Strategic Management Assignment help on – MARKS & SPENCER’S
- Introduction
Marks & Spencer’s also known as M & S is a retailer of clothes headquartered in the City of London. M & S has approximately 703 stores in United Kingdom (UK) and 361 retail chains spread across 40 more countries. M & S refers to a retail chain which mainly deals with the sale of clothes, luxury products, food items, etc. M & S was originated in the year 1984 by two geniuses i.e. Michael Marks and Thomas Spencer. In the year 1998, Marks & Spencer’s became the first British retailer which made a profit of pre – tax profit of approximately £1 billion. Even after making a profit of £1 billion, Marks & Spencer’s dropped down into crises which lasted for many years. According to the sources, it shall be taken into consideration that over 21 million visitors visit the retail store each week spread all across the globe. It has been seen that, Marks & Spencer’s treat its customers with high class quality, fashionable clothes, value for money prices. In case of home products offered at Marks & Spencer’s, provide food which is high class quality, outstanding variety of food items which is being sourced from approximately 2, 000 suppliers all over the globe. The retail chain i.e. Marks & Spencer’s employs 78, 000 people in the UK branch alone. Whereas, it has more than 700 stores opened in UK & many more to come in the international retail environment (Quick MBA Knowledge, 2004).
Marks & Spencer’s is mainly known for the vast variety in women’s wear & the lingerie section. Marks & Spencer’s has been regarded as one of the retail chains which is growing its business by increasing the market share from various other segments such as ids wear, men’s wear & home accessories. Marks & Spencer’s focuses upon increasing its market share with the help of online business as well. The overall sales or market share contributed at M & S from the clothing as well as home accessories account to approximately 49% of the entire business. The rest 51% of the sales is contributed through food items which includes, freshly baked cakes, breads, cookies, groceries, half cooked meals, meat & fish products. Marks & Spencer’s is also known for its initiatives of green credentials amongst the five year eco plan which mainly focuses upon neutralizing the carbon effect as well as provide non waste to landfills by the end of 2012.
- Main body
2.1 Porter’s Model
In order to analyze the strategic environment of Marks & Spencer’s use of various theories shall be done. This will help to provide a fair analysis of the internal as well as the external environment where Marks & Spencer’s operates.
The first theory which has been carried out within this report in regards to Marks & Spencer’s refers to the 5 Force’s Porters Model. With the help of the 5 Forces Porter’s Model analyses of the environment would be done based upon the following factors such as threat of entry, bargaining power of buyers, bargaining power of sellers, threat from the substitute goods & rivalry from the competitors. The use of generic 5 forces porter’s model will help the business to contrast along the competitive environment where in it operates (Johnson & Scholes, 2002).
Threat of Entry: The threat to entry refers to the first factor in the 5 Porter’s model of strategic management. The threat of entry at Marks & Spencer’s can be seen with respect to differentiation in terms of loyalty of customers which discourages a new entrant to enter the same industry. With respect to Marks & Spencer’s attaches with itself long time this has been developed as a main barrier to entry. It has been seen that, Marks & Spencer’s is an expert in its field and hence it is quite a difficult task for any of the retail chains to come & share the market with M & S. It is unlikely for Marks & Spencer’s to have a new entrant in its area. It has been seen that, the majority of market share is being M & S amongst the UK, US, Asia, etc.
Bargaining power of buyers: The bargaining power of buyers refers to the second element in 5 Porter’s model of strategic management. M & S showed its preference is to use British suppliers alone. M & S has become quite dependent upon its suppliers. At M & S, it has been seen that the bargaining power of buyers is less as it does not has close alternatives (Johnson & Scholes, 2002).
Bargaining power of suppliers: The bargaining power of sellers refers to the third element in 5 Porter’s model of strategic management. The supports which Marks & Spencer’s have got from the British suppliers have made them quite dependent upon the suppliers & hence the powers instilled with the suppliers are quite high.
The threat of substitutes: Threat of substitutes refers to the fourth element of 5 Porter’s model of strategic management. It shall be seen at M & S that, substitution will lead to the reduction in the demand for a particular group of products offered at M&S. The main threat of substitute which is being seen at M&S would be Sensbury and Tesco. Sensbury along with Tesco provides food to its customers which might act attract the customers towards it (Quick MBA Knowledge, 2004).
