Introduction
In order to succeed in the ever changing economic business environment, it is important for every company to carry out an analysis on its business environment and take into considerations factors such as the company’s micro and macro environment, its corporate culture and stakeholder’s management strategies. Doing so is important, as not only does it enable a company to gain competitive advantage in the market place, but it also enables it to have an effective strategic management plan which is in line with its stakeholders. An instance of a company which has managed to stay on top of its game in the competitive market is Marks and Spencer one of UK’s largest retail company, (Armstrong, 2006)
However, despite being on top of its game, the company has faced numerous challenges such as double-flip economic recession which had a great impact on consumer’s spending patterns due to their disposable incomes. Nevertheless, despite all these challenges, Marks $ Spencer has managed to retain a strong position and even witnessed an increased food sale of 3.9 percent and a £564.3 million profit before tax in the year 2012/2013. Consequently, in order to understand how the company has managed to stay on top of its game, it is important to carry out an analysis on Marks & Spencer competitive positioning in the UK market. In order to achieve this company’s micro and macro business environment, its corporate culture and stakeholders’ management strategies will be taken into consideration, (Marks and spencer,2013)
Marks & Spencer’s micro and macro environment
Macro environment analysis
Carrying out a macro (external) business environment is important as it comprises all the factors which an organization needs so as to compete in its industry. They are uncontrollable external factors which influence the manner in which the company makes its decisions, and consequently affects its strategies and performance. In order to do so, two strategic tools, SWOT analysis and PESTEL analysis will be used so as to aid in the analysis.
SWOT
This is a strategic business tool that is used in identifying an organization’s internal and external factors which are important in helping it meet its objectives. It identifies a company’s Strength and weakness (internal organizational factors) and Opportunities and Threats (external environmental factors) that are affecting the company. It will therefore help in analyzing and understanding Marks & Spencer’s current business situation and where improvements are needed to be made, (Hambrick &. Fredrickson, 2005)
Strength
• Marks & Spencer offers a wide range of products such as home, wine and furniture products, financial products, clothing and foods which creates for it a large consumer base.
• By sales, it is the largest retailer in the UK which means it has many consumers
• It has a strong cash flow position which is effective for its capital and important for running the large company
• It is one of the leaders in the delivery of premium quality food retailer attracting for itself many consumers because of its products
• It has a brand awareness which means that it has a well established brand loyalty in the UK market.
Opportunities
• There are many emerging new products in the market which means an increased and new set of consumer
• Alliances & Innovations with other companies can enable it to widen its presence in the market
• Customers in the UK retail market are nowadays changing to a more value for cash related products
• The company is continuing to develop and expand its overseas supply chain
Weaknesses
• Many consumers usually have the perception that the company offers high priced products which makes them not to try out their stuff
• Consumers are disinterested in their products
• There are numerous environmental issues which are facing the company like pollution
• There are emerging substitute products and technologies in the market
Threats
• There are new and existing competitors in the market which are a threat to Marks & Spencer
• There is a volatility of prices of raw products in the market
• New and emerging legislations that are being imposed in the country
• Economic recession being witnessed in the UK
• Emerging low cost retailers in the industry that are preferred to them
• There is extremely high competition in the retail industry
PESTEL
These are external environmental factors and include Political, environmental, social, technological, economic and legal factors affecting Marks and Spencer in executing its strategies. This tool highlights the factor which is important and what an organization needs so as to compete in its industry, (Clements & Hendry, 2002).
Political
Free trade agreements and European integration has opened up new markets for the UK and other organizations and countries to invest in Europe. This has greatly affected M& A and has caused it to fight hard so as to maintain its position and market share with innovative and aggressive strategies. In general, any trade can be performed in The UK as long as it does not affect the country’s existing laws, public orders and policy. However, for M& A political factors which greatly affect it are those that deal with industrial relationships and labor laws. It affects the company’s development efforts through labor law infringements in both its international initiatives and local operations
Economic
The retail sector in the UK is quite prawn to economic recessions and it is also very sensitive to interest rate changes. The economic recession of 2009 set the country’s economy struggling for survival but it has managed to get back on its feet again. Therefore, consumers are nowadays optimistic of the economy and the retail industry and Marks and Spencer operations are booming. Nevertheless, UK is the hub of ecommerce in Europe which means that Customers are not limited to local retailers’ only but also to external tourists which creates a diverse retail business and base trends.
