Marks and Spencer: Internal and External Analysis

M&S is a great brand. It is one of the UK’s leading retailers. The company operates in about 41 countries worldwide with UK as its primary market and employs about 76,000 people. M&S deals in clothing, food, home, financial services and online services.

To develop the suitable business strategy for its growth particularly focusing on Plan “A”, there have been discussed M&S’ internal & external environments. Strategic impact of external environment on M&S has also been discussed. Major challenges facing M&S and competitive advantages of M&S have been discussed. M&S is a market leader so that market leader strategy and suggestions have been given.

INTRODUCTION

The study encompasses a report about the M&S, to develop the strategy for its growth focusing on Plan “A”. Marks & Spencer launched Plan A in January 2007, setting out 100 commitments to achieve in 5 years. The discussion has been described in detail about the core analysis of M&S’ internal and external environment, SWOT analysis of M&S has been included. Debenhams has been selected closest competitor of M&S because they have a comparable product base. Strengths & Weaknesses of DEB have been described.

It also consists upon the current economic obstacles and the remedies to remove these obstacles.

For this reason, books, newspapers, magazines, and websites have been consulted.

LITERATURE REVIEW

REFERENCES & SOURCES:

BOOKS/NEWS PAPERS/JOURNALS,MAGAZINES & DIGESTS

BOOKS:

01. Fundamentals of Marketing by William J. Stanton, Michael J.

Etzel, Bruce J. Walker, 10th Edition, Published and Printed in

The United States of America by McGraw-Hill, Inc.

02. The New Encyclopaedia Britannica, 15th Edition, Volume 7,

Published by Encyclopaedia Britannica, Inc. United States of

America. British Library.

NEWS PAPERS:

The Guardian www.guardian.co.uk/

JOURNALS,MAGAZINES & DIGEST

European Retail Digest | The University of Manchester www.readinglists.manchester.ac.uk/

Web Sites:

web.ebscohost.com (British Library)

www.marksandspencer.com/

http://corporate.marksandspencer.com/aboutus/company_overview

http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=15053580&site=ehost-live

http://www.guardian.co.uk/business/marksspencer?INTCMP=SRCH

http://plana.marksandspencer.com/media/pdf/planA-2010.pdf

http://corporate.marksandspencer.com/mscareers/opportunities/shared_services_admin/ssa_hr

www.datamonitor.com

http://www.businessteacher.org.uk/free-marketing-essays/marketing-retail-assignment/

http://www.businessteacher.org.uk/free-marketing-essays/marketing-retail-assignment/

Brief History of Marks & Spencer:

M&S is a major retailer of clothing. It is headquartered in London.

M&S started its business in 1884 as a stall in an open market in Leeds. Then known as Marks’ Penny Bazaar, it was the household goods, toy, and sheet-music business of Michael Marks, a Jewish refugee from Poland. In 1894 he started partnership with Thomas Spencer. Marks’ son Simon transformed the business from outdoor stalls to indoor shops. He purchased Brookes Brothers, the oldest U.S. clothing retailer in 1988 but sold it in 2001. (1)

M&S products, including food, clothing and household goods have been selling under the St. Michael brand name in most parts of the world.(2)

The New Encyclopaedia Britannica, 15th Edition, Volume 7, Published by, Encyclopaedia Britannica, Inc. Printed in The United States of America. (British Library).

Aldridge, Roger, Autumn1995, ‘Growth Strategies – A Case Study in Internationalisation’. [online]. European Retail Digest, Issue 8, p25-32, Available from: (http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=15053580&site=ehost-live), [Accessed 15 March 2011 03:12 PM] (British Library).

Marks & Spencer – Overview:

M&S is one of the UK’s leading retailers. M&S offer stylish, high quality, great value clothing, home products and best quality foods. There are over 75,000 people working at M&S in the UK and abroad, and over 600 UK stores. M&S is expanding its business globally.

M&S is the number one provider of womenswear in the UK, and is rapidly growing market share in menswear, kids wear, home, and online business.

(Company Overview) Available from: (http://corporate.marksandspencer.com/aboutus/company_overview)

[Accessed 11 April 2011 at 4:24 PM]

Stock Chart for M&S, March 2011-April 2011

One Month Chart for MARKS & SP.

http://www.guardian.co.uk/business/marksspencer?INTCMP=SRCH

[Accessed 12 April 2011 at 03:09 AM] [online]

Something About Plan “A”

Marks & Spencer launched Plan A in January 2007, with aim to 100 commitments to achieve in 5 years. Marks & Spencer has now extended Plan A to 180 commitments to achieve by 2015. The goal of it to become the world’s number one retailer. M&S has now achieved 62 of its 100 Plan A commitments set in 2007. (1)

Marks & Spencer’s 7th annual report. Published in June 2010.

http://plana.marksandspencer.com/media/pdf/planA-2010.pdf

(Consulted on 20/03/2011)

Analysis of M&S’s Internal Environment:

M&S is the market leader in clothing due its range and quality. Leadership in clothing converted M&S into market leader in department stores.

