PESTEL as a Tool and Technique of Analysis - Article Example

1. PESTLE as a tool and technique of analysis Using PESTLE as a tool and techniques of analysing Marks & Spencer (M&S) would reveal the following: Political: From the case study, it is obvious that the liberal market environment gave consumers who would otherwise shop at M&S more choices in the form of alternative retailers. Still, Johnson and Collier (2011) imply that even when it was not performing as well as its shareholders would have liked; it M&S still had to meet its tax obligations. Economic: Consumers’ spending habits are generally dictated by the economic environment. A well-performing economy generally inspires more spending by consumers. During the 2008/2009 economic recession however, Johnson and Collier (2011) observes that M&S performed impressively, despite the cautionary type of spending seen in consumers. Social: From the case study, it is apparent that M&S enjoys goodwill from a majority of British shoppers. However, it is also clear that trends in the society such as Corporate Social Responsibility have had an effect on M&S. As a result, more demanding innovations (e.g. the introduction of the re-usable carrier bags), the removal of artificial colours from food items, and the adoption of eco-friendly production processes are now some of the social demands that M&S has to deliver to its customers. Technological: The Internet is among technological innovations that M&S has had to embrace. Online sales are increasingly popular and on 2007, the case study indicates that M&S launched the M&S Direct website, which involved working with Amazon.com in order to fully utilise the web platform as a sales avenue. Environmental: The case study indicates that M&S pays attention to: ethical sourcing of supplies; enhancing consumers’ awareness about ethical issues in fashion- e.g. recycling; and stocking fair trade items among other initiatives. In 2007, the retailer launched a five-year plan dubbed ‘Plan A’, whose objective was to enhance the business’s environmental sustainability. Legal: In the case study, it is evident that M&S has had no major problems engaging in foreign trade. As such, the legal environment in which the retailer carries out foreign trade appears to be favourable. The investment regulations in some of its supply markets –e.g. Singapore- appear to be favourable to the retailer too. 2. Evaluate the quality of leaders, change management in Marks & Spencer According to Houston and Dockstader (2002) quality leaders are those that are able to make a positive difference towards the attainment of organisational outcomes through the successful engagement with other stakeholders. Since M&S commenced its decline in 2000 or thereabout, its quality of leadership has been faulted as being unable to provide the insight needed to help it meets it objectives. Specifically, it is argued that the managers (and leaders) who have been in M&S have been unable to match their management styles to the organisation’s nature of trade and its structure. In the case study, it is indicated that “no one seems to fit” (p. 652). In a critique of the management, Pitcher (2004) suggests that the M&S manager at the time (Stuart Rose) was targeting a market that had already disappeared. If Pitcher’s critique was true, it was then indicative that the manager did not have a thorough understanding of the market that the organisation he led was targeting and was hence most likely going to make the wrong mistakes. Incidentally, Rose’s stint at M&S turned the tides for the retailer turning it back to profitability. His successor Marc Bolland also managed to oversee increased profits by a 13 percent margin. According to Guthrie (2011), while charm seems like a prerequisite for M&S managers, decisiveness seems to be a lacking attribute in both Stuart and Bolland. For example, the two failed to decide the fate of underperforming stores, even though they were aware that keeping them open was tarnishing the M&S brand slowly, while closing them would be either damaging or salvaging for the company’s fortunes. In relation to change management, it would appear that the Stuart Rose implemented and managed changes effectively. In an article, Rose (2007) documents what needed to be done and how he did it. Communication with employees and working closely with the strategists seems to have made earned him trust, and this made the changes he implemented much more acceptable. 3. Competencies that have provided M&S with a sustainable competitive advantage Through the 3C’s business model by Kenichi Ohmae (1991), M&S’s sustainable competitive advantage includes: Customers: Interested in quality (food and clothes), interested in premium brands (which M&S stocks), and are interested in healthy eating (hence positioning M&S as an ideal store where they can purchase fresh and healthy grocery and food items). Competitors: The competition is tough, but still, MS can compete on providing customers a wider choice of items. Additionally, and due to its extensive stores coverage, M&S can compete based on local convenience. Finally, and based on its relations with suppliers, M&S can bargain for lower supplier prices, benefits that it would then pass to consumers hence positioning itself as a low-cost or cheaper retailer compared to its competitors. Corporation: Since 2004 when Stuart Rose took over as CEO, and later during Marc Bolland’s tenure, M&S can pride itself for having good CEOs who despite intense pressure from the shareholders and stakeholders have managed to turn the company’s fortune back to profit-making. The company also has a network of quality producers, own branded products, and is able to provide quality items at reasonable prices. Most importantly perhaps is that M&S enjoys a significant amount of brand loyalty. 4. The extent to which a leader (Stuart Rose) was successful in instilling long-term sustainable change within the organisation In his own admission, Stuart Rose (2009) indicated that in order to revive the ailing British retailer, he had to adopt a micro-management approach when he initially took over. When the business got back on its feet however, he realised the need to “focus on building for the future” (Rose 2009, p.58). As such, he organised to have a formal top management which started by internalising the aims and objectives of the company, and identifying ways through which they could be achieved. Rose (2009) also undertook succession planning as a way of not only developing people, but also ensuring that the aims and objectives of the company would be carried forward even if any person in the management was incapacitated in any way. On environmental matters, Rose (2009) started an eco-plan that sought to make M&S carbon neutral. In the plan, the retailer targeted ensuring that most of its raw material was sourced from sustainable sources; that none of its waste was going into landfills; and that it