Marks and Spencer
Table of Contents
The aim of present report is to highlight the strategic marketing aspects for Marks and Spencer clothing business which has made mark for it with worldwide expansion into clothing business. In the present context marketing planning process for Marks and Spencer would be understood and formulated. Further with the present paper evaluation of the marketing planning process would be made so that changes in the marketing planning process can be done so as to improve the marketing planning process. Finally implementation plan for the clothing business of Marks and Spencer would be developed so that newly developed plan can be implemented to gain success in the marketing strategy for the organization.
Marks and Spencer is considered as one of the major retailers in UK according to market share with more than 3 million visitors visiting the store every day. Marks and Spencer is popular among its target group for supplying stylish clothing and home products. Marks and Spencer has its wide presence in UK with more than 600 stores and employing 75000 people in their stores. Marks and Spencer is still expanding its number of store not only in UK but worldwide so as to capture considerable market share for the clothing and home products. Marks and Spencer has highest market share for the women clothing in UK while it is one of the major player for the men & kids wear. Clothing and home ware business segment for Marks and Spencer accounts for more than 49% of the overall business for Marks and Spencer.
LO1 Understand the process of strategy planning
1.1 Explain strategic contexts and terminology- mission, vision, objectives, goals, core competencies
Mission statement can be defined as the statement of philosophy and quality representing organization’s thinking process. Mission statement of the organization sets out the boundaries within which business would be carried out. Mission statement frames the context within which organizational strategy is formed. In order to define the mission statement of an organization meeting is held between board of directors and other major stakeholders.
Vision statement of an organization gives the idealized view of world i.e. it highlights what an organization wants to be ideally and how the organization want to operate in the organizational environment.
Corporate objectives in the organizational environment are set which an organization want to achieve within the given timeframe set by the organization for achievement of the goals. Corporate objectives are known as the basic planning tool for the organization and are not subjective and can be measured (Johnson et al, 2001).
Goals are defined as desired result which organizations envision, plan and commit to achieve in organizational context. It is important for the organization to set deadline for the defined goals so that goals can be measured within the given timeframe.
Core competencies for an organization is central to the business and consist of three specific factors which are not easily imitated by competitors, can be extended for many products & markets and core competency should be able to add value to products & services offered by organization.
1.2 Review the issues involved in strategic planning
Strategic planning can be broadly known as a strategic fit maintained by the organization in their organizational resources and objectives keeping in mind changing business opportunities present in the market. Strategic planning process demands thinking ahead of the market elements instead of just reacting to the environmental change. Some of the factors which create issues in strategic planning process include fulfilling needs of customers, maintaining competitive advantage and future direction of competition.
The major role of strategic planning process is to fulfill customer needs as customers are central focus to any organization. But in present scenario customer needs are quite dynamic in nature and ever changing which create hindrance in the strategic planning process as according to customer need change there is need to change organizational strategic planning process which posses challenge. Competitive advantage helps the organization to develop a niche position for itself in the market with the help of which it would be able to achieve top position in market (Sadler, 2003). The strategic planning process should emphasis highly on developing competitive advantage for the organization due to which objectives set by the organization at the start of strategic planning process gets faded. Strategic planning process is more concerned about the future of the organization improving on the past and present performance. Deciding future direction is a tedious task to be handled through strategic planning process.
While some of the other factors such as future role of owner, ownership structure and location of the business are some of the elements which present age strategic planned overlook and it becomes difficult for them to manage their planning process in lack of these elements. Role of owner would be to look at the strategic aspects for the organization while smaller or day to day activities needs to be handled by someone with greater expertise in this area. Location of the business is an important aspect and it has been observed that location of the business is normally around the location of the owner. But strategic planning process should look into the matter and try to expand business irrespective of particular geographic location so that higher market share can be gained. Ownership structure defines financial needs of the organization and with the expansion in business it should be ensured that more and more equity finance is given by making shareholders owners for the business while major owner holding major stake in overall business.
1.3 Explain different planning techniques that facilitate strategy formulation. You may consider BCG growth- share matrix, directional policy matrices, SPACE, MIS
Strategic planning techniques makes best possible usage of the quantitative data collected through several resources in organizational environment so as to formulate strategy which helps in decision making process as well. Some of the famous planning techniques include growth share matrix, strategic position & active evaluation and directional policy matrices (DPM) etc.
