This assessment will cover following questions:
- Marks and Spencer are the retail supermarket industry in UK. Examine the key difference between “Porter’s 5 Force analysis” and “Porter’s Value Chain” analysis.
- Explain the internal and external business environment of the Marks and Spencer.
- Demonstrate the role of IT in helping the business to gain a competitive advantage
Marks and Spencer Group plc commonly known as M&S. It is a most renowned brand among British retail sector, which majorly deals in quality clothes, premium edible products and luxurious home décor articles (Baxter, 2019). It is a UK based multinational corporation and its headquarters are situated in Westminster, London. It has a high rising position in the London stock exchange list. As a constant component in the Financial Times Stock Exchange 250 Index since 2019. The company has been ranked as top 7th super brand by Centre for Brand Analysis in the year 2018. It is among giant global retailer brands with a counting of more than 959 stores all over the world.
Back ground information
Marks and Spencer was established as a partnership firm by Michael Marks and Thomas Spencer in the year 1884. It grew up from a small shop to a public company by the year 1926. Marks and Spencer opened their first food product outlet in 1931(Carvalho, 2019). Company started the research and planning regarding the production of garment and apparel products during the interwar period and established its very first textile unit in 1985. as in respect of the current scenario marks and Spencer trades in more than 30 nations. The growth of brand on a worldwide level is appreciable as it majorly focused on the core competencies of market. They always tries to perform every operation in the most innovative way possible. Significant brand values of Marks and Spencer are its promises for high quality services and trust for providing the premium products. Marks and Spencer sources raw material only from their verified farmers and stockist. Business also involve a great role in establishing international connections as it contributes in their economy as well (Chalaby, 2019). By doing overseas sourcing of production materials from various other countries as Malaysia, India, Hong Kong, Bangladesh, Turkey, Thailand, China, Italy, Sri Lanka and Indonesia. Thus such verifications increase the authenticity of the production process and enhances the quality of it.
Products and services of Mark and Spencer-
They offers a wide range of products and services in its three respective sectors as they consists of home products, food and beverage items and the foremost part is it clothing sector . There are numbers of quality products in this segment some of them are women’s clothing, denims for each and every age and gender group. men’s clothings from inner wear to formal suits, school articles comprising of all the major products as bags, containers, classic and sporty footwear, kids wear; shoes for occasions, accessories for men and women, wallets, jewellery, watches, hosiery, gem art effects, socks, and cosmetics, beauty products, for bathing, body, hair care, make up, fragrant soaps, perfumes and deodorants, nail care, and skincare products, extras includes men’s and kids’ toiletries, travelling gears, relent accessories, and occasional gifts. The company commits to provide the genuine product on time with full value of money. From past few years the business faced a bit of difficulties in the market in terms of the increased competition. As the vast segment of customer shifted towards the electronic shopping platforms. Where other business entities offers the similar good under same quality and decreased price. Such replicas of the original product influences the price oriented customers.
Analysis of Competitive environment of Marks and Spencer using Porter’s 5 Force with justifications
There is a high competition for Marks and Spencer in the market place as there are numerous other retail businesses which affect the working cycle of company. Porter's Five Forces is a strategic business model which helps in finding and analysing the competition surroundings around the organisation (Chlopecký, 2019). Analysing the Porter's five strategies for Marks and Spencer will help in understanding the pros and cons of brand in market. Such information plays an important role in the corporate planning for upcoming operations and management of business. A long term profitability can be achieved by taking corrective measures after application of these five forces.
Threat of new entrants:
Magnitude of new entrant in the market is quite low. The main reason behind this is that it take s a huge capital investment for the establishment of the new retail company. It is a risky task to introduce something new or experimenting irrespectively of market culture. As a new company has to provide something very different product and service to consumers as it is necessary to differentiate the product for the effective build up of brand.
All major retailers have strong established brand names and so enjoy customer loyalty, which becomes increasingly important in homogeneous markets. In a case of a foreign entrant in the local market the consumer taste and preference would be unidentified by the company. Higher cost will be incurred to perform the research and development for the company in different market. As the new entrant would face a lot of difficulties and it either would result in the pack up of new venture. Marks and Spencer has more than 100 years of experience in doing business of retail, nationally and globally (Cordell, 2019). Thus for the new entrant it is quite difficult to threat such a strong company on the level of skills, marketing and experience.
Threat of substitutes
Substitute firms would decrease the market share for Marks and Spencer. As the new alternatives are being introduced customers are more active to get shifted towards them. There are so many retailers who trades in foreign imports by lower price. It influences those segment of customer who are more concerned about the prices, the replica of any premium product is common to get and cheaper to buy. Thus the customer sometimes gets attracted towards the cost and willingly pay for the brand and label. In the food and eatable segment there are less chances for the substitute products, because no different company can use or copy the recipe of existing food item. Certainly it is also difficult to maintain the same qualitative standards.
