This assessment will cover the following questions:
- What are the macro and micro elements that affect the functioning of Marks & Spencer?
- Identify the strategic tool which is used to deal with the internal business environment in the context of Marks & Spencer.
- Explain the value chain Model propounded by Porter.
Value Chain Model, illustrated by Michael Porter is an effective tool in the strategic planning of the company and the manner in which the internal environment of the company is operating (Porter's Value Chain, 2017). The following essay will illustrate the application of the value chain model in analyzing the internal activities and the Marks and Spencer company will be specifically analyzed where the different activities will be clearly analyzed. Lastly, the report will also involve a reflective account of the efficiency of the Value Chain model on the internal environment of the M&S company.
Value Chain Model
Value Chain signifies the range of activities that are adopted by the companies or manufacturing units in order to deliver a product that has certain inherent value attached to it (Zamora, 2016). The value chain model given by Porter illustrates the primary activities and support activities which a firm is required to perform and further expands into industry level value chain and global level value chain.
Source: Porter's Value Chain, 2017
The value chain of a firm is the part of a larger value system i.e. an industry level value chain and a value chain,a t each activity point adds in the overall value of the product.
Primary Activities: The primary activities in a value chain consists of the five major activities i.e. inbound and outbound logistics, operations, Marketing and sales and service. Inbound logistic helps in determining the inward movement of the raw material form suppliers, operation details the entire manufacturing process, outbound logistic determines the storage and outward movement of the manufactured goods and service, the marketing and sales activity illustrates the promotional activities and offering the product to the customer and lastly services where after sales services are given to the customer (Kumar and Rajeev, 2016). These help the firms in creating competitive advantage and differentiate their product from others.
Support Activities: The effectiveness of these activities helps in increasing the quality of the primary activities' outputs in the firms. There are four types of support activities that are adopted by the firms i.e. Infrastructure, Technology, Human resource and Procurement. Infrastructure such as accounting practices, financial control, quality etc. helps in monitoring the activities and technological advancement helps in integration of the latest equipment in the manufacturing process (Porter's Value Chain, 2017). Trained HR and personnel helps in increasing the quality of the work that is being done and the procurement activity refers to the process of acquiring the raw material from different sources.
These value chain can be implemented in the physical or virtual context but in the present environment, it is necessary to implement the value chain in a combined manner where the organizations are able to generate maximum benefits from the implementation of the combined value chain (Hsiao and Chuang, 2016). The value chain model is an important strategic planning tools because it helps in mapping the value stream and critically analyse the manufacturing and distribution process. Further, it also assists in developing insight regarding how the visual environment can used effectively to generate as many benefits as possible and manage the business accordingly.
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Marks and Spencer Group Plc is a British Multinational Company that is operating in the retail sector. The company is operating at a worldwide level with a total number of 1463 locations and they have their headquarters in Westminster, London, United Kingdom. It was founded 135 years ago in the year 1884 by Michael Marks and Thomas Spencer thus leading to the formation of the name of the company Marks and Spencer which is commonly abbreviated as M&S. The company specializes in different sectors which are premium or luxury clothing, food and retail products and home décor products. The total number of employees that are employed by the Marks and Spencer company in all of its branches are 80787 and there are total of 959 stores of M&S that are operation in UK only (Marks and Spencer, 2019).
The company initially rose to reputation with its policy of selling only those goods that were British Made and food and clothes were the major items that they used to sell. From there, the company began its process of expanding and addressing the different needs of the consumers ensuring that their slogan of 1953 which was “A customer is always and completely right” has ben achieved. They have introduced enormous measures and contributed significantly in the GDP growth of the entire economy of the UK. Despite the major decline of the company in the year 1997-98, the company restructured itself by closing down unproductive stores and was able to re-establish itself in the prominent market of UK.
The CSR activity of the company along with their charity and other welfare programmes have always been extensive and popular and the total revenue generated by the company in the year 2019 is £10377.3 million (Marks and Spencer, 2019). The company is operating on the prominent stock exchange which is London Stock Exchange and is also a constituent of the FTSE 250 Index.
The internal environment consists of the activities that are inherent in the company and these can be effectively analysed using the Value Chain Model given by Michael Porter.
Primary Activities of the Value Chain Model consist of manufacturing the products and then Selling them directly to the customers of the company.
- Inbound Logistics of M&S is very strong and is perfectly integrated with the sustainability aspect where at each step they ensure that the activities are not harmful to the nature and due to this initiative, they have won many awards and recognitions.
- Operations involve the entire manufacturing and distribution process of the products that are manufactured by the M&S (Zamora, 2016). Despite various barriers in the online trading mechanism, that the company faced, the overall operations management system of the company is quite effective.
- The Outbound Logistics of the company is extremely well developed where they have in store shopping, online mechanisms, automated serving warehouses etc. and collectively, all of these help in increasing the efficiency of supply chain of the company.
- The marketing and sales aspect of M&S involves development of the digital division allowing customers to easily shop the products. Multi channel experience, high impact promotions, customers loyalty data are some of the techniques that the company uses in order to increase the accessibility of the company.
