Marketing - PEST Analysis of M&S Company - Essay Example

? Marketing Marketing PEST analysis of M&S Company Introduction M&S is an abbreviation for Marks & Spenser. The organization was formed in 1884 where Michael Marks came up with a market stall situated in Leeds. In 1994, Marks partnered with Thomas Spenser who was a cashier at a wholesale in Dewhirst and together they opened their first shop in Leeds in1994.  It is an international company that spreads trough parts of North America, Europe, and Asia. To carry out a PEST analysis on this company, we first need to understand the macro and micro factors that affect it.  With this in mind, one can evaluate the way M&S carry on in the ever changing market. By analyzing the current business situation of M&S, it will be possible for one to determine if the company should revise its way of serving customers, the way of market segmentation, or split its products into various target markets Macro factors that affect M&S These are the external factors that have an indirect impact on any company.  They include the political, social, technological, economical, and legal entities. For instance, in the legal entity, the government of UK has brought in energy saving organizations like “Green Tax” and “Change Levy” on the use of energy to lessen carbon dioxide by 30% and distributed subsidies to make improvements on subsidies. This has affected M&S positively in such a way that the company has been forced to launch an incentive policy in which stores can maintain the value of 15% of all savings it makes and above its moves. The move helps the company to save about 10% of its energy (Moiz, 2010). Micro Factors Marketing management is obliged to attract customers and set up good relationships with them by initiating the satisfaction and worth of their preferences. Nevertheless, market practices are required to focus on the needs of the targeted consumers and also the need to recognize the impact of micro factors that include: Products M&S deals in clothing, house appliances, food, footwear, and gifts. When providing these goods and services, they have to focus on the quality, trust, innovate, and values given to its potential customers. Customers The company lives to the policy that customers are the most vital element to be considered and understood because they determine its future and success. M&S appreciates that customer satisfaction comes first before the product sales and thus gives high quality products and good services in order to raise the loyalty of its consumes. Markets M&S possessed stores in Hong Kong and Ireland, including 131 franchises food in 28 nations operating via a network of thriving partnerships. It has recently opened a new market in Kirkgate, Leeds. Another coffee and heritage shop has been established right alongside the popular M&S clock in Kirkmarket. The retail environment however remains to be a challenge in the UK and other international regions. M&S has to take a step with regard to this factor by staying true to its values, listening to its potential clients, and constantly executing its strategy so ha the business can be stronger. Competitors While M&S focuses its operations on h quality of goods and services, its chief competitors, Tesco and Sainsbury focus theirs on the breadth of range, quality, and convenience. This company has a number of competitive advantages that have been in existence for a long time now. They include a recognizable brand name, and a stable supply connection. Specifically, M&S has its own exercise tight and market testing quality control. The great part of its operations is that it has kept customer loyalty as compared to its competitors. However, the worry is that Tesco and Sainsbury have established their stores globally as opposed to M&S, and thus the company has to check on this drawback (Moiz, 2010). The PEST framework analysis Definition This is a tool widely used o help in analyzing the social-cultural, economical, technological, and political changes in a given organizational environment. With the PEST analysis, one can get a true picture and understanding of the forces of change that an organization has been exposed to, thus enabling the management o take advantage of the available opportunities or put in place solutions o a given problem. The acronyms can be represented in the table below: Acronym Component Meaning P Political Legislation and regulations, laws, and universal issues that may have an impact on a given business, either immediately or in das to come E Economic Inflation, taxes, stock markets, interest rates, and consumer loyalty and confidence S Social Changes in buying trends, ethics, in lifestyle, advertising, major events, media issues, and publicity factors T Technological Access to technology, patents and licensing, innovations, global communication, and research funding. Reasons why the PEST analysis tool is used PEST analysis helps a company to identify personal or business opportunities and gives the company and its management an advanced warning of potential threats. The reasons are: The analysis reveals the course of change within a given business setting, thus helping one to shape his or her daily activities and operations. Such a factor ensures that one is working alongside the continuous changes as opposed to working against them.   It helps one to avoid initiating projects that are not well organized or those which are likely to collapse for reasons that are not within an owner’s control.    PEST analysis can help an individual to be free from unconscious assumptions in case he or she relocates to another county, market o location. This is justified by the reason that such an individual can develop an objective outlook of the new environment. Being focused on such factors might impact a decision, a new business, or a new market and can avoid mistakes in future. It can also be for the purpose of assessing the possibility of a new market The PEST analysis is therefore an important tool needed when an organization wants to make certain decisions concerning the progress of the company and what needs to be done to deal with some challenges. There is also a need to carry out a PEST analysis when a company needs to focus on the future events. Doing the analysis will give a deeper understanding of the environmental conditions that may have an impact on the activities.  