Growth share matrix is a useful technique for strategic planning process which helps in positioning the products according to lifecycle of a particular product. Figure 1 below depicts the growth share matrix.
Figure 1: Growth share matrix
Growth share matrix evaluates a particular product basis on the two important factors which are market growth rate and relative market share of the product in comparison to its competitors. An organization with multiple products may have its different products as per the matrix shown above where in each product has different cash requirement and future prospects (Wittmann & Reuter, 2008). A cash cow product would be one where organization has high market share but its market growth is low. Such products would be generating lot of cash for the organization but their future prospects would be declining. Star products would be having high market share and high growth rate due to which such products generate huge cash and their future prospects are even bright due to which these products should be emphasized more by the organization. Question mark products have high growth prospects but their relative market share would be low, an organization should devise special strategy in order to deal product of this category so that their market share can be enhanced significantly. Dogs are the products which have low market share and low growth prospects due to which organization should strive to exit from such products.
Strategic positioning and action evaluation (SPACE) matrix consider four factors basis on which an organization is given competitive positioning. These four factors include two internal as well as two external factors basis on which comparison is made. Two internal factors are financial strength and competitive advantage while two external factors are industry strength and environmental stability.
Figure 2: Showing SPACE matrix
The aim of SPACE matrix is to evaluate an organization basis on these four parameters and devise a strategy among the four shown in above figure i.e. conservative, aggressive, defensive and competitive (Marchington & Wilkinson, 2006).
Directional policy matrix (DPM) is a matrix which helps an organization to devise organizational goals and strategy in order to attain these goals. DPM provides an easy framework to evaluate performance for each product and based on the performance of each product market decision is made which particular product market needs to be maintained, build, harvest or divested by the organization.
LO2 Be able to formulate a new strategy
2.1 Produce an organizational audit for chosen organization. You should consider using SWOT analysis, product positions, and value chain analysis to conduct the audit
An organization would be said to achieve its goal when the business can attain customer demand successfully and stakeholders’ expectations can be met. In order to carry out audit for Marks and Spencer there are three important factors which would be considered and these are value chain analysis, SWOT analysis and product positioning for the business (Poirier & McCollum, 2006).
SWOT Analysis for Marks and Spencer
|§ Marks and Spencer is one of the most reputed brand in UK since 1884 providing quality products|
§ Marks and Spencer is a leading footwear and clothing provider
§ M&S deals into wide range of goods such as clothing, footwear and food products
§ M&S has made effective use of online medium to grow its market share in UK
§ M&S has good expansion in UK as well as abroad where in organization has established more than 700 stores domestically and 300 stores internationally and total of 76000 employees are working in M&S
§ M&S makes use of the latest technology in order to develop its product portfolio and attract new customers
§ M&S is one of the leading retailer making huge investment towards environmental sustainability
|§ Mark and Spencer has low market share among young consumer segment|
§ M&S has low adaptability for the changing fashion trends prevailing in the market
§ M&S has failed miserably to address its economic policies leading to financial losses for the organization
§ Perceived image for the M&S is for matured consumer segment which is not being changed by the marketing strategy
|§ There is high potential for online business in UK retail market|
§ Recession in the economy around the world has presented opportunity in for M&S to revise its marketing strategy to gain significant market share
§ M&S has started its expansion into developing countries such as India, China and Brazil where firm has high chances of growth
|§ Pricing strategy adopted by competitors such as Asda and Primark are giving stiff competition to M&S|
§ There is threat to operating margin in business through increasing transportation cost
§ Financial loss is major threat for the organization from international expansions as there is very low degree of success attained by organization in their international expansion efforts
Porter’s value chain analysis for M&S
- Mark and Spencer has outsourced all its inbound logistics activities where in vendors are responsible to transport all their shipment to M&S stores
- M&S invest heavily in order to improve operational strength of the organization. Company has more than 76000 employees which are trained and developed in regular basis so that operational strength can be maintained in organization
- Outbound logistic is one of the weakness for the organization where M&S does not have any specific policy in place and there is requirement to emphasize in coming time
- M&S makes best possible use of the print media advertisement as there are always newspaper and magazine advertisement given for the newly launched products and sales season for the organization
- M&S pays high attention towards service factor where in its huge employee base in all 700 stores are being trained to deliver best possible customer service (Leopold et al, 2009)
- Flexibility and integrity are the two basic elements of the procurement policy for M&S. Company has list of vendors through which procurement is made and these vendors are assessed in timely manner so that improvement can be done through cost saving
- Despite of having a large employee base M&S is successfully managing industry wide lowest employee turnover of just 14% and more than 46% of the employees in M&S are working since more than five years
- Infrastructure is one of the key strength for M&S as organization has developed 700 store domestically and 300 store internationally with best infrastructure
- M&S deploy latest technology across their stores and technology deployed by organization is environment friendly (Johnson et al, 2011)
Product positioning for the products of Marks and Spencer can be given as under:
- Cash cow: Night wears and under wear products of M&S can be categorized as cash cow due to high market share but low requirement of cash for these products.
