Strategic management is a process of continue analysis, planning and monitoring that is essential for company to achieve their objectives and goals. This process helps in making innovation and use new technology to fulfil the customers' need and expectations to organization. It helps leaders to manage their firm in recent situation. Strategic management is also used at the time of crisis in organization to create new ideas and plans that help to get overcome in it. Marks and Spencer is private limited company, it is leading British international retailer (Doz, 2017). There headquarter in London, UK and other states. M&S spread smile on the face of customers by making their products for men, women and kids such as beauty products, home, food products, wine, gifts hampers, baby products like shoes, clothes for new born kid etc. Archie Norman is the chairman and Steve Rowe is chief executive of this company. They both help each other to run their business successfully by taking help of their staff members, leaders, managers and other management department of different stages. According to research in 2017 there are 84,939 employees are work inside the firm. In this project strategic consultant play there role by creating plans and strategies for future and present situations. It explains strategic direction that has been followed in past and also describe strategic thinking has developed in the past 5 years. This report discusses possible strategies of company and focused on assets implications that has recommended in company.
Strategic direction of Marks and Spencer
M&S is very famous for their good services and products. This organization established in 1884 by Michael marks, Thomas Spencer is their business partner. They want to service their services through making products according to people needs. They served their services a long year ago. In 2004 Stuart Rose has appointed as chief executive of this company. At present Steve Rowe is CE of marks and Spencer after changes in board structure (Werhahn and et.al., 2015). M&S is a retail industry in UK; their work is to make clothes and beauty products for all human being. Organization has long history in United Kingdom marketplace. Their aim is to make good brand name in retail market. The function of this firm is to sell clothes, flowers and luxury products to people. They make creation and innovation in their products and services according to client demands. This industry gets interested to work with suppliers and clients of different values or culture. They take people requirement as challenge and happy to complete it. They make changes in production process according to recent trends in economy. Customer behavior impact on business growth.
Towards the product of Marks and Spencer consumer behavior is positive in way because they provide good quality products according to demands and requirement of people. Costumer use their services in good price that is valuable. Client buys some products that might be attached with their emotions and feeling, thus for this M&S is good choice for purchasing useful things.
Marks and Spencer used market penetration and market development strategy in their business. They followed both strategy in past of their services.
Market penetration strategy: this function is used by Marks and Spencer to expand their business in marketplace and all over the world. They follow this strategy in their past business process. Market penetration carries low level of risk, thus for this every organization used it. Penetration defines the process of selling products to old customer and to new one (West, Ford, and Ibrahim, 2015). Company make strategy according to this function that help them to spread their branches under the economy or society, through making good quality products. Dominate growth markets, increase or decrease products market shares is the strategy of this function. Penetration also help to drive out the planning of M&S competitors.
Market development strategy: Marks and Spencer developed their business through using market development strategy. This will help them in past and in recent business activity. Company need to established their existing business and products within new marketplace or state. They need to spread their businesses by supplying products such as clothes, home furniture and shoes for men and women.
Marketing development strategic is followed within 5 years ago in Marks and Spencer business. Organization used this process through market research, this is the first step of this strategy. Firm need to divide customer on the base of segmentation, it helps to distribute products according to people needs and demands. Thus, the effect of this development process increase business growth and success.
Use of appropriate frame work
M&S adopt pestle analysis for determining external environmental factors that are affected on company's strategies, policies and procedures, operations and other activities. There are many elements includes such as political, economic, social, environmental, technological, environmental in macro environment factors.
Political Factors: Government has regulated many policies regrading trade policy, taxation, exchanges rates etc. Due to fair trade path, on clothing and food segment. By this policy, M&s reduce their sourcing costs. The policy involves decrease of fat and salt in company's foods recycled packaging and animal well-being protection. There are some modification in taxation policy and government that are affected on retailers.
Economic Factors: There are many elements such as interest rate, inflation rate, population, economic conditions etc. included in this factor. M&S affects by discounted pricing of their challengers(Chapman, J.W. and et.al., 2016). If inflation rate is highly increased that directly affected operations of company. Customer confidence was hold by company's efforts to push through increased quality.
Social Factors: It includes customers needs, culture, traditions, taste and preferences, current trends etc. There are different people leaving in society, their taste have different with each other. Therefore, these social factors directly affects on operations of M&S. Company needs to make sure that giving the best product and services to customer satisfaction.
