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Business Strategy To Stay Ahead Of Competitors

Question :

It is important for the business to come up with strategies that can help it to stay ahead of its competitors. The company chosen is Marks & Spencer, a leading clothing and retail industry headquartered in London. A corporate strategy manager is being appointed to prepare the report for the business strategy of the company.

  • Impact and the influence of macro environment on business and its strategies.
  • The internal environment and capabilities of the business.
  • Apply and evaluate the outcome of analysis by using Porter's five forces model.
  • Application of theories and models to assist in interpreting the strategic direction of company.
Answer :
Organization Selected : Marks & Spencer

INTRODUCTION

Business strategy refers to the firm's working plan which helps in achieving vision and objective of the firm and meet the expectation of its customers. It also helps in optimising the financial position of the firm with its business model. Strategies are made by keeping in mind firm's strengths, opportunities, resources, competitors and its market. Strategies helps to strengthen the performance of the business. The present report is based on Marks and Spencer, a multinational retail company which was founded in 1884. Its headquarter is situated in London. Marks and Spencer is famous for clothing, luxury food products and home products and financial services. It has 800 stores all over the world. This report will cover, the impact and influence of the macro environment, the internal environment and capabilities, the competitive force of market sector and the range of theo

TASK 1

P1 Applying appropriate frameworks to analyse the impact and influence of the macro environment on a given organisation and its strategies

Pestle for environmental analysis :

Political factor :

The change in the government policy and taxation policy influence the trading of Marks & Spencer. The government has set regulation, if company do not follow then it might get close. If government has increased the duties it will directly impact on the sale of the company and products will get costlier but company can cover its cost from the customers (Matt, Hess and Benlian, 2015). The most important factor which can impact the growth of the company is financial regulation of any country, as every nation does not have the similar mindset on business. There may be chances that where the organisation want to expand the enterprise is not open to foreign direct investment.

Economical factor :

The company's retail sale got affected as people do not have extra money to buy luxury goods. At the time of recession the purchasing power of the customer reduced which have directly impact on the sale but company can overcome by giving discounts, offers. Also, the conflict between the small retailers over the rise in the price of the product affects the sale but company can collaborate with them (Eaton and Kilby, 2015). The status of economic activities in any country also have a severe impact on how organisation is going to perform over there. Recession in any region can affect the sales of Marks and Spencer while it can also lower down the purchasing power of the consumer. It might happen the revenue of the organisation is also been down.

Social factor :

The firm will look after the proper management of social conditions and activities that will help in effective rise in capabilities. This will involve the proper management of work force and their needs and demands. Keen analysis should be made by company on cultural aspects of the people where they are going to spend the business. Product should be designed on the basis of that and organisation must not be involved in creating commodities that hurt the religious sentiments of people. Market researches on taste, preferences, values of the consumers should be done by company in order to gain competitive advantage.

Technological factor :

Technology plays a very important role. Changes need to be brought out according to the needs of the customer and the latest technology otherwise the costumers will not buy. Innovation and creativity is necessary to attract the customers (Spender, 2014). Use of all new techniques should be made by company with advancing time. Like for example they can sell their product online with the help of internet. It will attract more consumers, also it will make more easy for them to purchase any product.

Legal factor :

The legal regulations keep on changing. The company needs to keep up to date with new laws and regulations to survive in the competitive market. The changing laws of the country can lay impact on the growth of Marks and Spencer. Like for example alteration in taxes or rules related to export and import of clothes can hamper the business of the company.

Environmental factors : Company should also take care of the environment, where they are performing business. They should lay emphasis on sustainability and also investment must be done in CSR activities. For example Marks and Spencer is also involved in paper bags instead of polythene. They also encourage consumers to dump waste in proper place and keep their surroundings clean.

The government is pressuring the company to change their way of using material.

In stake holder analysis, firstly identify who are the stakeholders because they are the people who get affected by the company's work (Bentley-Goode Newton, and Thompson, 2017). They have interest and power over it. The stakeholders are shareholders, government, customers, suppliers, interest group, public, key advisors.

Secondly, prioritising the stakeholders on the basis of people with high power & high interest are managed closely, high power & less interested people keep them satisfied, low power & highly interested people keep them informed and people with low power & less interested keep them monitored.

Thirdly, understanding the key stakeholders. Company must have better understanding of the needs and demands of shareholders. They must make policies where role of investors are hilly appreciated.

SWOT analysis :

Strengths:

Marks and Spencer is the most powerful retail brand. It has around 1000 stores all over the world and more than 70,000 thousand employees. This helps the organisation to handle the business operations and have high productivity (Fontana, Sastre-Merino and Baca, 2017). The strength of the company also includes quality of the product. It is highly recommended by the consumers. Also, they offer wide variety and range of goods. Apart from fashionable clothes, the company is involved in selling beverages, fruits and vegetables. They have also opened number of stores across the region.

Weaknesses:

The lack of proper customer strategy and fashion measures is the major drawback that causes the firm to have restricted productivity and lack of proper customer base. The enterprise has also not adopted advanced technology to promote their products. They are only involved in designing goods which focuses only on aged people, Marks and Spencer have not laid emphasis on youth and teenagers.

Opportunities:

The firm has a major opportunity to improve its business performance by implementing effective strategies and business operations and activities that will impact firm's performance. Company has chance to grow their business by expanding their share in Indian markets. They can also increase their activities by introducing new variety of clothes for adults as well as youth. Expanding their business online can also act as an opportunity for the organisation.

