Answer:
Introduction
The strategic management is all about classifying and defining strategies in order to attain better performance and competitive advantage. The company is said to gain a competitive advantage if productivity is higher than the average productivity in the industry. It can also be described as the packet of decisions which a manager undertakes to achieve a firm’s performance. In this report, Marks and Spencer (M&S) are taken to understand strategic management theory. Marks and Spencer is one of the retailers in the UK. The company provides high-quality services to the customers in the segment of clothing, food and home products. It operates in 41 countries other than the UK. It has well-defined guidelines and procedures regarding customer care, product quality, advancement, and trust. The company has more than 77,000 employees work in the UK and overseas. It is the ultimate goal of the company to become a most sustainable retailer in the world. The company tossed a plan in 2007 comprising 100 obligations to attain in the next 5 years. This plan was extended to 180 commitments by 2015.
This report revolves around the strategic analysis of Marks and Spencer. It explores business level strategy and corporate strategy, environmental analysis, resource and competence analysis. A strategic plan is developed to ensure resource implications. Finally, the strategic control is evaluated through the expansion of a strategy implementation plan. The strategic management provides overall direction to the organization. The strategy is the direction and opportunity of an organization over the long term. It assists companies to gain competitive advantage through the configuration of resources in the stimulating environment. It helps to meet the requirements of the market and fulfil the prospects of stakeholders.
Strategic Analysis
An indication of business level strategy and corporate strategy
The business level strategies help M & S to establish a competitive advantage. It also helps to compete across borders. It is concerned with how the company competes successfully in the market. The strategy relates to the choice of products, identification of the need of customers and gains a competitive advantage over competitors. The company follows cost leadership for a varied customer based on price. The prices are created on the internal proficiency in order to manage a margin which sustains above-average returns. The company offers the lowest price on the basis of standardization. M &S efforts to lower costs relative to it’s competitors (Allwood, Laursen, De Rodriguez & Bocken, 2015). It comprises building state of art efficient facilities, keeping strict control over production and overhead costs and reducing the cost of sales, R &D, and service. The company stresses the resources which facilitate efficiency. M & S is one of the world’s largest retailers in terms of sales. The winning strategy of the company is to sell branded products at the lowest prices.
A corporate strategy is a portfolio approach which helps to create the most value. There are various constituents of corporate strategy such as allocation of resources, organization design, portfolio management and strategic trade-offs.
- In the allocation of resources, M & S mainly focuses on the two resources, people, and capital. The company identifies core competencies and ensures they are well distributed along with the availability of appropriate talent (Balasubramanian, Bhattacharya & Krishnan, 2015). The company allocates capital across different segments to earn the highest return.
- The organizational design ensures that the organization has necessary corporate structure and related systems in order to create the maximum amount of value.
- In the portfolio management, M & S manages the risk through diversification. The company creates strategic options by developing new opportunities. The company invents by investing in it’s different segments (Aslani, 2014).
- It is one of the challenging aspects to balance the trade-offs between risk and return. M & S manages risk by differentiating products. The company updates itself with the strategies and the associated risks across the firm (Campbell, Goold, Alexander & Whitehead, 2014).
Environmental analysis
The environmental tool is a strategic tool to identify the internal and the external environment affecting the performance of an organization. M & S is greatly influenced by the environment. These factors determine the day to day circumstances. The environmental analysis of M & S is done by the PESTLE analysis:
Political environment: The company functions in the administrative and legal framework provided by the political government. The administrative and legal framework includes price regulations, tax rates, employee benefits, wage legislation and trade regulations (Karmanov, et. al. 2016). The European committee permits free flow of trade under the foreign trade regulations to import products easier.
Economic environment: The competitors of the company are specialized in the niche markets. The competitors focus on providing more than customer satisfaction (Wu, Ramesh & Howlett, 2015). They import products from abroad in order to save costs which causes disadvantage to M & S.
Social environment: The preference of consumers keeps on changing. There is a shift in the demand for fashionable clothing. The effective business strategy has only the capability to aim different demographics, structure, and culture of society. The price sensitivity of customers has left the company at the less competitive position (Bai & Sarkis, 2014).
Technological environment: The changes in the technology have greatly influenced the market conditions and trends. The electronic media have a major role in introducing the latest trends in the society. M & S need to consider the factors important to the modern technology. Such technology sets the standards linked to services and the product quality (Papulova & Gazova, 2016). The technology affects a business environment in terms of investment and application to compete in the market.