In this section, the discussion would be on the following key points:

Financial Resources

Human Resources

Company Image

Learning and development

Location

Production Facilities (1)

Strengths & Weaknesses

Financial Resources:

The company earned £9,536.6 million profit during the financial year

ended April 2010. (DATAMONITOR. 2010. Marks and Spencer Group plc. Available from: www.datamonitor.com

[Accessed 22 March 2011].

Human Resources:

In this area M&S has a number of teams, including Payroll, Pensions, Learning and HR Administration. M&S also has a general recruitment team who manage all store and head office recruitment.

(Human Resources. http://corporate.marksandspencer.com/mscareers/opportunities/shared_services_admin/ssa_hr

[Accessed 09 April 2011 at 02:28 AM] ).

William J. Stanton, Michael J. Etzel, Bruce J. Walker

Fundamentals of Marketing 10th edition, International edition (1994), Page # 54, McGraw-Hill, Inc. United States of America.

Company Image:

M&S is a top company for responsible business. Marks & Spencer has been recognised as the top company in the UK for responsible business. M&S was named Company of the Year 2006, at Business in the Community’s Awards

for Excellence. (http://corporate.marksandspencer.com/documents/press_releases/pr/businessinthecommunity.pdf)

[Accessed 09 April 2011 at 02:40 AM]

Learning & Development:

M&S provide in-depth training and performance coaching to the employees for their development.

(http://corporate.marksandspencer.com/mscareers/learning_development) [Accessed 09 April 2011]

Location:

M&S has over 600 stores throughout the UK. M&S’s largest store is located at Marble Arch on London’s Oxford Street.

http://corporate.marksandspencer.com/aboutus/where/uk_stores [Accessed 09 April 2011]

Production Facilities:

M&S is the world’s first retailer who is using palm oil in its products. 

This palm oil has been used in almost 1,000 M&S food, beauty and home products each year. 

(http://corporate.marksandspencer.com/investors/press_releases/sustainablepalmoil)

[Accessed 09 April 2011 at 03:48 AM]

Strengths & Weaknesses of M&S:

Strengths of M&S:

M&S has a strong market position in the clothing segment. M&S leads the market in womenswear, lingerie and menswear and have an expanding childrenswear business. M&S has been very successful in capturing its customer’s segment through its different product offer, in-store service and garment quality. Some other key points are:

Reputation/Brand

Market position

Quality products

Online shopping

Weaknesses of M&S:

The average shelf life for M&S products is 3 to 5 days, compared with supermarket dry shelf products with 3 to 4 weeks shelf life. It is a high price for consumers. Cost-conscious people are much concerned about the price. M&S stores have competitive disadvantages as compared to Tesco. Tesco stores have been carefully designed with good store layouts. M&S stores have not been carefully designed with good layout. This is a clear competitive disadvantage compared to Tesco. (1)

Some other key points are:

Slow to change

Lack of newness

Clothing: does not appeal to younger women’s taste

Analysis of M&S’s External Environment:

In this section the discussion would be on following key points:

There are two levels of external environment:

External Macro environment

External Micro environment

Marks & Spencer Group, PLC SWOT Analysis; Nov2010, p1-13, ‘DATAMONITOR: Marks and Spencer Group plc’. Marks & Spencer Group Company Report, Available from: (http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=58451839&site=ehost-live), [Accessed 15 March 2011 02:55 PM], British Library.

In external macro environment, key points would be:

People

Economic Conditions

Competitor’s Analysis

Social and cultural Aspects

Political and legal Aspects

Technology

In external micro environment, key points would be:

The market

Suppliers

Marketing Intermediaries (1)

And Opportunities & Threats.

External Macro Environment:

People:

The first external environmental factor is population because the people make up the markets. We know that M&S is trying to fulfill the ‘need, want and demand’ of its customers by their age groups, marital status, gents, ladies, kids, old aged people, and brand & quality conscious people and to the higher number of ‘home shopping’ or internet/online shopping.

Economic Conditions:

Economic conditions or changes effect the total market size. M&S has strong customer segment even in this challenging economic environment. M&S has increased the share of the clothing market.

(1) William J. Stanton, Michael J. Etzel, Bruce J. Walker

Fundamentals of Marketing 10th edition, International edition (1994), Page # 42,53,54 , McGraw-Hill, Inc. United States of America.

Competitor’s Analysis

Competitors of M&S are many. Because M&S sells a lot of different products. There is long list of its competitors, like, BHS, Debenhams, Derry’s, House of Fraser, Sainsbury, Tesco, and Morrison’s. But M&S is best known for its clothes. So that I have selected Debenhams closest competitor of M&S. This selection has been made because they have a comparable product base.

