The Strategic Position and Strategic Choices of Marks and Spencer Plc - Essay Example

Critically Discuss the Relationship between the Strategic Position and Strategic Choices of Marks & Spencer Plc. Table of Contents Table of Contents 1 Introduction 3 Definition of Strategic Position 4 Analysis of Strategic Position of Marks and Spencer 6 Definition of Strategic Choices 8 Analysis of Strategic Choices 10 Relation between the Strategic Position and Strategic Choices of Marks & Spencer 12 Conclusion 16 References 17 Introduction Marks and Spencer Plc. (M&S) is a one of the foremost British transnational retailer. It was established in the year 1884. Over the years, it has operated its business in the global retail industry and provided a wide range of products and services to its customers such as clothing, food along with financial instrument among others (Collier, 2004). Marks and Spencer has franchises in several countries such as China, Indonesia and South Korea among others. In early 1990s, it had started to establish its brand image and subsequently emerged as a household name on the global market. However, the organisation has lost its acclaim in the global platform to a certain extent during the last decade (Collier, 2004). Unfortunately, since last few years, Marks and Spencer has been losing its competitive power on the global retail industry. Competitors such as Arcadia Group Limited, Benetton Group, Oasis and The Gap and Burberry Group among others are eventually coming up with exciting and innovative trends to attract the global customers. This factor has been resulting in a steep decline for Marks and Spencer. With the consideration of these facts, the study intends to define and comprehend the notions of strategic position and strategic choices and subsequently desires to integrate the notions with the presented scenarios in the case study related to the operations of Marks and Spencer. Besides, based on the assessment of the scenario presented in the case study, a discussion will be made regarding the relationship between the strategic position and strategic choices of Marks and Spencer. Definition of Strategic Position Strategic position can be defined as the positioning sought by a business entity amid its consumers in a competitive marketplace. In accordance with Henry Ford, “A market is never saturated with a good product, but it is very quickly saturated with a bad one” (Wa'ed, 2014). In other words, in order to develop the effectiveness of a business in terms of attracting new consumers, satisfying existing consumers and retaining those consumers, the notion of strategic position plays a paramount role. In this similar regard, strategic position can be defined as a facet which is concerned with the ensuing influence on strategy of the internal resources, external environment along competences as well as the expectations and effect of stakeholders. These factors can be acknowledged as the core elements for comprehending and devising the strategic position of a corporation (CIMA, 2008). A prudent strategic position facilitates an organisation to establish its brand image amid its target consumer segment. Strategic positioning is one of the most essential steps for an organisation, by practicing which the organisation can ensure its success in the upcoming future (Wa'ed, 2014). For successful strategy positioning, an organisation should focus on a few factors. With regard to these factors it is ascertained that there are three distinct strategy options which are emphasized below: A) Best Product: At the time of manufacture, enterprises’ need to focus on low cost and variety. B) Total Consumer Solution: It can be provided through reducing customer costs and trying to increase their profit margin. C) System Lock-in: It can be attained through ensuring a strong bonding in between customers, suppliers and distributors in an enterprise. Figure. 1 Triangle of Strategic Position (Dean & Company, 2014) Analysis of Strategic Position of Marks and Spencer In keeping with the foregoing comprehension, it is determined that during the 1990s, Marks and Spencer was immensely successful both in terms of profit generation and market share. It attained massive success by applying a planned strategy to all its operations and organised them by establishing a set of fundamental values. Those values were renowned as core principles and it had also used them in all forms of its business activities. Those principles are illustrated below: 1) Offering consumers a selective range of high quality was a prime factor. Besides, it also focused on the attractiveness and design of the product. Above all, reasonable pricing was the essential factor for specific brand for instance St Michael logo was used by Marks and Spencer (Collier, 2004). 2) For bringing up-dated products and efficient production techniques in the market, it used to encourage suppliers. 3) For quality control, it had worked with suppliers to ensure high level of standards. 