Resources and competence analysis
The resources and analysis of M & S can be done on the basis of the factors given below:
Physical resources: Every company have the same resources as competitors but what makes a company differentiated from others is the way it uses and manages resources. For instance, M& S is having same store sites in the UK as ASDA. M & S have the physical resources given below:
Value for money product: The use of suitable resources made by M & S brings the good value for it’s products. The company has it’s own brand in the market which makes it popular in the competitive environment (Hurley, 2017). The company innovates on the regular basis which helps it to survive in the industry. Most of the suppliers of the company are UK based and faces product cost problems.
Own brands: The company has achieved good quality standards and uses it’s own brand for it’s products. M & S is the first retail company which sells it’s own brands. The company sells it’s own brands which help to maintain quality standards. It is sometimes difficult for the company to convenience customers to buy brands from M & S stores. Due to cut-throat competition, it is experienced that loyal customers of M & S shift to other rivals such as Tesco, ALDI, and Sainsbury (O’Sullivan, et. al. 2016).
Store sites: The stores of M & S have launched a long time ago, it was found that it’s various stores are too small. The company intended to enlarge by transforming stock rooms into the floor area. It has created the logistics problem (Mellor, Hao & Zhang, 2014). The company has found a solution by setting up satellite solutions. The company supplies stock to the small branches through it’s main branch. However, it is quite difficult for the company to manage stores without stockrooms.
Core competencies: The core competencies are the factors which differentiate a product and brand from others. M & S has a huge range of it’s own products under the name of various brands. The quality of the company’s products is better than the competitors. The company tries to lower it’s price and provide more value for money.
A strategy plan
It is the mission of M &S to make aspirational quality accessible to all. The strategic plan of M & S defines it’s strategy, direction and makes decisions on allocating resources to pursue the strategy. The mission of the plan is to offer new quality products in the segments of food, clothes, home and financial services. There are some other missions of M & S such as delivering high-quality goods at affordable prices (Kumaraswamy, 2017). It also considers good value for money which is received by the customers. The company provides an exclusive choice to the customers by offering new stock than any other brand.
The strategy plan of M & S describes what the company do in order to be successful in the retail industry. The internal and external analysis is conducted in order to understand the environment in which company operates. M & S is one of the largest international retailers. It was founded by Michael Marks and Thomas Spencer in 1884. The core competencies of M & S are:
Vertical incorporation
Fast fashion model
Short lead time
Low store quantities
Exclusive styles
Customer-centric approach
The resource implications provide the strategic direction to the company:
The internal resources are significant for the company in attaining and supporting competitive advantage. The internal resources of the company are divided into three categories given below:
Physical resources
The physical resources include the following factors:
Prime location: It is one of the best strategies applied by M & S. The stores of the company re always located in the prime locations of the city in every country. Usually, the crowd is found in the shopping malls, so M & S should locate it’ stores at shopping malls. The crowd is usually found in the downtown or shopping streets in U.S. and European countries. The company plans to open it’s stores in crowded places only (Bentley-Goode, Newton & Thompson, 2017). The prime locations provide more benefit to the company which results in the generation of more sales.
Attractive window displays: M & S do not rely much on the advertising and commercials. It focuses on providing a better store experience. The strategy of the company includes attractive window displays in order to attract customers. it maintains the store ambience and creates an impressive shopping experience.
Exclusive and latest designs: The M & S is popular for it’s latest trends. The public is always interested in the apparel designs provided by the company. The company provides various designs in a year (Bettis, et. al. 2016).
Organizational resources
Market-oriented strategy: It is important to emphasize on the customers in order to convert them into loyal customers (Podgórski, 2015). Otherwise, the customers can shift to other brands easily. M & S is committed to it’s customers by concentrating on their demand and preferences (Meredith, et. al. 2016). It is supported by the operational strategies of the company.
Staff education: M & S need to focus on it’s customers by educating staff. It is the priority of the company to focus on it’s human resources (Moatti, Ren, Anand & Dussauge, 2015).
Production strategy: M & S applies innovative strategies in it’s production process. The designers design the clothes only after examining the availability of material and the goods are manufactured after inspecting the availability of raw material. The things are produced on the basis of existing material and fabrics.
Value chain: The value chain of M & S is totally different from the competitors and it’s lead time is of 2-3 weeks. It is the value chain which makes company to produce new designs in the period of 2 weeks.
The objectives of M & S are to:
Save energy and become the eco-friendly store
Produce less waste
Increase awareness among another member of the organization
Use ecological fabrics and organic cotton
There are some factors which reflect the KPIs of M & S:
Financial: The group sale of the company was 10.3 bn pounds in 2014-15. The revenue of the company in 2018 is 10, 698.2 million.
Operational:
Order lead time: The lead time is the ideal time taken to order a product and receive it.
