Strategic management plan
In this assignment a strategic management plan for Marks & Spencer will be developed. Situational analysis and strategic management tools such as SWOT, value chain analysis, PESTEL and Porter’s Five Forces will be used to analyse the internal and external environment. The information gathered from the situational analysis will help the development of corporate and business strategy. TOWS Matrix and Porter’s generic strategies will be used in the development of the plan to help Marks & Spencer gain a competitive advantage in the retail industry.
Marks & Spencer began as a stall set up by Michael Marks in 1884. In 1894, Marks formed a partnership with Thomas Spencer leading to the opening of the first store in 1904. In 1926, Marks & Spencer became a public company. In 1931, Marks & Spencer began to produce and sell food produce. Over time they expanded from the UK to continental Europe in 1975. In 1999, they also began trading online, allowing for the now ever popular online shopping. (Marksandspencer.com, 2018) Now, in 2018, Marks & Spencer are an international leading, competitive high street retailer of food goods, homeware and clothing for men, women and children. They have a £3.7 billion clothing and home revenue, a recorded £5.9 billion food revenue and a £1.1 billion international revenue. Marks & Spencer have 1035 UK stores. 428 stores are found internationally over 56 international territories. They employ an average of 80,787 individuals worldwide. (Marksandspencer.com, 2018)
Analysis of external environment
First, a PEST analysis was carried out which helped identify forces in the macro environment that effect a business and are likely to do so in the future. It looks at political, economic, socio-cultural, technological, ecological and legal factors. (Partridge & Sinclair, 2005)
Marks & Spencer were the first major retailer to introduce a fair-trade policy in both clothing and foods. This policy led to a reduction in source costing for Marks & Spencer. Brexit is a major factor in the retail sector and for Marks & Spencer. Once Brexit has been finalised it will change the political landscape in the UK which will affect company operations and the depreciation of Sterling has already decreased revenue. Political factors also include government regulation and legality issues such as employment law, organisational tax and environmental regulations.
During the recession period when consumers had less money to spend, competitors of Marks & Spencer focused on discount pricing, but Marks & Spencer had their focus on higher quality. This resulted in a fall in revenue during the recession but have led to confidence in the brand to always deliver high quality. In recent times, new macroeconomic issues such as pound depreciation and uncertainty of the impact of Brexit have led consumers to be more price sensitive and resulted in their lowest sales in clothing in 10 years.
There are two major factors that affect Marks & Spencer that must be analysed. The first factor is the change in population size and generation shift. Marks & Spencer’s current consumers are now getting older and now they need to shift their attention to the generation x consumer. This shift must take into consideration the changing styles of new consumers and the behaviour in how they shop. Marks ; Spencer must look at changing fashion trends and how shopping behaviours of this generation have changed the way they do their shopping, the channels they use and how technology has become such an integral part of their shopping experience. The second factor in changing of consumer behaviour is that consumers are becoming much more ethical in their shopping behaviours, and now look for products and companies that are ‘green’ and care for the environment. Marks ; Spencer have put a lot of emphasis on this being the first UK retailer to become fully ‘carbon neutral’ and introduced their plan A program that focuses on making the business ‘greener’ and helping the environment.
Changes in technology in recent years has been of great benefit to retailers who have adapted to the change. Information on changing trends are more easily communicated and online social media have been a very cost-effective way to market their stores and products. Consumers can now, with the use of mobiles phones and tablets, shop at anytime and anywhere. Marks ; Spencer have developed a 5-year new technology transformation plan that will allow them to become a more digital focused business and improve the consumer shopping experience.
In recent years, consumers have put added pressure on businesses to put focus on being more environmentally friendly. Consumer behaviour has changed in a way that they now look for businesses and products that are conducted in environmentally friendly ways. Plan A was introduced by Marks ; Spencer, which is an environmental and ethical plan that the company stands by in all manners by which business is conducted. This has put them ahead of their competitors on ecological factors.
Marks ; Spencer as a business must abide by many health and safety regulations, consumer and environmental rights and other legal factors. All products sold must have up to date information present, where it was produced, nutritional information and the contents of the product. Brexit will also have a major legal ramification for Marks ; Spencer, where it is likely that they will have to face legal issues. Loss of common market will affect how their supply chains work, the free movement of people and international contracts.
