashion, whereas companies such as Matalan and George introduced cheap apparel. (Porters Five Forces) M&S’ experiences issues with supplier ability (supplier relationships) inclusive of fixed costs such as labor costs, warehousing expenses and a substantial proportion of their costs of operation. (Porters Five Forces) Availability of close substitutes in the market compromises the market edge of M&S. (Porters Five Forces) The threat of new entry by new affiliations depends on how properly M&s and other competitive brands can create the customer brand loyalty to their merit. The access to distribute links also offers M&S a competitive merit, hence posing as a hamper to new firms willing to enter into the industry. (Porters Five Forces) M&S political environment exhibits legal and administrative factors that affect the company’s strategic direction because of some legal and administrative restrictions. (PESTEL) In the social environment, M&S experiences dynamics in attitudes, beliefs; lifestyles among others affect the company to alter its strategy that would enable it to satisfy the demands of clients in a dynamic atmosphere. (PESTEL) Technological advancements open up opportunities to grow the business via exploiting unmet demands. (PESTEL) Regarding the economic environment, increasing oil prices are unfavorably affecting many corporations such as M&S. Brent oil traded for an amount exceeding a hundred dollars a cask as at the instance of writing. (PESTEL) On the legal environment, rising health complications such as obesity prompt stipulators to introduce stringent disclosure and advertising policies, which are a monetary burden on corporations such as M&S, such as a customer who sued M&S for selling him a shoe that injured him though the case ended after deliberations. (PESTEL) M&S has a great competitive edge whereby its resources are greatly valuable, rare, inimitable, and non-substitutable. (VRIN) Bibliography Collis, D 2008, ‘Competing on Resources’, Harvard Business Review, 1 July, p. 1, viewed 7 December 2013, http://hbr.org/2008/07/competing-on-resources/ar/1 M&S n.d., Our plan, viewed 7 December 2013, http://corporate.marksandspencer.com/aboutus/our_plan M&S n.d., Marketplace, viewed 7 December 2013, http://annualreport.marksandspencer.com/overview/marketplace/ Jackson, P 2002, ‘An Exploratory Study into Failure in Successful Organizations: The Case of Marks & Spencer’ British Journal of Management. No. 1, December, pp. 15-29, (Wiley Online Library). Grieves, J 2010, Organizational Change: Themes and Issues, Oxford University Press, Oxford. Harney, B 2012, Strategy and Strategists, Oxford University Press, Oxford. Read More