Social
Consumer’s tastes, preferences and lifestyle changes have presented both threats and opportunities for the UK retail industry. Consumers in the UK have the tendency of being loyal to one brand and the quality of products. However, this easily changes with a competitive pricing strategy from other competitors. In addition to that, consumers have a preference for trendy styles as opposed to classics which presents a threat to M&A in regaining a big market share for its consumers. This means that consumers in UK’s retail industry usually place a high value on their spent money, (Porter, 2008).
Technology
The retail industry in UK has witnessed radical technological changes. Changes as such include the use of internet as a basis of online shopping store which widens the use of ecommerce in the industry. In addition to that, paperless operations are being used and IT systems have offered a basis for this operation. Online marketing is also another technological aspect being used by Marks and spencer and other retail companies in the market as a basis for competitive advantage in the market place.
Environmental
Most companies nowadays opt for environmental friendly and renewable resources in their production which has posed a great challenge for many companies to maintain their market share. Consequently, this has caused Marks & Spencer to place great concern on the use of environmental friendly fabric and raw materials.
Legal
Legal regulations and laws are being enacted and companies are closely monitored in the UK retail industry. Bodies as such include National Legislation for health and safety which looks out for the rights of the consumers and the production of renewable and natural resources when making clothes.
Micro environmental analysis on Marks & Spencer
The strategic tool and framework which will be used in making analysis on Marks & Spencer is porter’s five forces. This tool examines and determines the level of profitability and competition for a company, thus determining the attractiveness of a market and the level of competition intensity, in this case Marks and Spencer, (Hambrick &.Fredrickson, 2005). The first factor is the threat of new entrants in the retail industry. Despite that the retail environment is very attractive; there is some high level of difficulty in penetrating it. This can be attributed to the strong monoliths in the market and strong and branded companies like Marks & Spencer which have a strong background in the market for a long time make it hard for new companies to survive. In addition to that, there are significant barriers to entry in the market like daily changing consumer expectations and high capital expenditure which make it hard for new companies to enter the market and survive. However, the rise of low cost manufactures in the market is posing as a significant threat to companies in the industry like Marks & Spencer. In addition to that, there exists opportunities for low economy and major competitors like ASDA and Top Shop are considering the introduction of low cost home products in their markets
Threat of substitute products in the industry is very high. This can be attributed to the fact that there are numerous retailers in both food sector and clothing sector in the industry and Marks and Spencer is greatly concerned about this.
Threats of bargaining power of consumers on the other hand is strong not only for Marks & Spencer only but also for the entire retail industry. This means that the industry has a large number of alternative suppliers in the industry consequently, which causes the industry to have a strong competition rivalry which is another porter’s five factor analysis. Competition is thus high as there is little or no product differentiation in the industry. The threat of bargaining power of supplier is low because there are many suppliers in the market which means that a supplier can be easily replaced due to many alternatives and availability of raw materials by Marks & Spencer and other companies in the retail industry, (Porter, 2008)
The corporate culture and structure theory
There are different definitions of organizational culture and corporate culture differs widely in different organizations. Nevertheless, corporate culture can be defined as patterns of behaviors and mindsets which are shared by people in the same company. Consequently, a corporate’s culture not only defines what is done in an organization, but also why it is done in the organization. Marks & Spencer’s corporate’s culture is a results of the organizations long terms activities and thus an aggregate of subcultures which have become as a result of the company’s response to challenges that it has faced over time which makes corporate culture complex and multifaceted. Understanding the type of corporate culture used by an organization is important as not only does it help in understanding how and why managerial reforms can have an effect between and within the organization, (Schein, 2004).
There are different types of corporate culture which can be adopted in an organization but it is possible for a company to adopt multiple corporate strategies like in the case of Marks & Spencer. Examples of corporate culture include the internal process model which focuses on internal business environment and information and communication management are used so as to attain control and stability in the company. Open systems model on the other hand, focuses on the external business environment where adaptability and readiness are used so as to attain external support, resource acquisition and growth in the company. The rational goal model focuses on control and external business environment where goal setting and planning are used so as to attain efficiency and productivity. Human relations model on the other hand makes use of internal and company’s flexibility where broader development and training of human resource are done so as to attain employee morale and cohesion and as employees are part of its corporate culture, therefore, it is important to know how to manage them effectively, (Bass O’Donovan, 2006).