- Stars: Men and women outwear products sold by M&S can be categorized as stars due to high market share and industry growth for these products
- Dogs: Children clothing products can be categorized under dogs due to poor performance of the products
2.2 Carry out an environment audit for chosen organization. You should use PESTEL or STEEP and Porter’s five force analysis for the environmental audit.
PESTEL analysis for UK clothing industry
|Political||§ In year 2010 coalition government under leadership of David Cameron came into power and to combat recession massive job cut happened|
§ Industry is negotiating free trade with some of the fast developing countries such as India, China and Brazil
§ Increasing tuition fee and decrease in number of students taking admission in UK would affect younger consumer segment for clothing (Assen et al, 2009)
|Economical||§ Industry got impacted by recession in year 2009 which impacted consumer spending and it reduced by 4.4%|
§ UK was among the countries where economy was less dependent on export hence lower impact was felt
§ Lowering down in value of sterling gave competitive edge for exporters in industry
§ Increase in fuel prices and food items have impacted overall spending power of consumers
|Social||§ UK has mix of various race, ethnic and religion|
§ Ageing population in UK has affected clothing industry adversely
§ Changing consumer trend demands for cheap clothing due to significant cut in their spending power
|Technological||§ Online shopping has become heart to clothing industry|
§ With technology coming into picture clothing industry is becoming even more dynamic
§ Organizations are managing their operations through IT systems which are secure
§ Online business model has potential to reach the location where company can’t setup their stores
Porter’s five force analysis for M&S
Threat of new entrants
Change in business model from physical stores to online retailing has allowed small players to enter into market. But due to existence of well known players and lower margins in clothing industry it would be really difficult for new entrants to gain market share. Hence threat of new entrant is low (Thompson, 2001).
Bargaining power of buyers:
M&S has their sales strategy which focuses buyers hence they are the ultimate goal for any business. Buyers in retail industry pose high bargaining power due to existence of numerous options and low cost of switching.
Threat of substitute products
Clothing is basic necessity for human being and this would improve in coming time but there is no threat for the substitute product.
Bargaining power of supplier
There are several suppliers for textile industry especially developing countries such as Bangladesh, India, Pakistan and Cambodia where textile revenue forms a major part of the national income. Hence availability of number of supplier reduces supplier power.
Rivalry among existing competitors
There is stiff competition in clothing market in UK where in players tend to gain higher market share through their sales or pricing strategy. With increasing consumer demand there is potential for further increase in competition.
2.3 Explain the significance of stakeholder analysis for your chosen organization
Stakeholders in M&S includes people having their relation with the organization in form of share owners, employee, vendors or suppliers, consumers, government agencies, financial institutions and society. Shareholders are primary stakeholders and their major goal would be to get good return for their investments. Employees in M&S have interest to build a career through their job position hold by them. Suppliers are having interest in organization to enhance their revenue and to ensure long term association. Consumer’s major interest would be to get quality goods for which M&S is known for. Government agencies would expect M&S to confine it under policies and regulations as framed by government (Lynch, 2009). Financial institutions would be interested to secure their investment and timely repayment. Society would expect M&S to take care of environment factors and to payback society around them. While formulating strategy it is important to understand amount of pressure or reaction which stakeholders would made so that while making decision its consequences can be properly understood. Hence stakeholder analysis would be important to understand potential impact of any strategic decision made by the organization.
LO3 Understand approaches to strategy evaluation and selection
3.1 Analyze possible alternative strategies relating to substantive growth, limited growth or retrenchment for your chosen organization.