Competitive Rivalry: The last element under the 5 forces Porter’s model refers to rivalry amongst the competitors. Marks & Spencer’s faced high levels of competition from other organizations that have just entered the retail industry. The main reason for the rivalry amongst the competitors would be the introduction of quality food, goods at an affordable price, fashionable clothes based upon the up-to date fashion, wide variety of products to choose upon. Marks & Spencer’s was unable to fight the current levels of competition practiced within the retail market.
2.2 Value Chain Analysis
The second theory which can be used in order to carry on strategic management at Marks & Spencer’s would be with the help of value chain analysis. Value chain analysis refers to a type of chain which would focus upon the inbound as well as the outbound activities being practiced within the enterprise. It shall be kept in mind that, at Marks & Spencer’s (M&S) shall emphasis upon the delivery of the goods in the best possible manner. It has been referred to as one of the significant ways through which profitability will be increased as well as practice better competitive advantage between the market place. In this case, the clients would be required to purchase in satisfying ways such as to greet the customers with up to date collection of clothes, lingerie, fashionable accessories & provide the products at an affordable price. The prices attached along the products shall provide the visitors with value for money. The visitors shall not think that the prices offered for the products are way too expensive. This will provide the customers to get attracted towards its competitors (Quick MBA Knowledge, 2004).
At Marks & Spencer’s there is a need to make necessary improvements within the layout of the store, inbound logistics, designing of the store, operations, suppliers, etc. The warehouses of Marks & Spencer’s shall not store old stock of goods. This would provide the new stocks to get their way inside the M&S stores. The up dated stock at the store will help to attract more number of visitors towards them. More visitors visiting the M & S Store means to high levels of revenues would be generated by the same. The packaging of the stocks at the store shall also be given due consideration. The packaging material used at M & S shall be attractive which would help the visitors to buy the products form M & S as compared to its competitors. It would be recommended at M&S that, the products shall be bought from them the overseas market which would lead to a decrease in the cost of production of the material (Quick MBA Knowledge, 2004). The decrease in the cost of production will provide the customers to buy the products at cheaper rates as compared to the products provided at Sensbury & Tesco. Redesigning of the stores shall be done which would lead to an increase the space of the store, provide high levels of comfort to the customers & convenience to the same while the customers lift, shop and browse the products from the store (Quick MBA Knowledge, 2004).
It would be recommended to M & S that, use of information technology shall be done within the store. The information technology system which shall be utilized at M & S will help the store to practice smooth as well as fast running services to the customers, suppliers & the buyers. Though M & S already has taken up steps to smooth the entire procedure, it would be expected that M & S shall follow this step to regain the competitive advantage (Johnson & Scholes, 2002).
2.3 Competitive Strategy
It is not an easy task to decide i.e. which competitive strategy shall be opted at Marks & Spencer’s in order to be in the battle of being the best. At Marks & Spencer’s, the recognition of the competitive strategy shall be done on the basis of high levels of differentiation. Therefore, various differentiation strategies shall be followed keeping in mind what the customer wants, what do M & S offers its visitors, etc. It shall be seen that, clarity on the basis of differentiation should be practiced at M&S. At M&S a straightforward approach shall be opted for. The straightforward approach followed at M&S would be to reduce the size of the target audience, the market segment to be targeted (whether to target on particular segment or focus upon multiple segments), whether M&S shall solely focus upon merchandise or they shall focus upon mid range markets as well to cater to large number of target audience (Quick MBA Knowledge, 2004).
2.4 Problems at M & S
Apart from the various ways competitive advantage there are various problems attached along Marks & Spencer’s. Marks & Spencer’s underwent a major decline phase in the year 2000. The problems at M & S have been divided into two sections i.e. culture as well as the core products. It was seen that, there were many problems which were being faced at M & S and some of the problems were addressed in a well defined manner. Therefore, the problems continue to act as problems for the organization in the competitive environment.
Þ Culture: Culture has been referred to as one of the major problems faced at Marks & Spencer’s. Holmes as well as Vandevelde tried to update the culture at Marks & Spencer’s but failed to change the same. It was seen that, M & S was instilled with old beliefs, values, core values which was spread all across the organization. One of the changes which took place at Marks & Spencer’s was the removal of the symbol of “St Michael”. Due to poor financial performance of M & S, the store did not have a feeling that they are the best serving the customers in the most effective manner. There were many old traditions as well as culture which were being followed at M & S. One of the old traditions which were seen at M & S is in regards to the approval of the various formalities. The people at the M & S store could not make any changes unless and until it was duly approved by top level management situated at the headquarters of the same. Various types of exercises shall be followed within the enterprises which would address the problems in the best possible manner (Marks & Spencer’s, 2012).