There are many theories which explain how an organization is structured. Some of them include the scientific management approach which has its basis on work planning so as to attain simplification, specialization, standardization and efficiency. This theoretical approach increases productivity through mutual trust between employees and management. The bureaucratic approach by Weber on the other hand usually considers an organization as being part of the society and is based on democracy, rationality, stability and predictability, specialization and structure as the main principles. Administrative theory has its basis on the management principles and considers management as planning, organizing, leadership and controlling organizational functions. The system approach sees an organization as a system that has several mutually dependent and inter-related sub systems and in its case companies have components which link its goals and processes. The socio-technical approach sees an organization as being composed of technical, social and environmental systems. The situational or contingency theory sees that companies are in a relation with the environment and requires these diverse environments so as to survive, (Armstrong. 2006).
An organization’s structure usually defines how activities are managed and are run in the company like task supervision, coordination and allocation so as to attain the goals and objectives in the company. Therefore, this means that an organization is usually structured in accordance to its objectives. Nevertheless, organizational culture affects it in that it offers foundation in which the standard routines and operating procedures are based on. It also helps in determining which individuals in the organization participate in decision making processes and therefore to which extent their views have an impact on the actions carried by the organization. There are different types of organizational structures that are used by organizations. For Marks and Spencer it makes use of . The matrix structure which categorizes employees in terms of product and function.it makes use of all structures so as to attain its objectives. This is seen where the company’s board of directors delegates its responsibilities who assist in delegating the work and message to other departmental heads, (Jacobides, 2007)
The stakeholders’ management strategies
For many organizations managing its stakeholders is one of the key challenges it usually faces of which this is not an exception for Marks and Spencer. Nevertheless, as much as it is challenging stakeholder management offers a company many advantages in the end. Stakeholder management generally involves considering the stakeholder’s values and interest and addressing them so as to make the stakeholders happy. For any business, there are different types of stakeholders, but for Marks and Spencer in its case, its key stakeholders include, its employees, the government, its consumers, and its suppliers. In its consumer relationship management feedback that the company identifies that it has brand loyalty and satisfied consumers. Good existing relationships as such are in the end converted into partnership and coalitions which built trust between marks and Spencer and its stakeholders. Nevertheless, Marks & Spencer has different ways of managing its stakeholders, (Samantha, 2012)
For the government, the company makes sure that its manages the government expectations by working with it in its wide range of policy development efforts on areas like trade, employability, consumer affairs and other laws. Doing this not only enables Marks & Spencer to follow the governmental rules and regulations, but it also enables it entice the government in coming up with policies which favor it through the good relationships established in its engagements in a number of political audiences.
Its customer relationship management strategy makes use of Marks & Spencer’s customer insight unit that makes sure the customers needs inform every aspect of decision-making. Understanding its consumer’s needs as mentioned before not only does it enable to align its business strategies in line with them but it also enables the company to gain consumer satisfaction as their needs are met .Marks & Spencer makes use of research, focus groups and customer feedback so as to stay in touch with its consumer monthly. Doing so enables the company to know what to change in their products and what is satisfactory to its consumers and helps its gain competitive advantage in the market place.
Marks & Spencer knows that employees are one of its key stakeholders and have done everything to maintain a good relationship with them. The company has done this by practically showing its commitment in the employee retirement, promotion, appraisal, training and development and recruitment and selection processes. In addition to that, the company has also provided its workers with a healthy working environment. Doing this is important as Marks and Spencer’s employees become confidence and comfortable in their business environment which enables it to perform its work effectively and produce quality products and services
Marks and Spencer has managed its suppliers by ensuring that all its suppliers are paid above the minimum wage and they are treated well which develops trust between the two. Doing this is important as it enables the company’s products to be of good quality and arrive in time. Managing all their stakeholders ensures that the organization is able to attain its objectives and goals both internally and externally and that a positive relationship is created through them and the company through good and effective management of their expectations. Marks and Spencer’s stakeholder management has enabled the company to identify its existing positive relationship with its stakeholders, (Robert, 2003)
Conclusion
As seen from Marks & Spencer, Carrying out a business environmental analysis is important a not only does it enable a company in the formation of its strategic plan and strategic management, but it also enables the company to identify its weaknesses, its strengths, and factors which affect it both internally and externally. Marks and Spencer has managed to stay on top of its game and gain competitive advantage in the market place because of its effective use of strategic tools and models in executing its strategies. This makes its strategies effective and fit for the organization as its stakeholders, culture and structure are taken into consideration which are part of the business environment.
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