Technological Factors: Nowadays, consumers prefer to buy products through online stores. So that, M&S make sure that increasing strong online presences that capitalized on this avenue. Therefore, M&S focus on their online presence for increasing number of customer. M&S has come in partnership with Sure Cloud. With the help of it, they are integrated high tech platform into its existing substructure that utilize across number of departments and functions.
Environmental Factors: It is necessary to M&S that following strictly regulations on environmental. Consumers pressures on ethical green pattern that need to stricter standards at company. Therefore, M&S has established new menswear range that utilizes less power, chemical and water in production process(Kimosop, Korir and White, 2016).
Legal Factor: There are many legal rules and regulations such as consumer protection, health and safety, labour laws etc. Therefore, M&S make sure that follow all legislation carefully in the workplace for effective operations of the business. Company also make sure that giving the best products and services to customer.
Porter's Generic Strategy:
Company's relative positions within sector defines whether business profits is above or below the average of business. The key basis of higher average profits in the long run is sustainable competitive advantage. There are two primary kinds of competitive advantage such as low cost and differentiation. In order to that, there are three generic strategies like cost leadership, differentiation and focus.
Cost Leadership: Company sets out to become low cost manufacturer in its business in cost leadership. The sources of cost advantage are variegated and depend on structure of business. This involves pursuit of economies of scale, technology, access to raw material and other elements. Low cost manufacturer find and expand all sources of cost advantages. M&S apply this strategy successfully have significant investment capital at their disposal, efficient provision and low costs while it comes to material and labour.
Differentiation: M&S search to be specific along similar concepts that are broadly valued by purchaser in differentiation strategy. It chooses one or more attributes that various purchaser in business understand as essential(Porter's Generic Competitive Strategies, 2016). It specifically positions itself to meet those wants. It rewarded for its singularity with premium price. Effective utilizing this strategy needs good research and development, invention and power to present high quality. It is essential to be flexible and to be able to adjust quickly in modifying marketplace for fighting competitions on risk.
Focus: The generic strategy of focus portion on the choice of thin competitive range within the business. The focuser choose segment or unit of segment in the firms and adapt its strategy to provide them to the exclusion of others. There are two variables such as cost and differentiation focus involved in this strategy. In order to that, company search cost advantage in it target market in the cost focus. Organization try differentiation in their target segment in distinction focus. Both are variables of focus approach part on difference between focuser target segment and other segments in the sector.
With the help of all the models, M&S chose strategies and fight competition in retail industry. This model assists in implementing appropriate strategies for increasing profits and competitive advantages in the sector. In order to that, company make sure that implementing effective strategies for overcoming of threats and determining bargaining power of purchaser as well as suppliers in the marketplace. Through it, firm identify weakness and threats for creating opportunities for future growth and development in retail sector. With the help of it, M&S focus on costs and differentiation strategies for competitive advantages. These models help in sustain firm position in the overall industry and know about number of competitors in the marketplace. This also assists in increasing productivity, profitability and knowing about possible strategies of firm.
Strategies drift faced by company
Strategies drift occur while the strategy of company is no longer applicable to outside situation facing it. It is arising from collection of elements that involving failing of firm to adapt to change outside situation, finding out competition, frequently built on previous success that management assume to continue and negate by top management regrading problems faced with evidence. There are four stages of strategic drifts that is incremental change, strategies drift, flux and transformational changes or death. In the incremental phase, there is small significantly modification in outside environment and it enables M&S to remain in touch with external situations. The rate of modification in the outside environment is fast and small. By this step, company will lose their competitive advantages. In the flux phase, there is no important gap between market expects and delivering by company. Administration have constituted this gap and begun to change strategy still there is no conclusive improvement. Either administration appreciated want for transformational modification in direction of strategies or failing of business in the last phase of strategic drift.
Demand of marketplace aligned with mission and vision of company
The Mission and vision statement of Mark and Spencer is aligned with demand of the marketplace. Therefore, company make sure that their mission and vision are flexible by demand of marketplace. The mission statement of M&S is to make plan quality accessible to all and clearly defines company objectives and goals to be aimed for within business(Kimosop, Korir, and White, 2016). The vision of Mark and Spencer is to increase employees oriented and satisfy customer demand in the marketplace. For achieving mission and vision, M&S adopt and implement different strategies in the business.
With the help of it, give sense of future, guides decision making and strategy. The vision of M&S is to measure of standards and process in the marketplace. The mission statement is to make inspirational quality accessible to others. The objectives of M&S is employees oriented that is higher expectation to the company. It is part of M&S to attract, motivate and retain high workforce to help the transformation of business and deliver improve execution. Company is to regain their leadership in clothing and speciality food.
