Company Analysis: Internal And External Analysis Of Marks And Spencer

Strength

Company analysis is a process of analysing the company profile, product, services, and profitability. The process of Company analysis is classified into two parts these are external and internal analysis (Dinnie, 2015).  The aim of internal and external analysis is to identify the company strength, weakness, opportunity and threats. It provides the strategic recommendations and suggestions on how the company could use and take advantages of its strength or improve its weakness. Internal and external analysis is necessary for an organisation to identify the barriers to operate in the future. It helps the company to evaluate the resources to ensure the future profitability, growth and competitiveness of the company (Hagos, and Pal, 2010).

In this report, internal and external analysis has been undertaken. This report assists investors, government, stakeholders to identify to make investment in the company.  In the starting of this report, internal and external analysis is explained with the example of Marks and Spencer Company. In the end of this report, recommendation is given on the best tools for the better understanding in context with investment decisions.

Strength

Strength describes the unique features of the company from which company takes the advantage. Strength refers to the goodwill of the company or the unique quality of the company. It has been an analysis that the Mark and Spencer have more than the 1300 stores and the company also operates at the international level. The company has a strong brand image in the market which is known as the strength of the company (Dobbs, 2014).

Weakness

Weakness describes those points from which company face the problems. It has been seen that the Marks and Spencer losing its employees like Food developer and product developer. The company was facing the risk of losing the employee which is a major benefit for the competitors of the company.

Threat

Threat describes the risk of a company. It is a major component for surviving a long time in the market by evaluating the threat. It has been evaluated that the instability in political and economic condition is also a threat in the international market. Marks and Spencer have many competitors in the market that sell the same product as Asda. The major risk for the company is economic uncertainty (Rothaermel, 2015).

Opportunities

Opportunities describe the advantages which are being used by the company against the competitors. It has been evaluated that the company has the six million consumers of their product from which the company can easily grab the market share or attracts the customers towards the product by giving them a discount on the product (Caprice, and Rey, 2015). It has been seen that the company enhance the network of convenience stores by focusing on the trends. The company has an opportunity to attract the customer toward their product by opening the small stores so that the sales of the product can be enhanced in the market.

Political Factor

Political factor includes government policy, political stability or instability market which affects the company. It has been analysed that the company faces the many issues to enhance the market share due to the high-cost structure in the international market.  The initiative taken by the company has been affected by the energy efficiency scheme of the U.K. government. There are various policies of the government which can affect the company like recycle packaging and animal welfare protection. The retail sector faces the pressure of taxation laws. The Marks and Spencer face the high pressure of the taxation laws (Rastogi, and Trivedi, 2016).

Weakness

Economic Factor

Economic factor refers to the economic growth, interest rate, inflation, disposable income and others which has a positive impact on the organization or on the profit of the company. It has been analysed that the retail sector is flexible to adopt the changes in tax and interest rates. To attract the customer, Marks and Spencer offering the product at the cheaper cost that is not beneficial for the company.

Social Factor

Social factor includes cultural trends, demographics, population analytics and others.  The company has the responsibility towards the society. The company has to make some new policy as per the social factors. Culture, population, language affect the company policies and other factors. It has been seen that the value of people is changing which affect the supplying power of the company. The company focuses on social agenda which helps the company to grow in the market.

Legal Factor

Legal factor includes rules, relation, and the law of the economy, it affects the company by making product and services or delivering product and services. It has been seen that the company takes an initiative with the name of ‘Behind the code’ which helps the customer to buy the product online. Marks and Spencer made the new reporting regulations in 2014 related to remuneration and provide the greater transparency to the stakeholder.

Technological factor

Technological factor includes the social media, new technology, and others. Technology enhances the speed of the transportation and designers can easily communicate through social media. Social Media is a strategy of the company to promote the products in the market.

Environmental factor

Environmental factor includes environmental regulation, ecological regulation, sustainability and others. Environmental factor analyses the environment of the economy which affects the company. It has been analysed that the company focuses on rules and regulation which helps the company to maintain the customer pressure. The company produces their product from the Silver and Gold producers. The company participates in the donation programs, it donates the garments to Oxfam.

 

Porters five forces framework is used to analyse the bargaining power of the buyer and supplier, and the threat of the new entrant, competitor and substitute of the product. It includes the five factors to analyse the company these are as follows:

The threat of the new entrants

It helps to analyse the threat of the new competitors of the company which increase the competition in the market. This factor analyse the new company behaviour and strategies. It has been evaluated that the Marks and Spencer has the low threat of new entrants just because of the low capital required. The company has a risk from the new entrant because it discourages the loyalty of the company.