Porter’s 5 Forces
This business model was developed by Michael E. Porter in 1980s which has combined five forces which enables us to understand how competitive and attractive the market was. (Porter, 2008) (Appendix 1)
Analysis of the internal environment
To analyse the capabilities and competencies that Marks & Spencer possesses, value chain analysis was used.
Value chain analysis
The value chain describes the categories of activities in an organisation which, when used together, help to create a product or service. It looks at the organisation in terms of a set of activities. Sources of competitive advantage can be analysed in these activities. (Johnson, Scholes and Whittington, 2011)
Inbound logistics refers to the storage, transport and delivery of goods into the business. Marks & Spencer launched a Warehouse Consolidation Programme, which involved opening a new ‘super warehouse’ in Bradford, which combined all its food suppliers from four centres into one site. They then built a second new warehouse in the East Midlands that will provide an e-commerce facility along with a National Distribution Centre. This allowed Marks & Spencer to have greater control over their supply chain.
Marks & Spencer have invested in sub-brands which are based on better quality in order to meet the changing needs of its consumers. Marks & Spencer launched in-store bakeries in stores to help them deliver the full freshness of products to their customers. Marks & Spencer also went down the route of modernising their stores to help improve the shopping experience for their customers in their stores. (Marks & Spencer, 2018)
Outbound logistics refers to the storage, transport and delivery of goods out of the business. Marks & Spencer have multi-channel operations. These channels offer a flexible range of order and delivery options, which provide consumers with convenient service for online shopping and offer next day delivery to its customers.
Marketing and Sales
Through marketing, Marks & Spencer look to emphasise the quality and style of its products. They look to create innovative promotions such as their ‘Dine For Two’, which provides value to its consumers and helps them to gain a competitive advantage over their competitors. They have also invested in TV and magazine advertising using high profile celebrities as the face of their clothing lines which is currently Holly Willoughby. They also use in-store visual merchandising.
Marks & Spencer pride themselves on their customer service and introduced zoning across their sales floor in order to provide more available staff for customers. They have also set out a supply chain initiative called ‘FUSE’ in order to help improve stock levels in store so that customers will always have at least 95% availability in store.
Marks & Spencer have flat organisation structure to its hierarchy. This allows the company to respond quick when the organisation requires a decision to be made.
Human resource management
Marks & Spencer offer high training programs for their staff in every department. All staff undergo performance reviews quarterly and are encouraged to develop their skills, Marks & Spencer also like to develop sales advisors into a managerial role. These opportunities are offered 3 times a year for staff to take part in the development program.
Marks & Spencer continue to develop new products to allow more choice for their customers. The company continuously seeks to develop new technology to improve the range and ease of shopping.
Financial management and control
Marks & Spencer have a lot of funding and is supported by strong balance sheet. It manages its expenditure and spends it where they feel it will help benefit the business and the consumer in order to help them gain a competitive advantage.
Swot analysis summarises the strengths, weaknesses, opportunities and threats likely to impact on strategy development. (Johnson, Scholes and Whittington, 2011)
Marks & Spencer have many stores with 1035 stores across the UK. 428 Marks & Spencer stores are found internationally over 56 international territories, employing an average of 80,787 individuals worldwide. (Marksandspencer.com, 2018). The large number of stores make the business wider and increases their sales due to the wide range of products that they supply. High recognition of the Marks & Spencer’s brand and brand loyalty are massive strengths to them. They are known by everyone in the market for their high-quality products and healthy image. Their consumer loyalty is also a huge strength to them as they continue to progress in the future. Marks ; Spencer have a high reputation for focusing on customer service. This is one of the most important methods they use to help build and maintain a good relationship between them and their customers. Marks ; Spencer are a well experienced retailer and have spent decades developing strong relationships with not only their customers but also their suppliers. The development of their supply chain is also a huge strength to them.
One of Marks ; Spencer major weaknesses is that it has a reputation for not supplying fashionable and up to date clothing lines, while also failing to appeal to the youth of today. Another weakness is their pricing. In the past when there wasn’t as many substitutes and consumers didn’t have the choice they have today and was accepted as the norm to charge more for quality. However, with today’s market and the development of online retailers’, quality can be bought at lower prices which has affected the revenue of Marks ; Spencer’s.
There are many opportunities that Marks & Spencer have developed for their online shopping facilities so that customers can shop more easily and anywhere, anytime. They can move to target a new younger segment of the market with development of design in their clothing and can use influencers online as a marketing stream. They can also look to move into more international markets such as China and India. Marks & Spencer also can take advantage of the new healthy eating habits which have been developing by promoting their ‘Count On Us’ and ‘Balanced For You’ ready meals which are calorie controlled.
