Business Strategy of Marks and Spencer in Modern-Day Business Environment - Case Study Example

Business Strategy Table of Contents Introduction 3 Strategic Position of Marks and Spencer In Relation to the Case 4 VRIN Analysis of Marks and Spencer 5 Ansoff Matrix of Marks and Spencer 6 TOWS Matrix of Marks and Spencer 7 SWOT Analysis of Marks and Spencer 8 PESTLE Analysis of Marks and Spencer 9 Positives 11 Negatives 11 Strategic Choices of Marks and Spencer 12 12 Relationship amid Strategic Position and Strategic Choices of Marks and Spencer 14 Conclusion 15 References 16 Introduction In context of the modern day business environment, the approach of conducting business has become quite a crucial component that has profound impacts on the operations of the business. In this competitive business environment, it is important that companies emerge with effective and diverse range of strategies in order to gain competitive advantage over their competitors in the global market. It is important that companies develop a competitive position for themselves in the global market so that it can attain utmost sustainability in its business operations. In this regard, the aspect of strategic positioning of the company will be crucial to describe (Sinha & Sinha, 2009). Observably, it is the strategies that differentiate one company from the other and facilitate it to frame its reputation amid the customers which is again a determining factor for the overall operations of the business. The strategies that companies develop in their operations directly impact the operational efficiency of the business in a comprehensive manner altogether (Duhaime & et. al., 2012). Apart from the strategic positioning of the business, the role of strategic choices of a company is also of paramount importance with regard to determining the operational performance of the business. Strategic choice is the set of decisions any business adopts towards the growth, development and expansion of the overall business which is again directly relevant with the operations wellbeing of the company in the long run. In order to derive a comprehensive understanding in this regard, it will be crucial to evaluate the case of Marks and Spencer (M&S) and its level of success along with complexities faced over the years. The company is one of the renowned enterprises in the retail sector and has been among the household names in the international business. Though the company experienced certain decline in its performance in the later part of its inception but it has taken several measures and steps to deal with the same which are highlighted in detail hereunder. Contextually, this particular discussion will reveal the relationship amid the strategic position as well as the strategic choices of the company in keeping with the provided case study. Strategic Position of Marks and Spencer In Relation to the Case Strategic positioning of any business can be delineated as the way in which companies remain in contention as amid the major players of the global business market. Strategic positioning can be regarded as the approach of companies towards dealing with the competitors as well as serving the customers in the global business market. Serving the customers efficiently in the global market relates with the aspect of gaining satisfaction of the customers, surpassing the performance effectives of the competitors in terms of satisfying the customers and ensuring retention of the customers amid others. Ensuring the satisfaction of the customers will directly lead to gaining competitive edge over the other market players (Donaldson & OToole, 2007). All these aspects together form the strategic position of any business. Subsequently, the aspect of strategic positioning of Marks and Spencer will be vital to consider. This aspect can be better comprehended from various strategic frameworks including VRIN, Ansoff Matrix and TOWS Matrix among others. The company is operating in quite a competitive environment which further impacts its operations up to a considerable extent. VRIN Analysis of Marks and Spencer Valuable The simple pricing policy of Marks and Spencer (M&S) is quite valuable in nature as compared to that of the pricing policy of its competitors. Apart from this, the approach of the company towards providing products and services exactly as per the specification is also a valuable prospect for its overall business and will ensure it to get competitive advantage. Maintaining highest standards of quality control within the business is also another key aspect in the operations of the business of Marks and Spencer in the global business environment (Collier, 2004). Rare The creative decision making culture of the organisation irrespective of any hierarchal influence is one the rare aspects of the strategic positioning of the company that has enabled it to make a distinct position for itself in the global business market. The long operational experience of the company is also one of its key strengths and it is also quite rare in nature as compared to its competitors in the global market (Collier, 2004). Inimitable The quality of products and services that the company offers is quite inimitable in nature which further enhances its strategic positioning in the global market. Besides, the approach of the company towards building and maintaining strong and sustainable relationships with