4) It had also facilitated its consumers’ by providing friendly atmosphere, helpful services and better shopping comfort and accessibility. 5) In order to improve the efficiency of the business, it had operated smartly. 6) For ensuring the improvement in business, it had developed its communication with consumers, suppliers and staff. From the analysis, it has been observed that, during the late 1990s, Marks and Spencer identified that only through significant focus on strategic positioning it can eventually ensure the effectiveness of the organisation. In order to achieve that it established a pricing strategy and introduced ‘St Michael’ logo as a symbol of quality. Moreover, it has treated its staff in a better manner and paid them high in comparison with other organisations. Furthermore, it had also ensured high level of consistency regarding quality to attract consumers. At the same time, it had also developed a few other components to ensure its prominent position on the global market. Through merchandising, improving product layout and decorating store identically, it had tried to build-up good impression in front of the consumers. Apart from this, it had also concentrated on ensuring consistency of its store image as well as focused on M&S standards guarantee (Collier, 2004). During the Marks and Spencer growth phase, a few changes were also seen regarding its method of operations. It had tried to maintain its brand status with the high street retailers through quality clothing along with following the current trend of the market. According to the assertion of time and the theoretical concept of product life-cycle, every firm has an introduction phase, then growth, after that stability and finally declining phase. This concept was not too different from the point of view of Marks and Spencer. Since last couple of decades, it has been experiencing several undesirable situations and circumstances in the global market. Even after that, it has been constantly focusing on building its unique strategic position from 1990s onwards. Correspondingly, it has been noticed that within the phase of the 1990s, Marks and Spencer did not have fitting room in its store, because of this fact that it had allowed its consumers who were unhappy with the clothes to refund them. Moreover, during the declining phase, Marks and Spencer had launched new clothing and food ranges to reinforce its situation in the retail market and also promoted through a large scale campaign to justify itself as an innovative retailer. After the analysis of the entire scenario related to Marks and Spencer, it can be affirmed that the corporation over the years has promised to deliver a set of valuable offerings in the retail market through its sustained focus on strategic positioning which is predominantly laid upon certain core principles of strategic management (Collier, 2004). Definition of Strategic Choices Strategic choice describes the characteristics that leaders or leading groups usually assume to influence a firm through making choices in a pragmatic manner. The “strategic choice” concept can be termed as advanced strategy wherein organizations’ are designed and structured differently. This concept has been mostly eluded by the leaders of the organisations’, weather in case of public or private. The concept i.e. strategic choice draws attention through the active role of leader or leaders group who has the efficiency and authority to influence the structure of the organisation through constructive decision making. It can be also asserted as a managerial choice (Friend & Hickling, 2014). Figure. 2: Area of Strategic Choice (Friend & Hickling, 2014). Analysis of Strategic Choices For choosing a strategy, an enterprise needs to determine its competitive position and needs to consider its future direction. It also needs to follow multiple options simultaneously. Process of Strategy Choice Figure. 3 From the above figure, it has been magnified that in order to establish a brand image in a competitive market, an enterprise should have its focus on its strategic alternatives first of all. Apart from this, after identifying the various alternatives, it should analyse those strategies. Finally, the enterprise needs to choose one of the effective strategies among various alternatives, simultaneously with the evaluation of those strategies. Thus, strategic choice can be asserted as a one of the crucial factors which has the potential of influencing an enterprise thoroughly. From the analysis of Marks and Spencer’s business scenario, it has been observed that, strategic choices have been playing an ultimate role in its business since last couple of decades. After the dream run from the 1990s onwards, Mark and Spencer suddenly lost its command over the international market during the year 1998. At that point of time, Marks and Spencer eventually started losing its market share and within a short period of time it had landed up above 25% downfall. During that period, Mark and Spencer introduced its new Chief Executive Officer (CEO). As it might have thought that, this approach can enable