Marks and Spencer PESTEL Analysis - Case Study Example

Mark and Spencer University Student Id Course Date Introduction Marks and Spencer is a multinational retailer which is in the London stock exchange. It has specialized in selling home products, clothing and food products that are luxurious. Marks and Spencer company was established in the year 1884 by Thomas Spencer and Michael Marks. It operates more than 852 stores in the United Kingdom with other stores in other parts globally like India, Greece, France, Poland, Spain, and hungry among others. Marks and Spencer has been considering its business environment in the process of coming up with the necessary strategies that can help in achieving the company objectives. In order to be successful in the various changes that usually face the environment of an economic business, it is necessary for all the companies to put into consideration various factors such as the macro environment and also the microenvironment (Campbell and Rahman, 2010). In addition, every company should also analyze its corporate culture as well as the management strategies of the stakeholders. The importance of analyzing these factors is that they usually make a company to have a competitive advantage and also it enables it to have an efficient strategic plan. For instance, a good example of a company which has a competitive advantage in the marketplace is Marks and Spencer which is one of the biggest retail company in the United Kingdom. This report is evaluating the PESTEL of Marks and Spencer while analysing the industry factors in the current business environment. A PESTEL study of the broader environment These are the external environmental factors which have an impact on the Marks and Spencer Company in the implementation of its strategies. These factors are; legal, economic, political, social, environmental and also the technological factors. Moreover, these are the strategies which a given organization requires in order to compete in the marketplace effectively. Political factors The political factors that have been affecting Marks and Spencer can include integration of the European market and free trade agreements. The free trade agreements, as well as the European integration, has led to the creation of new markets in the United Kingdom where the foreign countries can do their investments. However, this has greatly impacted the Marks and Spenser Company thus making it fight hard in order to retain its position in the marketplace. Therefore, the company has incorporated both innovative strategies and also aggressive strategies in doing its business activities (Hayes, 2013). Moreover, any trade can be conducted in the United Kingdom provided that it does not have any impact on the existing public orders, policy and also laws of the country. However, the majority of the political factors that greatly impact the activities of Marks and Spenser usually revolve around the industrial relationships as well as the labour laws. For instance, the political factors impact the development efforts of the company in the industry. Economic factors The economic factors that have been affecting Marks and Spencer can include interest rates and economic changes like the recession. The economic recession mostly faces the retail sector of the United Kingdom and also it is usually much sensitive to the various changes in the interest rates. For instance, the economic recession that occurred in the year 2009 left the economy of the country struggling to regain its economic stability but eventually it has managed to restore its economy (Lang, 2006). However, currently the consumers are very optimistic about the economy as well as about the retail industry thus making the operations of Marks and Spenser Company to boom. Moreover, the United Kingdom is the central place of commerce in the entire Europe thus meaning that the clients are not only limited to the local retailers but also to the external tourists hence establishing a diverse retail business. The economic factors have an influence on the general performance of the company through affecting the demand and operations. For example, the economic recession affected Marks and Spencer by reducing the demand as the disposable income reduces during economic recessions. Social factors The social factors that affect Marks and Spencer can include the customer preferences, demographic and the change in lifestyle. The target customers of Marks and Spencer have dynamic taste due to the changes in the technology leading to new product features. The demographics determine the kind of products that are demanded in the market hence it is important for Marks and Spencer to consider the customer demographics in the process of making business decisions. The changes in the tastes, lifestyle and also preferences of the consumers have presented both opportunities and also threats in the retail industry of the United Kingdom. For instance, the majority of the United Kingdom usually develop the tendency of becoming loyal to a particular brand of products. However, this tendency of the consumers is easily broken by the suitable pricing strategies from their competitors in the market (White, et al., 2007). Moreover, the tendency of the consumers to prefer the trendy styles usually presents a threat to the Marks and Spencer Company in obtaining a big share in the marketplace. Therefore, keeping pace with the changes in the social factors is very important in helping Marks and Spencer achieve its objectives. Technological factors The retailing industry has experienced many technological changes as companies are competing to achieve an increase in market share. Technology has provided many opportunities in the industry that has been used by Marks and Spencer in achieving efficiency and improving quality. The