the customers and the suppliers is also an aspect that can hardly be copied or imitated by the competitors (Collier, 2004). Non-Substitutable M&S associates mainly with the suppliers that have contemporary production techniques in the manufacturing of goods which is again a non-substitutable aspect. This is because of the aspect that the operations of the company will probably impact negatively once it changes its usual suppliers (Collier, 2004). Ansoff Matrix of Marks and Spencer The Ansoff matrix depicts the probable growth strategies of the business units in the contemporary business environment. The matrix also depicts how companies can grow their operations as per their present products and services. The Ansoff matrix of M&S is provided hereunder: Existing Markets Existing New Market Penetration 1. Development of new products and services 2. Utmost focus on the retail market of UK Product Development 1. Development of the ‘per una’ of the company 2. Advancement in the domain of technology New Markets Market Development 1. Entering new and emerging markets 2. Expanding operations in Hong Kong through franchising Diversification 1. More customer focused approach through products diversification 2. Splitting products into various business units including food, home and beauty amid others. Source: (Collier, 2004) TOWS Matrix of Marks and Spencer Strengths (SO) 1. High quality products and services 2. Stores located in various nations and spread all over UK 3. Highly profitable company over the years of operations Opportunities (SO) 1. Increasing number of customers in the retail sector 2. Scope for utmost improvement in the domain of marketing 3. Accessing customers of the global world through business expansion Weaknesses (WO) 1. Limited number of suppliers in the UK which further results in overseas sourcing 2. Concerns with a lack of proper services in the clothing range Opportunities (WO) 1. Associating with new suppliers in the UK and other parts of the world 2. Enhancing the services to the customers through engaging in e-business Weaknesses (WT) 1. Over reliance on the limited number of suppliers in the UK 2. A lack of efficacy in the use of technology Threats (WT) 1. Increasing cost of operations with each passing year 2. Increasing competition from Tesco and ASDA in the UK market 3. Companies entering the retail industry with high technological competencies Strengths (ST) 1. Effective relationship with customers and suppliers 2. Large operational experience 3. A renowned name in the retail sector Threats (ST) 1. Efficacy of the competitors in providing customer services 2. Increasing competitions with the emergence of new entrants with better competencies in various domains Source: (Collier, 2004) SWOT Analysis of Marks and Spencer Notably, from the above analysis, it can be comprehended that Marks and Spencer is one of the major players in the retail sector of the world. The company is deemed to be quite effective with regard to attracting the customers. However, there are also certain challenges which the company are dealing with in the present day scenario. This can be better comprehended from the case study hereunder. Strengths One of the major strengths of the company is the deliverance of quality products and services to the customers. M&S intends to present itself as one of the innovative players in the retail industry through the deliverance of a unique set of products and services. The company also develops noteworthy relations with the suppliers as well the customers which further ensure stability of its business operations (Collier, 2004). Weaknesses One of the major weakness of the company is it’s over reliance on the supplier of the UK which is quite limited in number for the company. In this regard, the company loses its competitive advantage over that of the competitors owing to the aspect that its competitors are mainly associated with foreign suppliers offering low priced products. M&S is also deemed to be quite inefficient in terms of the use of advanced technologies as compared to that of the competitors (Collier, 2004). Opportunities M&S will need to follow the footsteps of competitors such as Tesco and ASDA and should involve itself with the use of modern day technologies to attract customers of the young generation. The company has diversified its products into various diverse sections. However, it has the opportunity to expand its product range in the food, home and the beauty section as it has maximum customer loyalty for the same. Expansion in the markets of Hong Kong and other unexplored regions of the world is also among the luring opportunities for M&S (Collier, 2004). Threats Since M&S is offering its products and services in diverse sectors including food, clothing and home among others, the number of competitors it is dealing with is also quite large in number. This factor also serves as a threat for the company. Furthermore, the increasing online shopping preference of the customers in the market is also another vital threat for the company in its operations (Collier, 2004). PESTLE Analysis of Marks and Spencer Political Factors The government regulations in the UK and others parts of the world where Marks and Spencer operates have a notable impact on the operations of the business. The company has its operations negatively affected from the health and safety regulations of the