Strategic capabilities of company
A strategic capability means bridging strategy and impact of the company’s competitive position that are enabled by its ability to perform at high level of differentiated modes. In other word, it is strategic success is facilitated by distinguishing company capabilities(West, Ford and Ibrahim, 2015). In order to that, M&S need to determine and enhance new capabilities to respond to modify customers demand or threats of organization. The procedure of sharing strategies and putting them into activity is the duty of company’s leadership. It refers to company’s ability to successfully utilize competitive strategies that permit it to survive and enhance its value over time.
M&S strategic capability is the primary element in remaining financially viable and increasing despite the presence of challengers in free market. Various groups of interested parties’ effort to measure and way strategic capability (Werhahn and et.al., 2015). Financial analysis and authority regulatory agencies have interests in strategic ability since it plays role in the value and monitor businesses.
Use business canvas model
The business canvas model is finding detailed explanation and reflects consistently on business model. This creates difference between world-leading success and depressing failure. Business canvas model is graphical template describing various important elements such as customer segments, value propositions, channels, consumer relationship, revenue streams, resources functions, partnership and costs. It helps in think and compare many variations and thoughts for business model invention.
|Subsidiaries (M&S pension trust Ltd., M&S Scm Ltd., M&S finance Ltd.) Manufacturing and distributors Major brands Suppliers at regional and global level Contract manufacturer
|Pricing Marketing Diversification Purchasing and selling of consumer goods Evaluate consumer demand Warehousing and logistics
|Good price Wide presence Wide selection Safety Online purchasing Business diversification (finance, trust etc.) Mark&Spencer covers all the segment of the marketplace.
|Customer loyalty Free deliveries for month Trust Online shopping Internet retailing Discount clubs Long term relationship Customer service Self services Community
|Mass market Segmentation-low middle income Housewife Older people Student
|M&S is one of the largest retailers with 979 stores across UK. Stores and logistics resources Warehousing Supply contract Power of negotiation IT infrastructure M&S has expanded its stores outside the UK in the world.
|Super store Online shop M&S websites Gift card Social media Events Trust Affiliates Mobile application
|Advertising Cost of goods Logistics infrastructure Presence Staff Capital expenditure Warehousing and logistics International Operations Taxes IT capabilities development and maintenance
|Retail store Online selling Advertising financial income Commission on affiliates sales
With the help of business canvas model, company makes sure that adopt various strategies for higher competition in the marketplace and increasing competitive advantages. Through it, M&S build relationship with customers, gaining revenue, value proposition in business for expanding their business in the retail industry.
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Possible strategies of business
Strategic choice move strategic analysis and is based upon three components such as time period of strategic options that is development, acquisition, variegation or concentration. Secondly evaluation of option to measure their relative worth and practicability. Lastly choosing of strategy or option that company pursue. Mark&Spencer utilizes porter's sustainable competitive advantage model and porter's five force analysis for sustainable competitive positions in the marketplace.
Porter's sustainable competitive advantage model:
Mark&Spencer(M&S) preserves that expand average for its business. Company posses’ competitive advantage over its challengers. The objectives of business strategies are to accomplish sustainable competitions. There are two primary kinds of competitive advantage such as cost and differentiation advantage. Cost and differentiation advantages are called as positional advantage since company depict position of their firm in the sector as leader in either cost or differentiation. There are different views in model of competitive advantage.
Resource and Capabilities: In the concept of competitive advantage, resource and capabilities are included for developing competitive advantage to firm. Resources are the company particular assets helpful for making cost or differentiation advantage and easily acquire challengers(Porter's sustainable competitive advantage model, 2018). For example, patents, trademarks, image of company, brand equity etc. are assets of firm.
Cost and differentiation advantage: Competitive advantage is making by utilizing of assets and capabilities to accomplish either lower cost structure or distinguished good. Through Doz, Y.L., 2017it, choice of low cost and differentiation for positions for M&S. This judgement is focus element of competitive strategy of company.
Value creation: Through performing ordering of activities, company makes value. Value system of vertical actions involving those of upriver suppliers and downstream channel members. Therefore, M&S perform one or more value creating activities in mode of that makes overall value for accomplishing competitive advantage.
Porter's Five Force Analysis:
M&S adopt Porter's five forces analysis for identify and gain competitive advantage in the industry. There are five forces includes such as rivalry among existing, threats of substitute and new entrants, bargaining power of suppliers and buyers.
