Business Strategy and Strategic Group Analysis of Marks and Spencer - Coursework Example

?Business Strategy Table of Contents Introduction 3 Strategic Group Analysis of Marks & Spencer 4 Company Overview 4 Strategic Group 5 Strategic Group Analysis 6 Product Line 7 Competitive Environment 8 Recommendation 9 References 11 Bibliography 13 Introduction The retail market of UK employees over 3 million people. It is projected that the industry size would increase by 15 percent in the next five years. This is regarded as a slow increase due to the economic slowdown. Otherwise it was predicted that the market would have grown at a much higher pace. The retail sector of UK generates 8 percent of the country's GDP. This is also because of the growing demand of UK retail products all around the world and advent of ecommerce facilities (Ethical Consumer, n. d.). When it comes to calculating the maximum retail spending, London is the most popular shopping centre of the country. Though during recession, UK's retail industry faced a heavy blow, but this did not affect their international rankings among the largest retail sectors of the world (Gordon, 2011). UK has been always the hub for clothing and high quality fabrics. The high street fashion industry in London is estimated to be about ?450 billion. This clearly signifies the contribution of the retail apparel stores in UK's economy. The citizens of the country spend about ?1,054 million on clothing and also on footwear in 2009. Overseas also the retail industry of UK earn about ?7.3 billion revenue, which includes countries like USA, China, Russia, Japan, Italy, etc. Internet retailing is also quite prevalent in the country. The top retailers in UK are Tesco, Sainsbury, Morrison, Asda, Marks & Spencer, Alliance Boots, Home retail group and many more (Oxford Said business school, 2011, p. 9-10). Strategic Group Analysis of Marks & Spencer Company Overview The study is all about the strategic group analysis of Marks & Spencer. Marks & Spencer is one of the leading retailers of UK. The retail shops of Marks & Spencer receive about 21 million visitors every week. The retailer provides an attractive range of clothing, food, wine, and home products to its customers. There are around 78,000 employees in the company round the world, including UK. The retailer have about 700 retail store in UK and further plans for expansion is on progress. Marks & Spencer is number one retailer of lingerie and women wear in the country. It is also striving to become number one in menswear, kids wear and home products. The clothing and the home product department of Marks & Spencer generates 49 percent revenue, while other 51 percent revenue is generated from the food and wine department. The company has also declared itself carbon neutral and has created a five-year eco plan for the company. The company was started by Michael Marks as a penny stall in the year 1880. He was soon joined by Tom Spencer, who was a cashier of the supplier. The company aims to focus mainly in their core business area that is the clothing section and improve the range of their products. The company also want to work upon their sub-brands. Their motto for the food and wine segment is to present the British flavour to the world. Michael Marks had certain principle, based on which he wanted to develop his retail store. The principles formulated for the day to day business operation were: They wanted to offer their customers high-quality products at an affordable price. They wanted to encourage their suppliers to use the most advance technologies for production. The company wanted to work with the suppliers to ensure highest quality of products offered to the customers. They wanted to provide a friendly atmosphere in the store, helpful services and an excellent shopping experience to the customers. The retailer wanted to improve their efficiency by simplifying their operations. Lastly, the company wanted to maintain a good relationship with the customers, employees and suppliers. Strategic Group This term is mainly used in strategic management. It simply signifies the companies in the same industry have similar business and similar combination of business strategies. The term strategic group was first coined by Hunt in the year 1972. He was analysing the appliance industry and he discovered that there was a high level of competitive rivalry among the companies than the suggested Industry ratios. He then concluded there existed sub-group within the industry that made the situations more complex. These strategic groups caused more rapid changes in innovation, price structure, and quality improvements and lowered the profit of those companies who were following the traditional economic models (Hitt, Ireland, and Hoskisson, 2012, p. 60). However, Michael Porter viewed strategic groups from the perspective of mobility barriers. He included that it might become difficult for one strategic group to enter into another industry or group. This theory is similar to that of entry barriers that exists in any industry. The different implications of strategic groups for gaining competitive advantage are: The managers must assess their competitors according to the choice of the business model. Secondly, when the company has identified its rivals, it should analyse the causes of its competitive advantage and its effect on the industry (Hill, and Jones, 2012, p. 182). Strategic Group Analysis Strategic Group analysis aims at analysing the strategic groups within the industry. It would help the company to analyse its competitors and the basis on which they are competing. It would also help to identify the possibility of a company to move from one strategic group to another strategic group. The reason behind conducting a strategic group analysis is also to identify the strategic problems within the industry or strategic groups (Porter, 1980, p. 152). The characteristics of the strategic group on the basis of which the level of competition can be analysed are: Product diversity The geographical coverage The different market segment served by the group. The channel of distribution used by the strategic groups. The marketing efforts The quality of the product. The pricing policies undertaken by the companies. Strategic group analysis helps the managers to unearth the important techniques of competing for the customers in the different market segments and this analysis would also help them to predict the future strategies to gain competitive advantage over the competitors. Many companies compete in the same environment but it is