There are other substitutes as Tesco, LIDL, ASDA these giant retail companies plays a role of coercive competitor as well as a substitute for the product and services of the Marks and Spencer. These organisation provides the similar quality products globally. The intensive competition with substitutes can lead the organisation toward de capturing of customer. As the organisation can deal with this scenario by focusing more on product differentiation and using the premium quality in the preparation to promotion of the product.
Bargaining Power of Buyers
The strength of buyers to bargain within the market is weak. There are a lot of material suppliers for the Marks Spencer as it provide the finished goods into the market. Such limited companies are limited in to market and that's why they engage more and more of supplier in to selling their unfinished product to company. This creates the less competition of such retail companies into the market. As the buyer also not get the much option to choose for the purchasing of product. Marks and Spencer applies the product differentiation strategy by which it creates the unique standards for its products. By doing so the customer gets more relied on to choosing the same brand again and again, and feel unable to find the alternatives for the particular item. Thus it becomes difficult to shift toward any other competitive firm and that makes the buying power a weak force for the customers.
Bargaining Power of Suppliers
The extent of the bargaining of suppliers is low for the organisation. Marks & Spencer is a big retail chain company, with a global range of trading. Small and medium scale supplier are willing to take the part into the production and sales of this branded retail giant, to enhance their name and product's popularity on a large customer base(Devinney, 2019). Moreover, the organisation is not wholly dependent on suppliers and it prefers majorly to sale its very own produced goods under that brand name. That involves the major focus of company is onto collecting the raw material from local and overseas supplier and not the semi finished or loose products. Another factor for the decrement of buying power of supplier is that , Marks and Spencer mainly export the raw material from small and developing company. This activity helps the organisation in many ways as it does not only decreases the cost of product but it also enhances the quality. Certain premium characteristics of raw material increases the product authenticity and creates the efficient product differentiation into the market place. At the time of sourcing of raw material Mark and Spencer have several other options of supplier by that it is enabled to switch and shift the supplier thus how the bargaining power of supplier power becomes ineffective.
The growing culture of departmental shopping increased the market share of retail companies. Most of them are giant and large scale brands while some of them relies on the small and medium scale. Marks and Spencer being a developed retail venture faces competition from both the sides. As small scale retails does not effect the company's turn over that much but they affect quality and local market share of respective firm. A limited number of large scale competitors includes Tesco, Morrisons, H&M, LIDL etc. Competitive rivalry among retail firms is a threat for the company and has a strong force in the market. Marks and Spencer incurs a huge fixed costs for the operations. This enables it to perform most effectively in terms of doing the production and other management within industry at a maximum capacity. Investing the equity finance gives the company more control on determining its cost and pricing. These policies helps in standing strong into the market and giving the optimum response to this high force competitive rivalry (Culot, 2019).
Discuss Value Chain analysis of Marks and Spencer
Value chain analysis is a marketing strategy that helps the firm to identify the internal factors of a firm in order to gain knowledge of the competitive environment. This provides assistance to the company in undertaking measures through which strategic edge can be gained at market place. Value chain adds value to the customers and thus increase the profitability of a business. Marks and Spencer is one of the most reputed brands operating within the confines of UK that deals with selling of clothing, home appliances and food products. The manager of Marks and Spencer has applied this strategy to build loyal customers and to increase the sale of a products (Jnr, 2019). In the context of Marks and Spencer, porter's value chain consist of activities like inbound logistics, operations and outbound logistics. These are presented as follows:
- Inbound Logistics:Inbound logistics consist of activities such as retrieving, storing and distributing the raw materials and converting them into finished product. This is first and foremast activity of a business which deals with various operations. As Mark and Spencer has extensive goodwill in the market and it has maintain good relation with suppliers which help in distributing and storing the goods across the globe. The firm uses high quality products that results in cost savings and make best use of resources to gain large access in market.
- Operations: It includes activities that involve the process of converting raw material into semi or finished goods. In the context of Marks and Spencer, the firm is engage in various operations like assembling, machining and packaging. In this, the product is ready to launch in the market with special features like attractive packaging, display etc. The respective firm facilitate smooth flow of activities in order to gain competitive advantage within the market (Knoll, 2019). The firm provide products of standard quality at reasonable prices and gain large customer base across the globe. Thus, this increase productivity and maximize the efficiency of a business which promote economic growth.
- Outbound Logistics:Outbound logistics includes activities such as material handling, warehousing and delivering goods to the destination. This is one of the important factor of value chain analysis in a competitive market. One of the advantage of Marks and Spencer is that it engage in providing delivery of products to the destination at a minimum time in a optimised cost which increase customer satisfaction. Thus, this provide growth opportunities to the firm and increase the productivity. The concerned firm provide quick deliveries of products by strong network of intermediaries operating across the globe and provide after sale service which provide an ease to a customer.