2.5 Success & Failure of Vandevelde Strategy:
The other theory or strategy which has been used in regards to Marks & Spencer’s (M&S) refers to the strategy given by Vandevelde. During the pace of time, Vandevelde has implemented various theories or strategies at M&S for practicing success within the same. Vandevelde has been regarded as the savior of M&S. It was seen at the organization that, many of the strategies or theories provided by Vandevelde were unsuccessful (Johnson & Scholes, 2002).
Some of the successful strategies which were implemented at M&S and given by Vandevelde have been discussed as follows:
Þ Rebranding as well as updation of the corporate image by eliminating the confusion of using Marks & Spencer’s and symbol of St Michael.
Þ Restructuring the supply chain practiced within the stores based upon the demographic patterns
Vandevelde gave a strategy which meant to gain high levels of knowledge from the various stores situated all across the globe. This would help M&S to see the different strategies which have been formulated to attain success within a particular country. The main focus of Vandevelde strategy was to have high levels of control within the UK market. Hence, before attaining knowledge from the global market M&S made it plans to withdraw its stores form the European as well as American markets. This has been regarded as one of the major failures for M&S as it was unable to focus upon the operations; success was not managed in a well defined manner and damages the reputation of the same. There are various types of problems which are associated with the retrenchment across Europe. Some of the problems attached are strike action, bailouts, negotiations as well as the French government dragging Marks & Spencer’s to the court (Johnson & Scholes, 2001).
One of the strategies implemented by Vandevelde was the announcement of M&S to change its headquarters to London situated at the Baker’s Street. This would have been one of the main changes for the enterprise as well as a major step to move away from the traditional strategy. The change in the headquarter was to be done in the year 2004 & the analysts were waiting to keep a check on the effect which might change the inbuilt culture at M&S (Quick MBA Knowledge, 2004).
For the time being, Vandevelde stressed upon the importance of reinstating the confidence for M&S core customers with the primary aim to focus upon women apparels. In order to achieve all the strategies, Vandevelde implemented various strategies in tandem. The fashion at M&S was designed keeping in mind the traditional shoppers as well as the classically styled apparels under the name “Per Una”. Initially the strategies were quite successful & the profit figures showed an overall increase within the sales of the quarter & the share prices rose by 10%. With a positive impact over the figures, Vandevelde presented strategy in order to expand within the UK market. The expansion within the UK market would be made in adding home ware products, adding wide variety of simple & convenient food as well as leveraging financial services. M&S also updated the logistics which led to an increase in the financial results which lead to high levels of success & were praised for the appropriate strategies (Collier & Johnson, 2005).
The praise at M&S came in a quick manner which led to high levels of problems & in long run failure for the same. After making ways for M&S to recover the clothing section, Vandevelde had shifted its focus from three different approaches. There were various problems which rose within the clothing range. The main problems which aroused within the clothing range were seen in the women’s wear & children’s wear. The main reasons for problems which were encountered at M&S were due to overstocking as well as marking down of the sales item. It was seen that, clothing was losing its market share at the M&S store (Burn, 2008). With the implementation of the various Vandevelde strategies, there was a rise in the overall levels of profit earned by the enterprise. This also led to an increase in the levels of dividend & led to generate relationships amongst the customers.
- Recommendations & Conclusion
The various recommendations to M&S in order to improve its market share within the various countries have been listed as follows. They are as under:
Þ Rebranding as well as up gradation of the corporate image by eliminating the confusion of using Marks & Spencer’s and symbol of St Michael (Quick MBA Knowledge, 2004).
Þ Restructuring the supply chain practiced within the stores based upon the demographic patterns. At M&S a straightforward approach shall be opted for.
Þ Redesigning of the stores shall be done which would lead to an increase the space of the store, provide high levels of comfort to the customers & convenience to the same while the customers lift, shop and browse the products from the store.
Þ The packaging of the stocks at the store shall also be given due consideration. The packaging material used at M & S shall be attractive which would help the visitors to buy the products form M & S as compared to its competitors (Burn, 2008).
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