Operational level measures: It is the everyday technical demonstration, observance to developed schedule, capability to avoid criticisms and attainment of successful deliveries.
The efficacy of scheduling techniques: This technique measures when the activities are meant to be undertaken. It is made possible by four ways, centrally managed inventory, less cycle time, IT system, logistics and delivery (Hitt & Duane Ireland, 2017).
The flexibility of delivery systems in order to meet customer needs: It includes the factors like agreed place, mode of delivery along with the customized packing.
Environmental: The environmental KPI includes the 4 areas such as:
At stores: The eco-friendly management model is used by the company in order to reduce consumption, wastage and recycle the hangers and PVC free policy.
With product: The ecological fabrics and the organic cotton is used in the production. These fabrics are easy to recycle (Meyer, Neck & Meeks, 2017).
Transportation: The company uses a fleet of lorries which consume 5% biodiesel fuel. It reduces the CO2 emissions by approximately 500 tons.
Animals welfare policy: The clothes which contain leather and fur, usually comes from the animals raised in the food farms of the company.
Social:
The social factors include the code of conduct which comprises no forced labour, child labour and discrimination. It includes the safe and hygienic working conditions, appropriate working hours, regular employment, health and safety of products. The production should be traceable and the environmental awareness should be there (Wang, Cooke & Lin, 2016).
Strategy implementation plan
The strategic implementation plan turns the strategies and plans into the schedules in order to attain strategic objectives and goals. The aim of the strategic plan is to reduce wastage and unused substances to protect the environment in order to promote the healthy lifestyle of consumers. The strategy implementation plan of M & S includes:
Defining strategy framework: The strategy defines the activities conducted by the company. The framework of M & S introduces strategy which can be understood by everyone. It defines the new priorities and activities across the organization. The framework introduces the relevance of activities (Purce, 2014). A good way to understand strategy framework is to understand value measurement tool for both existing and new initiatives. The framework highlights the priorities and imitative adopted for the delivery.
Build plan: The next step is to create a plan in order to achieve the mission of M & S that is to offer new quality products in the segments of food, clothes, home and financial services. The plan is made by the leaders of the organization agreeing to a vision (Kim & Urpelainen, 2015). The values of the organization are kept in mind. Finally, the 3 to 4 areas addressed in order to reach the vision. These areas are clothing, food, home and financial services.
Define KPIs: The strategy implementation requires defining key performance indicators of the company. These are the traditional management tools and help to focus on the outcomes. The KPIs are required to keep simple and at least 1 KPI should be selected for each focus area. These should be measurable easily. The KPI of M & S includes group revenue, profit before tax, return on capital employed, underlying earnings per share and free cash flow dividend. The KPIs under non-financial measures include quality products, greenhouse gas emissions, sales revenue and gross margin profits.
Establish strategy measurement: The strategy implementation starts with the establishment of strategy measurements. It is going to evaluate how often M & S discuss progress. It is great to discuss monthly or quarterly. The discussion is also made on the minimum requirement of leadership team members.
Implement consistent and simple strategy reports: The strategy implementation focuses on the reporting. The objectives of the strategy reports are to:
- Consistency: The members of the company know what to expect and they need to update prior meetings.
- Simplicity: The strategy report provides a glance of how the strategy is progressing.
- Responsibility: The report comprises the name of the owners of each aim (responsibility) and the names of the people who are responsible for things get done.
- Insightful: The report is required not provides an overview of strategy but the progress over time. A comparison is made with the help of graph and charts (Rocha, et. al. 2016).
Link performance reviews to strategy: When the performance is linked with the strategy then the successful implementation of the strategy is ensured. It is a formal way to create a link between strategy and performance reviews. The internal stakeholders re communicated through the website and the information of company are shared through the annual report and meetings. There are various communication methods to communicate with external stakeholders such as face to face meetings, events and the marketing materials such as brochures and newsletters (Albert & McKay?Semmler, 2017). The information of the company is shared through it’s website and social media channels.
Conclusion
The strategic analysis analyses the market and define ways to endure advantage. In the above report, the strategic analysis of Marks and Spencer (M & S)is done. The strategic analysis of M & S includes the business level and corporate level strategy, environmental analysis and resource and competence analysis. The strategy plan is developed for the company comprising mission, strategic direction, objectives and KPI indicators. The strategic plan ensures the resource implications. Finally, the strategy implementation plan has been developed. It considers the communication methods for the internal and external stakeholders.
References
Albert, R. and McKay?Semmler, K.L., 2017. Communication Modes, L atin A merican/L atino. The International Encyclopedia of Intercultural Communication, pp.1-10.