Strengths of Debenhams:

Reputation

Good product mix and brand selection

Latest designers – better up-to-date with current trends.

Attractive Advertisement.

Weaknesses of Debenhams:

Internationally, they’re not well known as compared with M&S. They’re competing mainly in the domestic market. (1)

Social and Cultural Aspects:

Life-styles, social values, beliefs have significant marketing implications and M&S has capability to cope with change.

Political & Legal Aspects:

Every company is influenced by the political and legal processes. These forces, such as, monetary and fiscal policies, social legislation and regulation, and governmental relationships with industries.

Technology:

Technological changes, change the business style.

http://www.businessteacher.org.uk/free-marketing-essays/marketing-retail-assignment/, [Accessed 11 April 2011].

————————————————————————————-

External Micro Environment:

The Market, Suppliers and Marketing Intermediaries are also effect the organization.

Opportunities & Threats of M&S:

Opportunities:

Expansion abroad (India and China), and investment in other countries. (1)

Threats:

Due to strong competition M&S losses market share, especially in food sector. (http://www.businessteacher.org.uk/free-marketing-essays/marketing-retail-assignment/), [Accessed 11 April 2011, at 11:52 PM]

Major Challenges Facing the M&S:

M&S has made progress, but still face some challenges to meet the original

2012 targets.

Government has changed the rules for renewable electricity so M&S is working in partnership with BRE/Pure to meet its commitments.

Marks & Spencer Group, PLC SWOT Analysis; Nov2010, p1-13, ‘DATAMONITOR: Marks and Spencer Group plc’. Marks & Spencer Group Company Report, Available from: (http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=58451839&site=ehost-live), [Accessed 15 March 2011], British Library.

M&S has a wide range of food; and sales of food have continued to decline in the current economic climate. (1)

External Environmental’ Strategic Impact on M&S:

The retail industry is generally a very dynamic, fast changing sector. Companies have to be keeping themselves to aware about the market, to know any new trend and they have to keep up with the customer’s increasing expectations and changing tastes.

Nowadays, it is becoming more and more difficult and challenging to keep the customer satisfied and loyal – customers’ preferences change quickly.

Above mentioned analysis of external environment of M&S has a strong effect on it. M&S is among the top 6 UK retailers. External issues have the strategic impact on M&S as:

Fast changing Market & Economic conditions.

Consumers’ change of taste.

Marks & Spencer’s 7th annual report. Published in June 2010.

http://plana.marksandspencer.com/media/pdf/planA-2010.pdf

[Accessed 12 April 2011 at 3:33 PM]

Slow economy.

Increased competition from locally and from foreign companies. (1)

Competitive Advantages of M&S and How M&S will achieve it:

M&S is the market leader both in clothing and department stores. Reputation and brand of M&S is globally recognised. Internationally, DEB is not well known as compared with M&S. DEB is competing mainly in the domestic market.

M&S regularly checks the salaries against other retailers to make sure that it is competitive. For this reason M&S continuously reviews the basic pay every year. M&S also offer extra performance rewards to recognise individual achievement. (2)

M&S is continuously offering these rewards & benefits:

Competitive Salary, Bonus Scheme, Holidays, Employee discount, Pension Plan, Additional benefits (like: discounted gym membership, savings on tickets for amusement parks, joining fees for health clubs and reductions at a variety of UK holiday resorts.). (3)

(1). http://www.businessteacher.org.uk/free-marketing-essays/marketing-retail-assignment/, [Accessed 12 April 2011 at 5:00PM].

(2):

(http://corporate.marksandspencer.com/mscareers/rewards_benefits), [Accessed 12 April 2011 at 11:43 PM].

(3) (http://corporate.marksandspencer.com/mscareers/opportunities/trainee_management_scheme/trainee_benefits_rewards), [Accessed 13 April 2011 at 12:27 AM].

NEED OF STRATEGY FOR THE GROWTH OF M&S

Need of developing the strategy for the growth of M&S focusing on Plan “A” is to make moves, plans and strategies for expanding the market or enlarging the share of existing market and keeping them secure.

It helps an organization better cope with the changes that occur in market place from time to time.

M&S is a market leader in retail industry and under mentioned are the suitable business strategies for the M&S.

Market Leader Strategy:

The company has the largest market share in the relevant products market. The market leader should look for new users, new uses, and more usage of its products. M&S must defend its market share & market segment.

SUGGESTIONS:

Distinctive Competence:

M&S must determine its distinctive competence over its competitors. So that it can made strengths over them. Distinctive competence may exist in the form of:

Low cost of production competence.

Mass production competence.

Access to cheap sources of raw material.

Product quality & variety.

Financial & Technological competence.

Capability to cope with change.

An organization’s capability to cope with change is a very good & strong point. M&S must continue with the market changes with better marketing policies and effective functional programmes.

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