to register a decisive solution which can help the firm to regain its earlier position. Unfortunately, it did not work out accordingly for the enterprise (Collier, 2004). The new CEO Peter Salsbury tried to restructure the company by segmenting it into three parts such as United Kingdom (UK) retail business, overseas business and financial services. His intention was to establish a wide marketing department. Even after showing significant level of commitment from various standpoints, he was not able to reinforce its condition gradually. As a result, Marks and Spencer had lost its share value around 250% within 18th months. Then, in January 2000, Marks and Spencer appointed its new Chairman Luc Vandevelde. His appointment had brought in a new horizon for Marks and Spencer. Immediately after his joining, M&S had split the business unit into seven several segments such as Men’s wear, Women’s wear, Children’s wear, Lingerie, Home, Food and Beauty. Accordingly, it had also separate floors for its variety of segments. Besides, Marks and Spencer also vowed to hire about additional 4000 staff for offering personal services to its consumers. During that phase, it had also closed down all the Canadian stores, which had incurred losses since a long time back. Altogether, these decisive choices had benefited Marks and Spencer to reconstruct its stability in the retail industry. From the analysis, it has been ascertained that focusing on different strategic alternatives along with choosing the right alternative can influence an enterprise by a considerable extent (Collier, 2004). Relation between the Strategic Position and Strategic Choices of Marks & Spencer With regard to establishing a bridge in between strategic position and strategic choices of Marks and Spencer based on the case study, it can be asserted that both these factors are related indivisibly. According to the analysis, it has been observed that strategic choices are one of the most crucial factors in case of marketing activities. During the year 1998 Marks and Spencer had faced a financial difficulty, even after that it had spent around US$130 million Euro to extend its business in 2001. As a result, it had lost its market share value drastically. Thus, it can be affirmed that the investment planning of Marks and Spencer for long-term progress was not perfect for that period. This is owing to the fact that new players such as The Gap, Oasis and Next among others had just entered the retail market and started providing facilities similar to other retail enterprises. Moreover, those new players had also offered similar prices and similar kinds of atmosphere. Consequently, consumers were also getting attracted towards those merchandises. Thus, the strategic choice of Marks and Spencer was not ideal at that point of time (Collier, 2004). In addition, it can be also determined that strategic position is also another essential factor for an enterprise. Otherwise, an enterprise would not be able to make decisions ideally. Based on the comprehension derived from the case study of Marks and Spencer, during that phase it had not chosen strategy minutely as a result it had struggled in case of positioning its brand image. M&S did not have a loyalty card when almost all the other competitors’ were using that as a business strategy. From a different standpoint it has been also observed that when competitors such as Tesco were offering added value foods, M&S had been stalled on women’s garments. Therefore, it can be evaluated that Marks and Spencer’s strategic choice had not been perfect during that phase. Besides, the strategy of appointing a new CEO had not worked for Marks and Spencer (Collier, 2004). After the appointment of Salsbury, M&S initially divided the company into three segments. And, subsequently he launched new foods and clothes. In addition, he had come up with a larger scale promotional activity. According to the observation it is found that Marks and Spencer had tried to regain its position in the competitive market and to establish its brand image. At the same time, from the findings, it has been almost magnified that to ensure high brand image an enterprise such as M&S needs to focus on the strategic choice first. Without a set of proper strategic choices, strategic positioning cannot be possible (Collier, 2004). In keeping with the analysis, it has been also apparently observed that Salsbury’s aggressive strategic choice and strategic position had put Marks and Spencer even in a more critical situation. Immediately after he was appointed, he issued a memorandum and according to his concern, he specified that problems of Marks and Spencer can be removed through avoiding the traditional approaches. In another attempt, he wanted to increase the profit margin, thus he had closed six European stores, and one of the head offices. Besides, he had also closed all the Canadian stores. In the UK market, Marks and Spencer had implemented a costly store change strategy. Conversely, it had designed a new store image. The new designed