Allwood, J.M., Laursen, S.E., De Rodriguez, C.M. and Bocken, N.M., 2015. Well dressed?: The present and future sustainability of clothing and textiles in the United Kingdom. Journal of the Home Economics Institute of Australia, 22(1), p.42.
Aslani, A., 2014. Private sector investment in renewable energy utilisation: strategic analysis of stakeholder perspectives in developing countries. International Journal of Sustainable Energy, 33(1), pp.112-124.
Bai, C. and Sarkis, J., 2014. Determining and applying sustainable supplier key performance indicators. Supply Chain Management: An International Journal, 19(3), pp.275-291.
Balasubramanian, S., Bhattacharya, S. and Krishnan, V.V., 2015. Pricing information goods: A strategic analysis of the selling and pay-per-use mechanisms. Marketing Science, 34(2), pp.218-234.
Bentley-Goode, K.A., Newton, N.J. and Thompson, A.M., 2017. Business strategy, internal control over financial reporting, and audit reporting quality. Auditing: A Journal of Practice & Theory, 36(4), pp.49-69.
Bettis, R.A., Ethiraj, S., Gambardella, A., Helfat, C. and Mitchell, W., 2016. Creating repeatable cumulative knowledge in strategic management: A call for a broad and deep conversation among authors, referees, and editors. Strategic Management Journal, 37(2), pp.257-261.
Campbell, A., Goold, M., Alexander, M. and Whitehead, J., 2014. Strategy for the corporate level: Where to invest, what to cut back and how to grow organisations with multiple divisions. John Wiley & Sons.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Hurley, N., 2017. Dirty fashion: How H and M, zara and marks and Spencer are buying viscose from highly polluting factories in Asia. Guardian (Sydney), (1786), p.12.
Karmanov, M.V., Korotkov, A.V., Gryzunova, N.V., Kiseleva, I.A. and Kuznetsov, V.I., 2016. The strategic analysis of industry-specific competition and environmental risks–an integrated approach. International Journal of Environmental and Science Education.
Kim, S.E. and Urpelainen, J., 2015. Rising regional powers meet the global leader: A strategic analysis of influence competition. International Political Science Review, 36(2), pp.214-234.
Kumaraswamy, P.R., 2017. Redefining ‘Strategic’Cooperation. Strategic Analysis, 41(4), pp.355-368.
Mellor, S., Hao, L. and Zhang, D., 2014. Additive manufacturing: A framework for implementation. International Journal of Production Economics, 149, pp.194-201.
Meredith, N.A., Quinn, C., Cate, D.M., Reilly, T.H., Volckens, J. and Henry, C.S., 2016. based analytical devices for environmental analysis. Analyst, 141(6), pp.1874-1887.
Meyer, G.D., Neck, H.M. and Meeks, M.D., 2017. The entrepreneurship?strategic management interface. Strategic entrepreneurship: Creating a new mindset, pp.17-44.
Moatti, V., Ren, C.R., Anand, J. and Dussauge, P., 2015. Disentangling the performance effects of efficiency and bargaining power in horizontal growth strategies: An empirical investigation in the global retail industry. Strategic Management Journal, 36(5), pp.745-757.
O’Sullivan, D., Evans, T., Manson, S., Metcalf, S., Ligmann-Zielinska, A. and Bone, C., 2016. Strategic directions for agent-based modeling: avoiding the YAAWN syndrome. Journal of land use science, 11(2), pp.177-187.
Papulova, Z. and Gazova, A., 2016. Role of Strategic Analysis in Strategic Decision-Making. Procedia Economics and Finance, 39, pp.571-579.
Podgórski, D., 2015. Measuring operational performance of OSH management system–A demonstration of AHP-based selection of leading key performance indicators. Safety science, 73, pp.146-166.
Purce, J., 2014. The impact of corporate strategy on human resource management. New Perspectives on Human Resource Management (Routledge Revivals), 67.
Rocha, C., Duclos, L.C., Veiga, C.P., Bischof-Dos-Santos, C. and Neves, N.A.F., 2016. The control mechanisms on the performance of the strategic initiatives management: analysis of critical sales process in a metallurgical business. International Business Management, 10(4), pp.357-369.
Wang, J., Cooke, F.L. and Lin, Z., 2016. Informal employment in China: recent development and human resource implications. Asia Pacific Journal of Human Resources, 54(3), pp.292-311.
Wu, X., Ramesh, M. and Howlett, M., 2015. Policy capacity: A conceptual framework for understanding policy competences and capabilities. Policy and Society, 34(3-4), pp.165-171.