For M&S substantive growth can be made through two major factors which are mergers and acquisitions. M&S can go for merger as their major substantive strategy due to market strength of M&S in UK and even at international front. Acquisition can be other option for substantive growth for M&S due to increasing market share and competitive strength. Joint venture can be called as limited growth option for M&S as ownership would be common for the two organization undergoing joint venture. But competitive advantage in joint venture would be narrow and looking at the brand positioning and market strength for M&S it is not advisable to go for joint venture in any of the markets (Thompson, 2001). Retrenchment can be known as remedial strategy and needs to be adopted in case of financial losses, inefficiencies, fierce competition and market or economic crisis situation. At present M&S does not faces any such situation but in case retrenchment is needed for M&S there can be three strategies which are cost reduction, revenue enhancement and asset reduction strategy.
3.2 Select an appropriate future strategy for chosen organization
Human resource for M&S helps in order to attain competitive advantages which are customer services for the organization. But it is important that M&S develop and enhance skill set for their huge employee base in order to attain imitable customer service. It is recommended that organization should adopt interactive strategy. The major reason behind recommending interactive strategy for M&S is building competitive advantage looking at the competitive strength of other players prevailing in industry. M&S should focus itself towards interactive pricing, cooperative strategy, interactive strategy in hyper competition environment, game theory and quality strategy (Wilson and Gilligan, 2005). Interactive strategy in hyper competition advocates for managing interaction with industry players at the time of hyper competition in market place. Interactive pricing and quality strategy demands for lower price and best quality and cooperative strategy require M&S to operate in resonance with major industry players so that it can attain imitable competitive advantage. Game theory would require M&S to analyze competitor move for adopting strategic decision making approach. Thus interactive strategy is recommended for M&S as their future strategic approach for gaining competitive advantage.
LO4 Understand how to implement a chosen strategy
4.1 Compare the roles and responsibilities for strategy implementation for your chosen organization
For M&S there are three major roles for strategy implementation and these are developing framework for future strategy, alignment of organizational resources for delivering future strategy and finally making changes required for the implementation of strategy planned. M&S need to clearly communicate its future strategic aspect to its various stakeholders so that efforts made by every stakeholder are in sync with the strategy recommended by the organization (Hitt et al, 2010). In second role organization should align all its resources towards attaining defined future strategy so that aligned efforts can be made. Stakeholders should be encouraged to follow communicated strategy and goals should be kept in mind (Sadler, 2003). Finally leaders in organization should inculcate changes so that strategy formulated can be implemented in organizational context. These responsibilities in M&S should be taken care by top management, middle management and outside stakeholders. Middle management has role to implement strategy formulated by upper management, upper management has key responsibility areas such as framing strategy, interpretation and adjustment for strategic response. External stakeholders such as consultant help in decision making and formulation of strategy (Bryson, 2011).
4.2 Evaluate resource requirements to implement a new strategy for your chosen organization
Resource requirement for M&S at the time of strategy implementation would be vital and there can be significant changes in resource requirement depending from one organization to another. Requirement of resources in M&S can be determined through two factors which are nature of resources and organizational environment (Coulter, 2001). As interactive strategy has been recommended for M&S so there are three major resources required by M&S which are physical resources, manpower and start up cost (for entering new markets). Physical resources required by M&S include finance, production and marketing resources for the organization. It is important for M&S to allocate more resources on quality improvement as interactive strategy makes quality improvement as its major agenda. People resource would be vital to develop competitive advantage through customer service and skill development should happen. Initial set up cost should be invested into new market after proper analysis.
4.3 Discuss targets and timescales for achievement in your chosen organization to monitor a recommended future strategy
M&S should adopt three major monitoring strategies in organizational context which are acceptability, feasibility and suitability. Suitability parameter for strategy implementation in M&S assess whether or not strategy implementation address key issues (Johnson et al, 2011). Acceptability measure for the strategy monitoring in M&S evaluates meeting expectations for stakeholders through strategic approach. Feasibility measure assess whether or not recommended strategy can be implemented in practical aspects. Interactive strategy adopted for M&S can be mainly assessed through suitability criteria where in it would be monitored whether or not interactive strategy addresses the key issues for M&S. Under suitability key opportunities and threats for M&S should be addressed properly (Courtney et al, 2009). Acceptability criteria at M&S should evaluate the risk and return composition for the organization while feasibility measure can be adopted to understand financial targets for M&S.
From the current paper strategy aspects for an organization along with its importance were understood. Process of strategic planning was explored in order to understand how strategic planning takes place in the organization. Further strategy formulation and technique requirement for the formulation in special context to M&S were addressed. Monitoring and evaluation of strategy for M&S was explored and interactive strategy was recommended for M&S along with its implementation technique.
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