firms that are failing to ensure successful implementation of technology are losing their market share as customers are looking for fashionable products. There are numerous radical changes in terms of technology which has taken place in the retail industry of the United Kingdom. Some of these technological changes include; the usage of the internet in doing online shopping thus broadening electronic commerce in the retail industry (Khan, 2013). In addition, the Information and Technology Systems have been used in the business operations. Moreover, the Marks and Spencer Company in most cases makes use of the technological aspect of online marketing in order to gain a competitive advantage over the other competitors in the marketplace. Therefore, the firms operating in the retailing industry have to keep pace with technological changes to ensure that they remain relevant in the industry. Environmental factors The operations of the companies in the retailing industry are expected to protect the environment from pollution. Marks and Spencer have adopted environmental policies that are aimed at controlling pollution. The majority of the companies in nowadays prefer having environmental friendly and also renewable resources in their process of production which has resulted in greater challenge for some of the companies in retaining their market share. Therefore, this has made Marks and Spencer to have great concern on the usage of the raw materials which are environmentally friendly (Tokatli, Wrigley, and Kizilgün, 2008). Failing to operate in a way that can ensure environmental sustainability can harm the reputation of the company hence important to ensure an organization is a good corporate citizen. Legal factors The legal factors that affect the firms operating in the retail industry can include company regulations and laws that they are expected to adhere. Both the legal regulations and also the laws have been enacted in order to monitor the business activities of the companies in the retail industry of the United Kingdom. Moreover, the legal bodies such as the National Legislation for the health safety closely monitor the consumer rights as well as the production of the renewable resources. Marks and Spencer has been considering the regulations in the market that affect its operations in making business decisions. Industry analysis The micro environmental analysis The industry is at maturity stage in the lifecycle. The forces in the market that can affect the company include technology and lifestyle changes. These forces affect the company by changing the demand pattern in the industry where technology leads to change in product features. The lifestyle also determines the demand in the industry. The strategic tool that is mostly employed in doing analysis on the Marks and Spencer Company is the porter`s five forces. Moreover, this strategic tool usually examines and also determines the competition level as well as the profitability of a given company. Therefore, this strategy helps the Marks and Spencer Company to determine its attractiveness to the consumers in the marketplace (He and Mukherjee, 2007). One of these factors which pose a threat to this company is the entrance of new companies into the retail industry. However, even though the retail industry has an attractive environment, there are some difficulties which hinder the penetration of a company into the industry. This can be as a result of strong companies in the marketplace such as the Marks and Spencer which have already established a strong base of the market for a long time thus making the survival of the other companies to be difficult. The drivers of change are customer needs and technological changes where organizations in the industry adjust their operations to meet these factors. In addition, there are still other barriers which hinder new companies from entering into the retail industry, and these barriers include; the changes in the consumer expectations and also high capital expenditure. However, the low-cost manufacturers that are emerging in the retail industry are posing a major threat to the companies which already exists in the retail industry such as the Marks and Spencer. Also, the threat of the bargaining power of the clients does not only affect the Marks and Spencer Company, but also it has an impact on the whole retail industry (Angelette, 2006). The balance of power in the retailing industry within the forces can be achieved through keeping pace with the market changes to achieve relevance. Potential directions available to the company for future growth The potential directions that can be utilized by Marks and Spencer in the process of achieving future growth can include differentiating its products and investing in technology. The products that can make sense for the company can entail the stylistic fashions in the clothing market. Marks and Spencer have to invest heavily in technology to make sure that it is efficient in operations. The relevant future direction that the company can take include differentiating its products in the market to eliminate the ease of substitution. However, despite the Marks and Spenser Company having a competitive advantage, it is also faced with many challenges which include the double-flip economic recession that greatly affects the spending patterns of the consumers because of their disposable incomes (Grayson, 2011). Moreover, despite all these challenges the company has still managed to maintain its strong position, whereby the company has witnessed an increment of around 3.9% in the food sales and also a general profit of around 564.3 million dollars in the year 2013. Through investing in technology and adopting differentiation strategy Marks and Spencer can be in a better position to increase its market share. In addition, so