Discuss two support activities in Porter's value chain of Marks and Spencer:
Support activities play an important role in coordinating the activities of a firm. This assist the firm in facilitating the primary activities which is very crucial for an organization. Support activity provides the bases of decision making and organising the activities of a firm (Mbazira, 2019). Support activities such as human resource management, technological development, etc. is very important for Marks and Spencer in facilitating the . Below the support activities of value chain analysis of Marks and Spencer are presented as follows:
- Human Resources Management:It consist of various elements like recruitment, selection, training and development of a workforce to increase the efficiency of an organisation. Choosing the right person for a right job is very important for a company to increase the productivity and it is very important to make optimum utilization of resources to achieve the goals of an organisation. The manager of Marks and Spencer provides training to employees in order to increase the sale of products and skills and knowledge of an employees. As the firm is highly dependent on its subordinates so it is important for a manager to provide training to them as a result the motivation and morale increases. This provide benefit to a respective firm as it can save cost by hiring of experts.
- Technological Advancement:Today in a competitive era, technological development is one of the important factor of any business as it brings efficiency and quality in a manufacturing sector. There has been constantly improvement in a technology which contributes in the economic growth of a country. The manager of Marks and Spencer has promote their business on social media marketing and organisational websites for the purpose of expansion. This provide easy access to customers which increases the sale of a products. This provide growth opportunities and increase the profitability of a business. Today, Marks and Spencer has diversify its operations across the globe in order to gain competitive advantage within the market. The business environment in which company carry out its operations is regarded as dynamic and the manager has to adapt itself changes in the organisation in case of obsolescence of technology. The manager provide proper guidance to subordinates so that they can work in an effective manner.
Identify key value adding activities with justification of Marks and Spencer
Value chain plays a very important role in an organisation as it provides a overall framework of internal and external factors which provide a bases of decision making. The main focus is to make best use of resources so as to achieve the organisation goals. Marks and Spencer is one of the renowned brand in UK which emphasize on selling of various items like clothes, food and home products (Morgan, 2019). The manager of Marks and Spencer focus on efficient supply chain which improves the productivity. Also, the firm provides attractive packaging designs which attract large number of customers. The concerned firm focuses on providing excellent quality products at a reasonable prices which adds value to its customers. The firm can gain competitive advantage by providing better experience to the customers and and provide training to new staff. Also, providing wide options of payment provide flexibility to the customers while purchasing products covering operating parts of UK.
Summarise and reflect on how the business could deploy information technology (IT) and use innovative ideas to improve its business processes and to enhance its competitive positioning
Based on the analysis of Porter's 5 force of Marks and Spencer it can be determined that the level of competition rivalry in the confines of retail sector is, moderately active. As the newly established retail firms are loosing through marginal profits, and existing giant retailers are targeting the different segment of market (Rosca, 2019). Marks and Spencer has a very pro efficient departmental structure that enables it to engage its people inside the organisation as well as the consumers from targeted sectors.
Being a constantly growing retail organisation it has multiple strengthens which helps in efficiently approaching the market in a strategic manner. As there are some weak points of Marks and Spencer which can be managed effectively by practising certain new factors and techniques (Prabavathi, 2019). Such as promoting the use of information technology and digital media. As the organisational people are also a less tech friendly and that results in wasting of a large operational time while performing most of the activities manually. Engaging the human resources with the more technological and digital activities will save the time and other resources in overall organisational process. The positioning of the company among its targetted market share is currently not placed as up to standards. Due to the significant classification of market the physical platform sale is become a less effective these days so to enhance the company's market position it can adapt multiple of electronic platform for the sale and marketing of the product. While targeting market audience demographically, the organisation can use the E-media platforms, for the promotion, advertising and market surveys (Rivera, 2019). Sale of the products can also be performed at various E commerce portals, company can increase more customer interaction with the help of online media.
Another big deployment of information technology can be done inside the organisation by implementing the techniques of operations and management. Automation in the production techniques will increase the more quality of process as it will help in achieving the time base targets efficiently. While certain business soft wares and tools can be used to increase the systematic management. Furthermore the innovative ideas can be performed in the packaging and production.
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Books and Journals
- Baxter, G., 2019. A strategic analysis of Cargolux Airlines International position in the global air cargo supply chain using Porter’s Five Forces Model. Infrastructures. 4(1). p.6.
- Carvalho, J. and Nobre, P.J., 2019. Five-factor model of personality and sexual aggression. International journal of offender therapy and comparative criminology. 63(5). pp.797-814.