Rivalry among existing competitors: There are many challengers in the marketplace. They are serving different products and services for decrease market attraction. In order to that, M&S faces challenges in terms of competitors such as ASDA, Aldi, Tesco etc. in the retail industry. Company manage this force through building sustainable differentiation, increasing scale and competing for small market instead of collaborating with challengers.
Threats of new entrants: New entrants are threatening for firm in terms of profitability. Profitable markets attract new entries that decay profits. For instance, patents, economies of scale, capital requirement etc. that decrease competitive rate(Porter’s Five Forces of Competitive Position Analysis, 2013). M&S handle this force with the help of innovative product and services, increasing economic scale, enhancing capabilities and spending large amount of money on research and development.
Bargaining power of suppliers: All retail firms purchase their raw material form number of suppliers. Strong suppliers in customers services sector utilize their discuss power to extract higher prices from companies in retail area. M&S handle this force by building efficient supply chain with many suppliers and utilizing various materials for designing of products. Company depends upon developing dedicated suppliers. The overall impact of higher suppliers bargaining power of suppliers is that decrease overall profitability of firm.
Threats of substitute: Business's profitability suffering by while new goods and services meet same consumer wants in various ways. M&S handle this force by being product oriented instead of service oriented and enhancing swift cost for customers. Company serving unique product from their current good in terms of value proposition, so that it create high threats of substitute good and services.
Bargaining power of buyers: Customer need to buy the best offering available by paying the minimal cost as possible. This put pressure of company's profits in long run. M&S handle this force by increasing big customer base that aids in two modes such as decrease bargaining power of buyers and provide possibilities to the company. Consumers are speedily innovating product and frequently seek discounts and serving accepted goods. Company hold on coming up with new goods then it can limit the bargaining power of purchaser.
With the help of porter’s five forces, company make sure that different existing competitor in the retail market. They also make sure that threat of substitute and new entrants that affects on operation of M&S. Firm determine that policies and strategies for overcoming for these threats in the market. Therefore, M&S make sure that implement appropriate strategies for increasing high position of business and competitive advantages in retail industry. with the help of porter’s sustainable competitive advantage model, company make sure that appropriate determination of resource and capabilities, cost and differentiation advantage, value creation in business for effective position in retail marketplace. Therefore, company make sure that appropriate utilization of porter’s five forces analysis for increasing sales and profits of business.
Recommendations of resources implication
Every company has many resources areas such as human resource, operations, finance, marketing, technology etc. With the help of it, firm should adopt various strategies for improving and developing all resources areas for business success. In order to that, M&S should need to improve human resource areas by hiring skilled workers for impressive operations or functions of business (Hill, 2017). Firm should make sure that giving the best training and development for effective implementing strategies in the workplace.
Skilled workers are helped in effective marketing and adopting technology in the workplace. For marketing, M&S should hire person who are perfectly known about different types of technology that utilizing in production process of goods and services to M&S. Company should follow different techniques for managing all the operations or functions for increasing productivity and profitability of business in retail industry. Firm should follow competitive advantages models such as porter's five force, porter's generic strategies for fighting competitions with their challengers.
With the help of it, M&S should follow different strategies such as marketing strategies, marketing mix, promotional mix for increasing sales and gaining profits of business. Firm should make sure that allocation of resources, improving quality of raw material, proper funding, effective marketing operations, utilization of advance technology for effective functions of business(Doz, 2017). They should follow strategies for resolving conflicts and overcoming challenges that are faced by company. Through it, firm should building relationship with their employees for increasing productiveness and improving culture of organization.
In order to that, company should follow various approaches to expand their business and beat competition. They should provide product and services to customer on affordable pricing that helps in increasing customer experience as well as satisfaction for their product and services. With the help of it, company should follow strategies for overcoming resources implications of business. This assists in increasing number of customer and income of business. Firm should apply specific model for effective utilization of resources for increasing profitability and competition advantages in the industry. This helps in increasing capabilities and capacities for effective execution of M&S in the retail industry.
This report has summarised that market penetration, development strategy and market development strategic for determining direction of strategic of M&S. It can be concluded that utilizing pestle analysis and porter’s generic strategy for strategic management. By these ways, company make sure that face competition and give the best product and services as compared to their challengers in the market. It can be discussed that strategic drift and its phases, alignment of mission and vision with demand of marketplace by utilizing business canvas model of M&S. It can be analysed that possible strategies that M&S in market. Furthermore, report has completed that recommendation for analysing implication of different resources of organization. It includes human resources, finance, marketing, operations, technology that helps in increasing competition by M&S in the marketplace. It can be concluded that effective management of strategies helps in increasing competition and success of business.