as to understand well about how the Marks and Spenser Company has managed to retain its competitive advantage, it is quite necessary to do an analysis concerning its competitive positioning in the market of the United Kingdom. However, this analysis usually requires consideration of various factors such as the corporate culture, management strategies of the stakeholders and also the both micro and macro business environments. Marks and Spencer is likely to experience improvement in the market share through developing products that are able to meet the customers’ needs better than the rivals in the industry. Figure 1: Dynamic model SWOT analysis The SWOT analysis is the strategic tool for a business which is used in the identification of both internal and the external factors that are of great significant in assisting an organization to achieve its objectives. The SWOT strategic tool usually comprises of the strengths, weaknesses, opportunities and also threats which have an impact on the company. Therefore, this strategic tool assists Marks and Spencer Company in analyzing as well as understanding about the current situation of its business. Strengths 1. Marks and Spencer provides a broad range of products which include; wine, financial products, furniture products and also clothes among the others thus establishing a large base of the consumers. 2. The company has managed to successfully implement its social sustainability strategies that have helped in improving the image of the image of the company in the industry. 3. In terms of the sales, Marks and Spencer is the largest retailer in the United Kingdom thus indicating that it has a large number of consumers (White, et al., 2007). 4. Marks and Spencer has a brand loyalty in the market of United Kingdom thus meaning that majority of the customers are aware of its brand. 5. The company provides customers with high-quality foods thus making a large number of the consumers to get attracted to its products. Opportunities 1. Through the formation of alliances with other companies, the Marks and Spencer can be able to broaden its market share. 2. The consumers in the retail market of the United Kingdom in nowadays are changing their value to the cash related products. 3. Marks and Spencer is further going on developing and also expanding its supply chain overseas (Angelette, 2006). Weaknesses 1. The perception of majority of the consumers is that, Mark and Spencer provides products to the customers at high prices thus making them not to try to transact with the company. 2. Some of the consumers are not actually interested in the various products which are offered by the company. 3. There are a large number of environmental issues which include pollution that are being encountered by the company. Threats 1. The prices of the raw material in the retail market keeps on changing thus threatening Marks and Spencer. 2. There in are new legislations which are being enacted by the government in the country that are affecting the company (Tresidder, 2010). 3. Presence of the low cost retailers in the retail industry has greatly affected the company since majority of the consumers have opted for the low cost retailers. Conclusion The environmental and industry analysis of Marks and Spenser has shown the competitiveness of the company in the retailing market. For instance, the company has remained relevant in the industry through coming up with most competitive strategies aimed at meeting the needs of the targeted customers (Tresidder, 2010). Considering the fact that the taste of the customers has been changing, developing relevant product features is crucial in meeting the expectations of the customers. As it has been observed in the Marks and Spencer, doing an analysis concerning the business environment is of great importance since it enables a company to establish its strategic plan. Also, it assists the company to identify its strengths as well as its weaknesses. The sustainability of Marks and Spenser has been achieved through engaging the key stakeholders hence giving them a chance to give their opinions necessary for the company management. References Angelette, B., 2006. The Revolution That Never Came and the Revolution Coming: De Lasteyrie Du Salliant, Marks & Spencer, Sevic Systems and the Changing Corporate Law in Europe. Virginia Law Review, pp.1189-1223. Campbell, D. and Rahman, M.R.A., 2010. A longitudinal examination of intellectual capital reporting in Marks & Spencer annual reports, 1978–2008. The British Accounting Review, 42(1), pp.56-70. Grayson, D., 2011. Embedding corporate responsibility and sustainability: Marks & Spencer. Journal of Management Development, 30(10), pp.1017-1026. Hayes, R., 2013. Food microbiology and hygiene. Springer Science & Business Media. He, H. and Mukherjee, A., 2007. I am, ergo I shop: does store image congruity explain shopping behaviour of Chinese consumers?. Journal of Marketing Management, 23(5-6), pp.443-460. Khan, O., 2013. Managing risk by internalising product design in fashion retail: An exploratory case of Marks & Spencer. Manchester School of Management, Manchester. Lang, M., 2006. The Marks & Spencer Case-The Open Issues Following the ECJ's Final Word. european taxation-amsterdam-, 46(2), p.54. Tokatli, N., Wrigley, N. and Kizilgün, Ö., 2008. Shifting global supply networks and fast fashion: made in Turkey for Marks & Spencer. Global Networks, 8(3), pp.261-280. Tresidder, R., 2010. Reading food marketing: the semiotics of Marks & Spencer!?. International Journal of Sociology and Social Policy, 30(9/10), pp.472-485. White, G., Gardiner, G., Prabhakar, G.P. and Abd Razak, A., 2007. A comparison of barcoding and RFID technologies in practice. Journal of information, information technology and organizations, 2, pp.119-132. Appendix Dynamic model Read More