traded ethically. The plan further sought to help customers and employees alike to adopt healthier lifestyles. The plan further sought to enhance its value-for-money propositions made to customers, but assured them that no extra costs will be charged. In regard to supply chains, Rose (2007) indicated M&S willingness and efforts towards becoming a market leader in ensuring high labour standards in the supply chains. In all his endeavours in M&S, Rose reiterated that he was “merely a guardian” of the business and that he wanted to leave a build a framework that his predecessor would find easy and beneficial to work with (Rose 2007, p. 58). Through the foregoing mentioned decisions and plan, Stuart Rose was arguably a CEO who successfully instilled long-term and sustainable changes to M&S. 5. What the future holds for M&S Like other retailers in the competitive retail market, M&S future depends on what it does on the short-term. When Rose took over, it was argued that the retailer’s hope lay with reviving the female clothing line. Among other things, when the clothing line was revived, the store had a turnaround. Lately however, while the food court is performing impressively, the clothing line is faltering. In my opinion therefore, M&S needs a strategy to revive and sustain its female clothing line. When Rose took over, he disposed off the ‘dead stock’ by selling it off at lower margins, re-stocked what was fashionable and in demand, and engaged consumers through aggressive marketing campaigns. While this was a way of managing a crisis that had been occasioned by years of bad strategy, M&S will be better placed to engage in Just-in-time supply chain management in order to avoid getting tied down with stock that does not sell in future. Just-in-time supply chain management will however rely on several factors as indicated by Muckstadt (2003). They include: M&S will need to know it customers hence making it better placed to forecast demand more accurately- Already, M&S has adopted a ‘know-customer’ strategy through the consumer barometer that was launched in 2010 (M&S 2013); M&S will need to adopt lean philosophies for purposes of shortening internal lead times, reducing work-in-progress inventories, and reducing setup times; M&S will need to create an information infrastructure for use in its supply chain. Such will enhance efficiency in the supply chain. Currently, most of the Information systems infrastructure is targeted at enhancing the online customer experience as indicated by M&S (2013). A lot therefore still remains to be done in enhancing the use of information systems in supply chain management; M&S will also need to design more integrated business processed based on the demand characteristics of specific products by customers, and rethinking the manner in which production of goods and inventory management is done. As indicated on the 2012 annual report, most consumers are now looking for fashion items that can be used across seasons. With such insight, M&S would be better placed not to overstock on clothes that can only be used during one season (e.g. winter clothes) ; Lastly, M&S may need to unite its decision-support systems especially in relation to demand forecasting. Through such systems, M&S will probably be able to create supply chains that respond quickly and with the right quantities to customer demands. Regardless of how well effective the supply chain, M&S future would not be promising without effective marketing. As such, M&S will need to design effective marketing strategies that will increase customers traffic in the retail shops (or online stores), and by so doing, enhance its competitive position. Other factors that will influence its future include technology development and M&S ability to respond to advancements therein; globalisation and M&S ability to remain competitive in the global market (e.g. by investing in international markets); economic influences that may change consumers behaviours; and future management of the company and their ability (or lack thereof) to make good strategic choices for the retailer. In future, several paradigms changes may influence M&S’s business operations. For example, a war could occur, the economic fortunes could change, climate change could have more pronounced effects on the choices that consumers make, and the nature of trade relations in the world could change in a manner that affects how M&S conducts its business. New trends could also act as the driving forces for consumer behaviour. For example, the consumerism culture could contract or become more pronounced, the social or political landscape could affect and shape consumer behaviour, and technological changes could affect the manner in which retailers market their products and how consumers make purchases. Demographic changes are especially relevant for M&S’s future because as indicated in the case study, M&S has traditionally targeted the 55-plus year-old demographic segments. In future, and in a bid to capture the younger group of consumers, M&S will perhaps have to change its marketing strategies to appeal to a more-energetic and vibrant section of the population. With development in communication technologies, the possibility of consumers bypassing retailers to purchase goods directly from the manufacturers is a possibility. Such a possibility is even more likely considering the ease of internet searches, orders, and payments. If such was to happen, M&S would need to devise a plan on how to remain relevant while competing with individual niche retailers who do not as much overheads as it does. Its best option would perhaps be championing its cause as a one-stop-shop, thus saving the consumer the trouble of having to source goods from different places. As an established retailer, there is no doubt that M&S has the ability to market itself in a manner unobtainable by independent producers who would want to bypass the retailers in future. As such, M&S could use marketing as a way of gaining and enhancing market share. References Guthrie, J 2011, ‘Dapper Dutchman has yet to pass M&S crisis test’, The Financial Times, viewed 11 May 2013, . Houston, A & Dockstader, S. L 2002, ‘Total quality leadership: a primer’, Total Quality Leadership Office, no. 97, pp. 1-71. Johnson, P & Collier, N 2011, ‘Marks and Spencer plc: where next for the icon of British retailing?- Case study’, In Cummings & Wilson (Eds.), Strategy as orientation and animation, John-Wiley & Sons, London. pp. 650-657. M&S 2013, 'Annual report 2012', viewed 11 May 2013, . Muckstadt, J A., Murray, D H, Rappold, J A & Collins, D E 2003, ‘The five principles of supply chain management: An innovative approach to managing uncertainty’, Cayuga Partners White Paper, pp. 1-8. Ohmae, K 1991, The mind of a strategist: The art of Japanese business, McGraw Hill, New York. Rose, S 2007, ‘Back in fashion: How we’re reviving a British icon’, Harvard Business Review, May, pp. 51-58. Read More