The Concepts of Strategic Management - Case Study Example

Strategic Management Case Study Contents 1.0 Introduction: 2 2.0 M&S Analysis: 2 2.1 Value for Money: 2 2.2 Resources and Core Competencies: 3 2.3 Strategic Vision: 3 2.4 SWOT Analysis: 4 2.5 PESTLE Analysis: 5 3.0 M&S Before 1990s: 6 3.1 Success of M&S Strategy: 6 3.2 PORTER’s Five Forces: 7 4.0 M&S After 1990s 9 4.1 Weak Management Strategy: 9 4.2 Two New Strategic Approaches: 9 5.0 Conclusions 11 Bibliography 12 1.0 Introduction: Marks and Spencer is one of the top six retailers within the United Kingdom. The group was started way back in 1884. Then a small stall opened by Michael Marks. This paper aims analysing the company in terms of current performance, internal analysis, external analysis, before 1990s and also post 1990s. The main aim is to identify the strategic decision making of the company and the overall performance of the company. 2.0 M&S Analysis: 2.1 Value for Money: The main factors that influence the buying decision for customers is the value for money. M&S has over the years been able to blend and adapt to the changing environment and has been able to develop a strong brand image for itself. The company started with the slogan “Don’t ask the Price – It’s a Penny”, and this had worked very effectively for a long time. Considering the current market position and the current competitive environment, it is crucial to note that the same concepts will not prove to be as effective as it was earlier (Andrew, 1980). The constant change that the company has been sustaining is one of the best attributes of the company and it is important to note, irrespective of the style that the company undertakes, there is a major importance given to the value for money and the quality of the products (King, 2009). For instance, in the 20th century, the company was successful simply because of the understanding of the middle class as well as concentration on quality and fair prices. Hence it is evident that the company pays major attention to the value for money that it provides. 2.2 Resources and Core Competencies: The identifiable strategic resources of the company have been clearly listed in the case study. It is important to note that these form a major part of the strategic moves of the company. The physical and intangible resources along with the high levels of capabilities that the company currently posses, clearly these have a very positive impact on the business and on the overall performance of the business (Rodgers, 2007). Considering the core capabilities of the company it is evident that M&S has been able to be successful in the markets as the company provides high quality, excellent value clothing and home products along with the wide variety of outstanding quality food globally (M&S, 2010). In short as has clearly been explained by Peter Drucker the success of the company is based most importantly on the quality of the products and the overall services that the company provides. 2.3 Strategic Vision: Mark and Spencer is a company which has been able to build its overall performance and product line over the years. The company has evidently provided excellent services and products for a number of years. In terms of the strategic vision of the company, it is evident that the company is focusing on setting high standards for the markets. The company with its performance has been able to grow the customer expectations and meet the needs of the customers to a great extent. Hence it can be noted that the company is clearly growing its name and performance to be able to achieve recognition and to set standards based on the value, service, products, quality, innovativeness and style. The company has evidently and successfully not only set a standard for the industry but has also very effectively gained complete customer loyalty and trust. 2.4 SWOT Analysis: Strengths Weaknesses Excellent Brand image Strong levels of brand extension into the food industry Strong brand image of the food sector and also high performance promise Innovativeness and Originality Excellent marketing and advertising efforts of the company Good diversification of the products Strong and intense product line High levels of sales and turnover Strong and impactful leadership Resignation of some of the top leaders like George Davis, Andrea White and Melanie Davies Few straight falling quarters in performance Higher pricing than other companies on the high street Too much focus on older trends and lack of newer and trendier products limits the audiences to be older generation alone. Opportunities Threats Use of advertising and marketing to rebuild company name and image Improved focus on core markets Focus on ageing as well as youth alike Expansion of brands Introduction of new brads for the company More focus on trendier products Need for more innovation and creativity E-Commerce opportunities The tarnished reputation and brand image Higher competition Wider competing companies like Tesco, and others Reducing need for hi street store and increasing focus on ecommerce stores Loss of youth markets Changing tastes and Social needs Branding and brand recognition. 