store was driven by attractive lighting and flooring to create a different mood. Accordingly, it can be said that the intention of avoiding traditional approaches had worked to a certain extent but it was not successful thoroughly. Moreover, it can be further stated that Salsbury had been able to identify the requirements along with the changing trends and high cost involvement issues of Marks and Spencer. In spite of identifying the causes, due to inefficiency in terms of strategic positioning, Salsbury was not able to fortify Marks and Spencer’s condition during 1999s (Collier, 2004). Finally, after a certain period, Marks and Spencer had appointed Vandevelde as the new Chairman. During that period along with the strategic choices, Marks and Spencer had also concentrated on strategic positioning. At that point of time, the management of M&S identified that it should distinguish its variety of products in different segments to position itself an innovative retail enterprise. Marks and Spencer’s actual intention was to fortify its condition in domestic market first and then the international market. From the analysis derived from Marks and Spencer’s case study, it can be ascertained that during the decline phase, the chairman of Marks and Spencer first of all focused on strategic position and according to it a set of strategies to reinforce its brand image in retail market was selected (Collier, 2004). Consequently, it can be affirmed that, strategic position and strategic choice are interrelated and indivisible. In this case, Marks and Spencer also had chosen a few strategies to ensure its brand image as a corporate retailer. In order to do that, it had stopped using green carrier bags and simultaneously it had also changed packaging and labelling its products’ to establish a new brand image. Besides, Marks and Spencer had also launched internationally through the help of a set of ideal strategic positioning and strategic choice. During the overseas phase, it had divided its products and services into five different segments. However, at that stage, Marks and Spencer had started to regain its command back as a retail player. Consequently, Marks and Spencer had been able to stabilise its brand position through a variety of strategic choices. For instance, Marks and Spencer had executed factory outlet malls for selling excess stock in a discounted price (Collier, 2004). After a few years, during 2003, finally Marks and Spencer recovery did not pan out completely. As a result, the chairman resigned in 2004. Moreover, it can be affirmed that, the choice of strategy and the positioning of the brand image of Marks and Spencer had been inadequate. Conclusion From the foregoing analysis of Marks and Spencer’s case, it has been magnified that during the last couple of decades, it has been experiencing growth, stability and declining phases as a retail industry player in the competitive market. It is also determined that strategic position and strategic choice for an enterprise play vital roles to direct its operations towards the designated growth path. It is ascertained that both strategic position and strategic choices are related with each other and they can help an enterprise to regain its stability after facing a stage of decline. Over the years, it has been observed that Marks and Spencer has implemented several aspects such as different floor for different product, attractive lighting for Christmas and also sponsored couple of football teams. Apart from this, during 2001, Marks and Spencer had registered a surprising alliance with the former captain of England’s football team which can be termed as a key factor regarding the strategic position and strategic choice of the enterprise. Conclusively, it can be highlighted that strategic position and strategic choices are inseparable components. Correspondingly, for M&S, an indifferent focus of the company in these aspects brought about significant downfall in its flourishing market prospects in the past two decades. M&S thus requires ensuring that a proper balance is established amid these two valuable factors so that it is able to develop its competencies without much complexity in the long-term future. References Collier, N., 2004. Marks and Spencer. Exploring Corporate Strategy, pp. 1-15. CIMA, 2008. Strategic Position. About Topic Gateways. [Online] Available at: http://www.cimaglobal.com/Documents/ImportedDocuments/cid_tg_strategic_position_mar08.pdf.pdf [Accessed April 16, 2014]. Dean & Company, 2014. Strategic Positioning. Home. [Online] Available at: http://www.dean.com/delta-model/strategic-positioning [Accessed April 16, 2014]. Friend, J. & Hickling, A., 2014. Structure of the Strategic Choice Space. Strategic Choice Is Central to Strategy Making. [Online] Available at: http://www.simply-strategic-planning.com/strategic-choice.html [Accessed April 16, 2014]. Wa'ed, 2014. Strategic Positioning. Learning Center. [Online] Available at: http://www.waed.net/English/learn/Pages/Strategic-Positioning.aspx [Accessed April 16, 2014]. Read More