The major threat to Marks & Spencer is their strong competitors within the market, for example Tesco, Dunnes and ASDA. They have been developed into providing high quality products at a lower price. In the clothing market, they have a massive threat from online retailers such ASOS who provide high fashion at lower prices. There is also a huge new competition from high street stores like Zara and H&M, who also provide high fashion at lower prices. The uncertainty of how Brexit will affect the way Marks & Spencer trade is a worrying threat to the company.
• Large number of stores
• Powerful and trusted retail brand
• Strong reputation for high quality products
• Good customer service
• Highly developed supply chain
• Highly trained employees Weaknesses
• Reputation of their clothing only being for older generation
• Expensive pricing
• Slow to adjust to changing fashion trends
• Growing demand for new fashion trends
• Online shopping become more popular
• New younger customers
• Overseas development like China and India
• New healthy eating trends (SO)
• can use their brand reputation to expand overseas
• can use their reputation for high quality foods to attract new consumers who are developing with the new healthy eating habits (WO)
• target a younger market with their clothing
• focus on developing the clothing more rapidly to keep up with changing trends
• move more into online sales as this will reduce operating costs
• Food retailers offering high quality at lower prices
• Increasing competition from new lost cost fashion retailers
• The emerging online clothing retailers
• Use their strong relationships with suppliers to bargain for cheaper prices but still high quality
• Use overseas markets to develop new fashion trends more quickly and of a high quality.
• Update their website to improve customer experience and increase online shopping (WT)
• Source more overseas to help reduce pricing
• increase international expansion outside of the UK
In my Opinion, differentiation is the competitive strategy that should be adopted for Marks & Spencer. Differentiation is a strategy which aims to make an organization different and unique from its competitors. As Marks & Spencer is a high street store, there are many competitors in each of its main markets; food produce, clothing goods and homeware. It is possible for differentiation to be adopted to each function within an organization as there is always room to expand on a company’s unique identity. Differentiation as a strategy aims to provide added value to customers in the hope of building a constant customer base and appeal to new customers. This added value does not only include value for price or quality of goods, it can include staff and customer interactions, follow up care, online, layouts, convenience and more. (Universalclass.com, 2017)
Marks ; Spencer stores are located on each popular high street, making it accessible to both loyal and new customers. They can develop their stores to be more attractive to the younger generation to make them unique and it is a different way to offer new and exciting experiences for its customers. This would differentiate Marks ; Spencer stores from competitors such as Tesco and ASDA, which would have the low-cost generic approach to layout. Marks ; Spencer offer unique products, available only in Marks and Spencer stores. They already have a strong healthy foods image. If they can develop this image by having a marketing push on products from their ‘Count on Us’ and ‘Balance for You’, they will see major benefits from it as consumers are becoming more and more health conscious. Marks ; Spencer are said to see themselves as food specialists, not as a supermarket which differentiates them from their competitors. Marks ; Spencer use locally sourced, high quality produce. Produce are only sourced from outside of the United Kingdom when goods are out of season. They should focus on developing this image further. Marks ; Spencer aim to have high levels of brand integrity and safety. They also have a non-genetically modified ingredients policy, support fair trade, use free range farming and field grown produce. Marks ; Spencer pride themselves on their highly trained staff who endlessly aim to meet the goal of the organization’s motto, “Make every moment special.” Marks & Spencer are a customer orientated organization and must use this to gain a competitive advantage. Marks & Spencer’s clothing range must be adapted to target the youth of today. Investment in R;D and development of their clothing lines to keep up with changing trends is essential for them to gain a competitive advantage. Development of their online website to make the user interface more user friendly. The use of influencers online helps to market and make their products more attractive to the youth of today.
From this assignment it has been highlighted how competitive the retailing industry is and how rapid changing trends and changing consumer behavior affects businesses like Marks ; Spencer. From this research it can be observed that Marks ; Spencer are still a valuable commodity in today’s environment and that they still have what it takes to stay competitive in this industry. They need to focus on developing what they already do very well like product quality, service and innovation but must try to adapt better to the changing trends. They must also look at changing their image and target the youth of today while also developing a better online profile as everything is transitioning to online and they do not want to be left behind.