2.5 PESTLE Analysis: Marks and Spencer has created a strong brand name for itself over the years and is now considered in the top ten retailers of United Kingdom. Considering the PEST analysis of the company, the following can be clearly identified as the factors that impact the growth and development of the company. Political and Economic factors have had a major impact on the company. The company has been faced with a number of uncontrollable issues like changes in the household spending of the country as well as high levels of recession being faced within the country. M&S deals with high priced products and with the overall spending habits of the households, and buyer behaviour changing this is a major factor that impacts the company and its overall growth. In terms of the social factors the changes in the style of shopping, i.e. gradual change from High stores to online shopping has also impacted the business positively. Technology has also played a major role in the company and its growth. The implementation of information systems has helped the company grow and develop effectively and has also permitted better value for all processes. In terms of the Legal aspects, the company faces high number of changes with the change in the legal aspects and legislations. The main focus is to ensure that the company complies with all legal factors and conducts business in an ethical manner. Finally considering the environmental factors, the changes in the outlook of people and their buying behaviour has had a major impact on the business. For instance, with the declining economy, people prefer to buy less expensive clothing and to cut out on the luxury goods. This has a direct impact on the position of the company. 3.0 M&S Before 1990s: 3.1 Success of M&S Strategy: Marks and Spencer have used the strategy of diversification and this has proved to be very effective for the company. It is crucial to also identify that although the company deals with broad product groups the company has complete control on its operations. TM&S has very effectively managed to innovate and diversify the product range and have also ensured that the basic traits of the products remain the same, i.e. high quality, durability and complete value for money. M&S has focused on the a few main factors while dealing with the decline before 1990s. The company has ensured to diversify the products as well as to work on keeping specialization within the company. The brand name of the company as well as the level of innovation and value added services was given immense attention thereby allowing the company to implement the expansion programme in a more effective manner. A mix of all these efforts clubbed with the quality of the products clearly has allowed the company to successfully face the competition and has also permitted an improvement in the overall sales and revenues of the company. The company has also effectively used the physical and intangible resources and the capabilities of excellent supply chain management, effectively to help nurture the growth as well. On the whole there have been constant efforts and attempts by the company to develop the best mix to suit the needs of the customers as well as to improvise on the strategies and work flow processes. 3.2 PORTER’s Five Forces: Porter’s Five Forces is an excellent strategic tool and helps identify the main threats that the company faces. Here the main ideas have been summarized in the image below. A detailed explanation of the same has been provided as well. Considering each element: a) Threat of New Entrants – The Company faces low to medium levels of threat from the new entrants. Marks and Spencer has been in the industry for a long period of time and the company’s brand name. With the market position and power that the company current has it is evident that the company can discourage the potential entrants and the company has developed a number of entry barriers. b) Power of Buyers – Marks and Spencer faces high levels of threat from the bargaining power of the buyers. This is mainly the buyers have a wide range of options that they can choose from and there are a number of possible substitutes as well. c) Power of Suppliers –With the growing number of companies that are present in the markets, the suppliers have also increased considerably. It is important to note that the company also manufactures its own products which in turn simply imply that the suppliers have a strong position. Hence Marks and Spencer faces medium to high levels of threat from the suppliers. d) Threat of Substitute – The markets are filled with a number of different foods and clothes stores. It is crucial to note that M&S faces high levels of threat from substitutes. Companies like Tesco and Sainsbury cause the highest threat as these companies provide excellent substitute products for lower prices. e) Competitive Rivalry – The competitive Rivalry for the company is very high. There are a number of competitors for M&S in the markets. The company faces competition not only from the clothing and apparel sector but also from the food sector as well. Most competition provide similar quality with much affordable prices. 