How to use the PEST analysis There are specific steps to follow in conducting this analysis. The first step entails brainstorming the factor as well as gathering information to know what is comprised in them. When brainstorming the political factors, one should consider aspects such as: the county’s next national, state, or regional elections and its implications to the government policies; the most probable contenders of power and their views on some kind of businesses; the level of development of the rule of law and property rights as well as the rate of corruption and the way the law deals with it; and if there are possibilities of change in the political environment and regulations. For economic factors, brainstorming can put into consideration the current economic trends; the stability of major exchange rates; the unemployment rate; he ease of consumer access to credit; and the disposable income levels of customers. During this brainstorming step, one can focus on the population growth rate; age profile and its effect on the business; generational shifts in preferences and attitudes; social taboos, religious beliefs, and other socio-cultural factors that may have an impact on business operations. In the technological brainstorming of technological factors under step 1, one can put in mind the new technologies in the market; the possibility of potential competitors to have access of new technologies; the effect of infrastructure o job patterns; and the accessible technological hubs that an individual or a company can learn from o work with. The second step in PEST analysis is devising the opportunities. After identifying the changes that are occurring in a business environment, one needs to take a look at each change and think of the opportunities that may be opened up as a result. An example may be if there would be new products, new market potentials, or help the owner make processes more effective. Brainstorming the threats comes in as a third step, which is a significant tool to know how the spotted changes can be a barrier o the business. Understanding this early enough will enable an individual o minimize the problems o avoid them at all costs. The lat step of how to perform a PEST analysis is taking an action. This calls for h owner of the business to identify crucial opportunities and develop the actions he will take to exploit these opportunities into his business  plan. If there are significant risks identified, the owner needs to take suitable approaches to eliminate or manage them. Application of the PEST analysis on M&S Company M&S, just like any organization needs knowledge of the environmental trends and influences that surround it. Political aspects Marks and Spenser is located in the UK, which enjoys political stability most of the time and thus there are no serious threats. Back in 2005, there was a terrorist attack that caused some kind of tension but security measures took it course and there has been steadiness in the government. In addition, the present labor administration, having served for three terms now, has in general proved to be effective and efficient in its rule. M&S is likely to have a humble time with issues concerning tax since UK’s tax system is among the most gratifying and attractive in the developed markets characterized by low personal and corporate taxes. Economic factors These factors can affect businesses by either making them to retrench or extend their operations. For instance, the accident dated 11th of September in America led to economical predicaments in North America as well as other countries. His crisis caused consumes to alter their purchasing traits as retailers watched their sales go down. M&S lost approximately 9million pounds profit in the duration 2001 and 2002 from the retailers worldwide. In fact it had to close its operations in continental Europe. Regardless of this, the UK has an open economy and is ranked among the hugest in the world. Due to well managed monetary and fiscal policies, the economy has expanded along with strong government and low inflation. In this regard therefore, M&S should conduct a systematic economy analysis to identify the short term and long-term state of economy. Social factors Consumer desires and preferences change with time. In the context of M&S, it has to keep up to the modern needs of its customers, specifically by keeping the trend in color, style, and technology even though it has high standard products. The good thing is that Marks and Spenser has many operations across the region that places it in a varied socio-cultural arena. If M&S does not comply with customer needs, then it is most likely that it will lose the customers to its potential competitors. It also has to deal with social issues like foreign products and services as well as consumer leisure time, aging of population, and mortality rates. Technological factors For competitive advantage, technology has to be in place, since it is a key driver of globalization. M&S competitors are more superior in technology use, which is substantiated by the reason that it did not have an internet shopping alternative or loyalty card when other retailers were having it. This drawback was however spotted that it would affect the company’s competitive position, thus higher technology is currently being applied to increase its potential. This includes the use of the windows 2000 server to give secure and dependable internet platform. Conclusion From the above analysis it is quite evident that M&S is a successful company. Basing on the macro factors from the PEST analysis, it can be conclude that M&S adheres to government policies and regulations. Further, it is influenced by the factors of social, technological, and economic to meet its goals. Not forgetting the micro factors, M&S has maintained a pleasant and long-term relationship with the customers and suppliers. In summary, the PEST analysis has established that M&S business structures follow societal trends, increase its market share potential, and keep its position in the international market. It is recommended highly that M&S enhance its stock management and combine it with the new technologies to solve problems immediately and keep time in its supplies. References Moiz, D. (2010). Mark & Spencer: Company overview, market and competition. Publications Oboulo. com. Peng, G. C., & Nunes, M. B. (2007, July). Using PEST analysis as a tool for refining and focusing contexts for information systems research. In Proceedings of the 6th European Conference on Research Methodology for Business and Management Studies (pp. 229-237). VIGNALI, G., & VIGNALI, C. (2009). THE PEST ANALYSIS. Fashion Marketing and Theory, 4(1), 119-130.                 Read More