- Last activity is the Service activity which involves the enhanced customer experience and services that is provided by M&S Company. The company has made the delivery free for the customers on order above the price of £50 and the size of the food halls in the company has also been increased (Fanzo and et.al., 2017).
These are the primary activities of the company but there are support activities also which needs to be determined of the M&S company and this can be done effectively in the following manner:
- Infrastructure helps the company in controlling their overhead cost and M&S manages and controls the financial planning ad the strategic management of the operations of the company. These helps in increasing the competitive positioning as well because the M&S regularly adopts and implements the latest trends and practices in the company along with the strong physical presence as well so that the company can attract maximum customers (Amara, Halilem and Traoré, 2016).
- HR Management recruits their employees on the basis of the talents and skills that they posses and this practice has helps the company in reducing the cost effectively and build the pressures for their competitors by producing higher quality products and still compete on the price basis.
- Technological Development has always been used in the M&S Company where the activities sand processes are increasingly being automated and there is integration of the software with the processes. This has helped in reducing the number of defects in the products that are being manufactured by the company thus increasing their brand value.
- Procurement refers to the sources by which the raw material and resources required are gathered and this is done by the M&S Company in the manner of strong ties that they have developed with their suppliers over the time (Al-Shammari and Al-Faqir, 2017). This has helped them in optimizing their inbound logistics so that the coast efficiency the company can be achieved.
This is the manner in which the Porter's Value Chain has been made applicable in the Marks and Spencer company's internal strategies and the different source that the company uses have also been illustrated. The effectiveness of the value chain implementation in the company has helped them in becoming the internation leader in the retail industry specifically in the clothing sector and contributing in the GDP of the company effectively.
Reflection on Value Chain Model
In my opinion, the value chain model is an effective tool in determining the manner in which the internal activities of any company can be analysed because it helps in ascertaining the different activities that are being performed by the business and also helps in evaluating that whether the outcomes of the company are effective or not.
The analysis of the primary activities of the M&S Plc helped me in identifying that the company has clearly segregated and defined policies of the company where they are able to integrate their inbound and outbound logistic activities effectively and the analysis of the support activities helped me in learning that the secondary activities are also very well developed where they have used their experience to develop those approaches that have helped them in garnering maximum results.
Although, earlier I was not aware in such detailed manner about the way in which the activities of the company are sequenced, yet this model helped me in closely analysing each aspect. I learnt that the support activity of the company is extremely well developed but the technological aspect is not so strong. The company has experienced many difficulties in integrating their activities on the online platforms and there are various technical glitches in the software.
I think that this inefficiency of the technological aspect has lead to the slump in the sales of the company and therefore, this has led to the customers turning away form the company. Additionally, the lack of adequate customer relationship management and not heeding or giving importance to the feedback and experience of the customer in the store was another major fault of the company which led to the ultimate decline in the customer loyalty towards the company.
The analysis above of the value chain helped me in determining that the faults of the M&S Company can be significantly addressed by selecting and hiring more talented and skilled IT personnel that will help them in operating their software without any problem and ensure that the online experience of the customer is not affected significantly. This will increase their customers because of the increasing trend of online shopping (Koc and Bozdag, 2017). The company should also try to satisfy the needs of the consumers in a better manner i.e. they should try to develop appropriate feedback mechanisms that will help them in analyzing the experience of the customers. The suggestions provided by the customers and employees of the company can help in identifying that what are the aspects in which the company is lacking. Ultimately, when the customers will find that their suggestions are being taken seriously, the goodwill of the company will improve and I think this will address the problem of regular decline in the performance of the business.
The research conducted above on the implementation of the Value Chain Model in Marks and Spencer Plc clearly indicates the importance in understanding how the internal environment and different activities of the company are operating. The analysis also helped in identifying that which are the activities in which the company is lacking so that appropriate recommendations and suggestions could be presented in the report. Conclusively, a reflective account was also detailed in the report and this helped in ascertaining the views of the writer of the report that whether the value chain model is an effective tool or not for analyzing the internal environment of the company and then subsequently, the writer's suggestions were included in the report.
- Al-Shammari, E.A. and Al-Faqir, T.K., 2017. Analysis Support Activities Value Chain Model to the Porter and Impact on the Knowledge Department. Iraqi Administrative Sciences Journal. 1(1). pp.60-86.
- Amara, N., Halilem, N. and Traoré, N., 2016. Adding value to companies' value chain: Role of business schools scholars. Journal of Business Research. 69(5). pp.1661-1668.
- Fanzo, J.C., and et.al., 2017. Value chain focus on food and nutrition security. In Nutrition and health in a developing world (pp. 753-770). Humana Press, Cham.
- Hsiao, T.Y. and Chuang, C.M., 2016. Creating shared value through implementing green practices for star hotels. Asia Pacific Journal of Tourism Research. 21(6). pp.678-696.
- Koc, T. and Bozdag, E., 2017. Measuring the degree of novelty of innovation based on Porter's value chain approach. European Journal of Operational Research. 257(2). pp.559-567.