the internal strategic capabilities which differentiate them. Marks & Spencer has many outlets and retail units round the world compared to its competitors. So the reach of the company is more than its competitors. M&S has an excellent supply chain to stock all the stores in the right time. The brand name itself acts as a competitive advantage. M&S is the other name for quality for its customers. None of the company can survive for 125 years without providing quality products to its customers. These are some of the factors which have given an edge to the company over its competitors. Product Line The company used the brand name St. Michael to sell its products. It was introduced by the son of Michael Marks. It sold goods like women clothing, lingerie, uniforms and other female items under the brand name of St. Margaret. Soon in the year 2000, the names were changed to Marks & Spencer. They guaranteed the quality of the food products. Their main motive was to provide the best quality products to the customers at an affordable price. The company sold many domestic products containing the name of their own company M & S. At present the company is into Women wear, Sportswear, Lingerie and hosiery, Baby wear, Seasonal classics, Beachwear, Perfect seasonal clothes, Summer classics, Cosmetics and Perfumes, M&S Money – Marks and Spencer Financial Services, Shoes, Menswear, Technology, Home ware, Food and drink, Children wear, Alcohol Gift shop, and M&S Energy (Buy an Essay, n. d.). The company is the most favourite clothing retailer in the country among the customers. The market share in this department has increased by 11.7 percent in the last year. The company wants to focus mainly on the lingerie and the men’s section now in the clothing department. They want to introduce something innovative in these two departments. Though the company has faced many challenges due to the rising cost of raw materials such as cotton, but the rising customer base has compensated those issues for the company (Bostock, 2011). The company also strengthened its position in the high quality food market this year. M & S through its innovative techniques have focused mainly on the freshness, and good quality of the product. The customers responded positively and the sales rose from 4.1 percent to 4.5 percent. Competitive Environment It is very important to position the company and its products, so as to fit between the strategies and the business model. Marks & Spencer competes in different market segments like department stores, clothing, retail sector, shoes, restaurants and fast-food and quick service restaurants. So the company had to develop strategies which could help it to gain advantage in different segments. The Marks & Spencer's competitors are the high street retail shops, the furniture shops and the supermarkets. M & S is into different sections such as clothing, home decor and food wine. So the competitors are many in each of these sectors. In the clothing section M&S has competitors like John Lewis. It has always been noticed that a stiff competition has always prevailed between these two departmental stores. Though M&S have report of a rising profit of 0.8 percent than its competitor, but John Lewis is also a superb departmental store. John Lewis is such a place where the customer can buy a laptop, sofa, food, clothes, all under one roof. The shop sells from button to needle for the customers. In this case M&S follows a different strategy. They mainly target sophistication high income group customers. The products available are of high quality, sophisticated, and niche. So the customers in its target group are also less than John Lewis. The other competitors of M & S are ASDA group limited, Benetton Group, Arcadia. It is difficult to specifically define the competitors for M & S because it is doing business in different segments such as clothing, food and wine, home product segment, etc. SO the competitors were different in different segments. This proves that M & S really have many competitors in the market. The company is firstly well-known for its clothing, so the competitors may be Debenhams, House of Fraser, or even the small clothing stores like Oasis or Next. In the food segment the competitors might be Morrison's, Sainsbury’s, Waitrose or Tesco (Hoveers, 2011). Recommendation Marks & Spencer can promote its food department more. The Dine In campaign introduced by the company received a good response from its competitors. The high quality of food served was appreciated by the customers. Apart from this the e-commerce facilities such as free delivery charges is also an attractive offering. The company can go for more international expansion. There is a huge untapped market for quality clothing and the company can utilise them. The home wares could be eliminated as huge numbers of retailers are already selling them. The company can focus on its core areas. References Bostock, K., 2011. Clothing and Home. [Online]. Available at: [Accessed on June 1, 2012]. Buy an Essay, no date. Chapter 1: Introduction. [Online]. Available at: [Accessed on June 1, 2012]. Ethical Consumer, no date. Shopping guide to High Street Clothes Shops, from Ethical Consumer. [Online]. Available at: [Accessed on June 1, 2012]. Gordon, K., 2011. Gloomy Months Ahead for British Retail Industry. [Online]. Available at: [Accessed on June 1, 2012]. Hitt, M. A., Ireland, R. D., and Hoskisson, R. E., 2012. Strategic Management: Concepts and Cases: Competitiveness and Globalization. Connecticut: Cengage Learning. Hill, C. W. L., and Jones, G. J., 2012. Strategic Management Theory: An Integrated Approach. Connecticut: Cengage Learning. Hoveers, 2011. Top Marks and Spencer Group plc Competitors. [Online]. Available at: [Accessed on June 1, 2012]. Oxford Said business school, 2011. Innovation in the UK Retail Sector. [Online]. Available at: [Accessed on June 1, 2012]. Porter, M. E., 1980. Competitive Strategy: Techniques for Analyzing Industries and Competitors: with a New Introduction. New York: Simon and Schuster. Bibliography Abraham, S. C., 2012. Strategic Planning: A Practical Guide for Competitive Success. West Yorkshire: Emerald Group Publishing. Hill, C. W. L. and Jones, G. R., 2011. Essentials of Strategic Management. Connecticut: Cengage learning. Hoskisson, R. E., Hitt, M. A. and Ireland, R. D., 2008. Competing for Advantage. Connecticut: Cengage learning. Thompson, A. A., et. al., 2008. Crafting and Executing Strategy. 14th ed. New Delhi: Tata McGraw Hill Education. Williams, C., 2010. Management. Connecticut: Cengage learning. Read More