Bargaining power of supplier

It helps to analyse the bargaining capacity of the supplier by evaluating the manufacturing firms of raw material. It is observed that the company bargaining power of supplier is high. High power of suppliers declines the sale of the company (Mathooko, and Ogutu, 2015).

Opportunities

Bargaining Power of Buyer

This factor is to evaluate the barraging power of buyer by evaluating the number of manufacturing the form of a singular product. It is observed that the Marks and Spencer has the high bargaining power of the buyer because there are many manufacturing firms who produce the same product.

The intensity of the competitive rivalry

It analyses the competitor behaviour of the company by evaluating the competitors. It analyse the competition level of the market whether it is strong or not. It is observed that the Marks and Spencer has a high competition level. It has a strong competitive market due to which company face many issues with the supermarket chains (Moczadlo, 2015).

Threat of substitution

It analyses the substitution of the product which can easily replace the product. It is observed that the company produce the innovative product which fulfils the requirement of the customer. Marks and Spencer have the high threat of substitute product because this is very easy for the other companies to copy the design of clothing (Porter, and Heppelmann, 2014).

Advantages	Disadvantages
Easily analysis the threats	Process can be organising regularly to be effective research.
Take the advantages of the strength	Time and cost consuming tools
Develop the company goals and strategies for achieving them.	Not define the solution
Expanding the business by evaluating the economy.	Competition increases by analysing competitors.

Marks and Spencer is a major British multinational retailer, it manufacturing the clothes, home products, and luxury food products. It is a big firm thus it faces many issues and threats by surviving the market. It faces the issues at the time of expanding the market in the other country (M&S, 2018). The company has to analyse the level of threats and power of buyer and supplier for reducing the threats. The external analysis is beneficial to analyse the market and economy for expanding the business in the other countries. Internal analysis of the company is beneficial to take the advantages of strength. Combination of SWOT and PESTLE Analysis tools is beneficial for Marks and Spencer for analysing the internal and external analysis (Shabanova, et al., 2015).

Conclusion

From the above analysis, it has been concluded that there are many tools that the company can be used for analysing the environment. For analysing the environment, the company classified the process of analysis into two parts these are internal and external analysis. According to the internal and external analysis, company should regularly analyse their environment which has been changes within the organisation. It is essential for Marks and Spencer to know what the current conditions inside the company and external analysis helps to predict the future cruises and profits. There are many tools which are used by the company to analyse the internal and external environment of the company these are SWOT, PESTLE, Porters five forces framework and others. SWOT and PESTLE analysis is the best combination of tools for the company.  It is observed that the company will grow fast in the market by using these tools for analysing the environment.

References

Caprice, S., and Rey, P. (2015) Buyer power from joint listing decision. The Economic Journal, 125(589), pp. 1677-1704.

Dinnie, K. (2015) Nation branding: Concepts, issues, practice. Oxon: Routledge.

Dobbs, E. M. (2014) Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp. 32-45.

Hagos, T. M. and Pal, G. (2010) The means of analysis and evaluation for corporate performances. Annales Universitatis Apulensis: Series Oeconomica, 12(1), p. 438.

M&S. (2018) About us. [online] Available from: https://corporate.marksandspencer.com/aboutus [Accessed 9/08/2018].

Madhavaram, S., Hunt, S. D., and Bicen, P. (2017) The FREE (Firm Resources and External Environment) Framework as an Alternative to SWOT: An Abstract. In Academy of Marketing Science Annual Conference, New York: Springer, p. 49

Mathooko, F. M., and Ogutu, M. (2015) Porter’s five competitive forces framework and other factors that influence the choice of response strategies adopted by public universities in Kenya. International Journal of Educational Management, 29(3), pp. 334-354.

Moczadlo, R. (2015) Creating competitive advantages–the european csr-strategy compared with porter's and kramer's shared value approach. Ekonomski vjesnik: Review of Contemporary Entrepreneurship, Business, and Economic Issues, 28(1), pp. 243-256.

Porter, M. E., and Heppelmann, J. E. (2014) How smart, connected products are transforming competition. Harvard business review, 92(11), pp. 64-88.

Rastogi, N., and Trivedi, M. K. (2016) PESTLE technique–a tool to identify external risks in construction projects. International Research Journal of Engineering and Technology (IRJET), 3(1), pp. 384-388.

Rothaermel, F. T. (2015) Strategic management.  US: McGraw-Hill Education.

Shabanova, L. B., Ismagilova, G. N., Salimov, L. N. and Akhmadeev, M. G. (2015) PEST-Analysis and SWOT-Analysis as the most important tools to strengthen the competitive advantages of commercial enterprises. Mediterranean Journal of Social Sciences, 6(3), p. 705.