UK as it had been unable to adhere to the same in an effective meaner. However, with regard to adhering to the environmental regulations of the UK, the company has also failed to meet the corporate governance standards of the nation as it stooped the use of green bags to enhance its brand familiarity (Collier, 2004; Scribd, n.d.). Economic Factors In the uncertain economic scenario of the UK, the company i.e. M&S, has been largely affected which further forced the company to come up with job-cut strategy within the business. It also introduced products such as wine and champagne to move in parallel with a few of its key competitors (Collier, 2004; Scribd, n.d.). Sociological Factors With the changing nature of the demand of the customers and their purchasing habit, M&S has the need to come up with diverse and innovative range of strategies. Contextually, the management of the company has emerged with the idea of selling products online to keep up with the operations of the competitors such as ASDA and Tesco (Collier, 2004; Scribd, n.d.). Technological Factors With the changing demands of the customers, one of the visible transformations of preferences of the consumers can also be seen in their approach towards associating with innovative operations. In this context, it can be apparently observed that M&S has had to deal with severe problems as technological incompetency has been one of the major weaknesses of the company over the years (Collier, 2004). Legal and Environmental Factors In relation to the legal and environmental factors, it can be ascertained that the business environment of the UK for the retail players especially is driven by strict regulations to uphold the business operations. It is found that Luc Vandevelde being appointed as the new chairman for the organisation decided to prepare a set of restructuring plans for the company to regain its position. Accordingly, it was claimed by French government that M&S had broken employment law of France. The subsequent legal obligation lay down by French government to prevent the closure of M&S stores brought about serious consequences for M&S under the guidance of Luc Vandevelde (Collier, 2004). Positives From the above strategic positioning analysis, it can be depicted that M&S has several positives in its operations which further can act as a core performance stabiliser of the business. The approach of the company towards enhancing its UK business, ensuring proper relationship with customers and suppliers and augmenting the range of its products can be highlighted as noteworthy positives of the strategic position followed of the company. Negatives There are also certain negatives in the operations of the company which should also be highlighted to depict the level of effectiveness of the strategies of the company. A few of the negatives of the company include its technological innovation incompetency, its level of service quality and non-adherence to regularity norms among others. Strategic Choices of Marks and Spencer From the foregoing analysis, it is apparent that M&S has both strengths as well as weaknesses of its own. The company has witnessed both growth and challenges in conducting its business over the years. However, this strategic position of the company can be considered directly relevant with the strategic choices it has made over the years in its operations. Notably, in the year 1998, the company had halted its operations and expansion in the areas of America and Europe. The company intended to establish its business in the above mentioned markets with its prevailing tried and tested approach. However, tough trading in the nations had forced the company to halt its expansion plans in the same. This further influenced M&S to focus on the UK market and make noteworthy changes in its recognised concept i.e. “the Penny Bazaar”. The concept which was introduced in the year 1980 enhanced the reputation of the company in the global business environment and enabled the organisation to establish a strong base as one of the major players in the retail sector of the world. The first aspect that has been propounded by the company in the penny bazaar concept is transforming the same into stores as per the changing demands of the customers in the market. The management of the company upon its return back to the UK market also established simple pricing strategies for its products in order to attract the attention of the customers. In the later stages, the company had also made changes with regard to the logo of the penny bazaar concept in order to ensure its familiarity amid the potential customers. Contextually, the company introduced “St. Michael” as the logo of the organisation which also acted as the sign of quality of the products offered by it. The stores that were being transformed from the penny bazaar were also being filled with a family environment where the employees were valued for their work and they were further motivated to accomplish the goals and objectives of the business. As a result of the changing business strategy of the company, the employees of the organisation were also treated with utmost respect and value which further resulted in their pay hikes. Simon Marks, who took over the control of the company from his father, was well known for his approach of taking control of the business. Subsequently, he came with the proposal of top to