4.0 M&S After 1990s 4.1 Weak Management Strategy: Marks and Spencer has been faced with a number of management issues which led the company to face a decline. These included the lack of attention that the company gave to the operations and the high levels of reliance on the image and reputation of its brand (Sanders, Ashworth, Lapworth, & Fraser, 2002). Also, with the intense levels of reliance on the suppliers the company was facing major reasons for decline as well. The lack of innovations and freshness in the styles and fashion elements, led the company to be faced with issues. To top all these, when the top management started to leave as well, these caused a major blow the company and the overall performance of the company. The need for a strong and strategist leadership was one of the main causes for the decline of the company. Also as explained in the case, “…everything is going swimmingly and you don’t tinker with a successful formula. After sales and profits declined, M&S put the magnifying lens on the business and asked what was wrong. Staff and Customers told us that the quality was not as consistent as it used to be, and the service needs to be better than it is” (Case Study - Marks and Spencer Management Strategy, 2010). 4.2 Two New Strategic Approaches: Considering the current position of the company, and the current market needs the following recommendations can be drawn out. a) The company requires to focus on improvements of the ecommerce systems and to improvise the information technology used within the company. This plays a major role in the success of a company in the current times. Also based on the value chain analysis this will help the company improvise on the processes and will also help gain back its competitive advantage by gaining a cost advantage and differentiation in the markets. b) The second recommendation to Marks and Spencer is to identify better suppliers and to develop better contracts and agreements to get the supplies at lower rates. This will assist the company in improvements both in terms of the existing as well as new products and markets. Based on an Ansoff Matrix analysis, the company is presently focusing on diversification, however if more attention is given to the market development as well as the product development, M&S will be able to effectively build the competitive advantage. Ansoff Model 5.0 Conclusions Mark and Spencer have been able to effectively meet the needs of the customers over the years. The company has a strong and effective brand name and quality and the company has been able to effectively reach out to the younger crowd and changing needs of each year based on high levels of marketing and advertising. It is crucial to note and understand that all the strategies set by organizations are concerned with a number of different aspects like its own activities with the external environment, its resources, long term goals, and the values, expectations and goals of those influencing strategies. The organisation by itself has worked hard to achieve where it belongs to presently and has also built its brand name, image and value to a great extent. Mark and Spencer to a great extent can be considered to be a milestone in the field of strategic management and performance. Bibliography Andrew, K. (1980). The concept of Corporate Strategy. Dow – Jones Irwin. Bevan, J. (2007). The Rise and Fall of Marks and Spencer: . And How it Rose Again. Profile Books. Briggs, A. (1984). Marks & Spencer 1884 - 1984: A centenary history of Marks & Spencer Ld, the originators of penny bazaars. Octopus Books. Case Study - Marks and Spencer Management Strategy, KCB IBD Strategic Management (December 2010). Johnson, G., Scholes, K., & Whittington, R. (2006). Exploring Corporate Strategy. Essex: Prentice Hall. King, I. (2009, May 18). 'Don't Ask The Price, It's A Penny' — sign set retailer on path to success. Retrieved November 12, 2010, from http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article6307732.ece M&S. (2010). Marks in Time. Retrieved November 12, 2010, from http://marksintime.marksandspencer.com/assets/pdf/learn_more/dont_ask_the_price_its_a_penny_12_14.pdf Mintzberg, H., Lampel, J., Quinn, J. B., & Ghoshal, S. (2002). The Strategy Process: Concepts, Contexts and Cases. Financial Times Management: Prentice Hall. Porter, M. E. (1979). How competitive forces shape strategy. Harvard Business Review , 137-145. Rodgers, P. (2007, Mat 27). Marks and sparks: Shopping in the 21st century. Retrieved November 12, 2010, from http://www.independent.co.uk/news/uk/this-britain/marks-and-sparks-shopping-in-the-21st-century-450606.html Sanders, M., Ashworth, A., Lapworth, K., & Fraser, A. (2002). Marks & Spencer trade Secrets : everything You Will Ever Need To Know About Everything . Orion. Worth, R. (2007). Fashion for the People: A History of Clothing at Marks & Spencer. Berg Publishers. Read More