bottom management approach which in most of the scenarios results in efficacy in various domains of the business with regard to quality and relationship amid the stakeholders of the business. These strategic choices of the management of the company further reflected in increased profit and turnover of the company. Furthermore, a few of the principles set by the company with regard to its operational activities also worked in favour of the growth and development of the business. Certain principles of the company included maintaining proper relationship with the customers, providing high quality products and services to the customers and encouraging suppliers for the use of updated techniques in their operations amid others. The strategic choices of the company also included its approach towards dividing the product line of the company amid several key divisions and adopting a customer focused approach in its marketing approach. All these aspects have worked in favour of the company. Furthermore, the strategy of the company with regard to the addition of 4,000 staff to enhance the customer services of its stores also can be highlighted as a prudent notion. Additionally, the management of the company developed strategies to establish the business primarily in the UK market which has resulted in enhancing its position in the concerned market by a considerable extent. In keeping with this strategic choice, the company has strengthened its profit centres, its financial capability as well as the approach of dealing with the customers, all of which have worked in favour of the company’s reputation in the UK market (Collier, 2004). Relationship amid Strategic Position and Strategic Choices of Marks and Spencer Observably, a few of the key strategic choices of M&S have directly influenced its strategic position in the present day context. The company has developed strategies to provide high quality products to the customers, which has yielded positive outcomes wherein it is able to attract maximum number of customers despite the presence of tough competition it needs to deals with in the retail industry. The company has also been deemed to be quite appreciative with regard to the formation of proper relationship with the customers and other suppliers. Lately, this aspect has become one of the major strengths of the operations of Marks and Spencer wherein it is able to ensure maximum customer engagement along with assuring their loyalty towards the business. Notably, from the foregoing discussion, it is apparent that M&S has highly prioritised its operations in the UK market through developing strategies specifically for this market. This aspect has contributed positively towards the present strategic position of the company. This can be justified from the aspect that the company has been a major player in the retail sector of the UK further providing tough competition to noteworthy players such as Tesco and ADSA. The company has also made the strategic choice of developing a marketing approach that is significantly customer-focused. This facet has also resulted in enhancing the strategic position of Marks and Spencer as they are able to engage the customers towards their products. Additionally, the approach of the company to engage more and more staff in its store services has also augmented the level of services to the customers. However, a lack of strategic choices of the company with regard to innovation and creativity along with the use of updated technology has been reflected in the image of the company wherein it is considered as technically incompetent in comparison with its competitors like Tesco and ASDA. This dimension depicts the impact of strategic choices of the company on its present strategic position. Conclusion From the overall analysis of the study, it can be comprehended that strategies are among the major determinants of conducting any particular business. It will not be ambiguous to depict that the effectiveness of any business is largely dependent on the efficacy of its strategies and the choices that are made in the courses of conducting the business. This aspect can be better comprehended from the examples of strategic choices of Marks and Spencer which is directly interlinked with the strategic position of the company in the global business domain. Notably, the company has been a major player over the years in the retail sector of UK which is largely owing to its strategic choice of prioritising the UK market as the key potential market for the operations of the company. Hence, it can be concluded that strategic choices of companies are quite significant for business units as they directly determine the strategic position of the business. References Collier, N., 2004. Marks and Spencer. Home. [Online] Available at: http://www.ahotelier.com/upload_jobdescription/13789055708464_27_marks_and_spencer_a.pdf [Accessed April 22, 2014]. Duhaime, I. M. & et. al., 2012. Strategic Thinking: Today’s Business Imperative. Routledge. Donaldson, B. & OToole, T., 2007. Strategic Market Relationships: From Strategy to Implementation. John Wiley & Sons. Scribd, No Date. Pestle Analysis for Marks and Spencer. Home. [Online] Available at: http://www.scribd.com/doc/46921930/Pestle-Analysis-for-Marks-and-Spencer [Accessed April 22, 2014]. Sinha, P. K. & Sinha, S., 2009. International Business Management. Excel Books India. Read More