Threats:

The lack of proper innovation in clothing and carrying out of effective customer communication is the major threat factor that impacts the customer performance to a greater extent (Hughes, Cox and Akhir, 2016). The changes in trend of clothing can also act as a threat to company. Organisation should be involved in doing market research of competitors product, in order to improve their services and also to have an idea about the risk related to substitute goods.

Ansoff's growth vector matrix

Various strategies have been taken in consideration by organisation to have a better and effective strategic positioning in market. It involves the following factors that have been taken in consideration by organisation are:

  • Market development: It is a strategy to enter within a new market, using the existing product range. This is a cost effective and most safe approach of having a strategic positioning within market. The company could expand their business in new market either in their region or across the world. They can also develop their industry by offering new range of products. New distribution channel may also be considered by Marks and Spencer in order to increase their revenue.
  • Market penetration: this approach will include M&S to use its existing product portfolio within the existing market of operation. This will support the firm to have minimum financial loss (Grover, 2016). The method can be achievable by company while growing the market share of current goods. To implement the technique organisation needs to lay focus on their sales and promotional activities.
  • Product development: This strategy will lead M&S to develop new and high quality product and services that will help in improving the quality of product and services that will lead to effective rise in business operations and activities. The commodities can be developed by company through keen analysing consumers needs and demand. Market research should be done by organisation to gain competitive advantage and increase their revenue. They can also be involved in expanding their brand by offering new variety of commodities.
  • Diversification: this strategy involves the practice of launching new products in new market. This is the most risky and costly approach to be followed by a business organisation. One of the best example of diversification is Samsung, which started as trading company and now it has been expanded into securities, insurance, and retail. The market presence of Samsung is now diversified global set of business which consist of appliances, watch making, music services and home equipments.

Following of these approaches will help in effective assessment of macro environmental factors that will help in increasing the quality of services and products (Buckley, Burton and Mirza, 2016). These frame works will help in proper utilisation of resources and have a good market share (González-Rodríguez and et.al., 2018).

M1- Critically analyse the macro environment to determine and inform strategic management decisions.

The effective management of macro environmental factors like political, cultural, technological and environmental factors will help the firm to define and draft an effective strategy. It supports the significant growth and development of various business operations and activities. The assessment of external environmental factors will help the business organisation to carry out business operations and activities and develop appropriate strategies that will help the firm to grow and develop effectively. It will support a good growth of business functionalities by M&S. Other than this, it leads the organisation to have strategic management decisions. The macro analysis tool is useful to find whether a new product, service or business have the potential to be profitable or not. While doing macro analysis Marks & Spencer will be forecasting trends based on what company know about their environment. Once, the company has understood the macro environment analysis, it will continue to scan for information for its factors such as by watching or reading the newspaper.

TASK 2

P2- Analyse the internal environment and capabilities of a given organisation using appropriate frameworks.

The strategic capabilities are the processes that have been implemented within an organisation that helps in improvement of competitive advantage of firm. This helps in proper utilization of organisations assets, resources and market position that will help in effective handling of business strategies (Pisano, 2015). The major key components of strategic capabilities are:

Physical: this involves the machines, infrastructure, data bases etc. The age, condition, limit and part of every assets will decide its usefulness for the company. These are tangible in nature that are used in business operations and other supports the action of the company.

Financial: it involves balance sheets, cash flows, funds etc. It is basically the money available to a company for spending in the form of liquid, securities, cash and credit lines.

Human: includes managers, partners, suppliers and customers. It is concerned with all those activities that impact the individual's behaviour to implement the strategic needs of the business. Human resource responsibilities involves hiring, firing, and keeping up to date with state and tax laws.

In order to analyse the strategic capabilities of cited retail enterprise, VRIO assessment is been carried out within the organisation that will help in suitable management of business activities and operations. VRIO assessment of M&S is as follows:

Value: the effective and well placed strategy within a business organisation will help in proper assessment of activities which will further help in expansion of business and its operations in an effective way (Amran and et.al., 2016). The products and services offered by M&S are well known for their high quality and value. Resources are also determined as valuable if they help the firm to expand perceived customer value. If, none of the company's resources are considered valuable, the firm is likely to have competitive disadvantage.

Rarity: Many of the products and services that have been taken into consideration by Mark & Spencer are quite rare for its competitors. This helps the firm to have a good market and competitive advantage that supports a good rise in capabilities and meeting of the goals and operations within the organisation (Klettner, Clarke and Boersma, 2014.). Getting a rare resource it little tough for the company, and it is extremely valuable if it receives one. Rarity of resources in the firm leads to competitive advantage in an organization. There are generally two conditions to be satisfied for rarity to keep a competitive advantage. One is resources and other is capabilities, they are very hard to find and should be last longer because their supply is always short.

Imitation/substitution: Few of the products and services that are been developed by M&S are very difficult to imitate or copy. This gives the product and services offered by cited retail firm a uniqueness which helps in meeting its aims and objective. M&S with rare resources and capabilities is hard to imitate by other firms gain an advantage of competitiveness in the market. The level of imitation of M&S also depends upon the cost factor.

Organisational capabilities: the effective business framework, expansion and competitive advantage are some major factors which help in good growth and development of cited retail enterprise. Marks & Spencer formal structure, compensation policy, and management control system decides the M&S organising. It is determined that without the correct organisation to get, use & monitor the available resources, even companies with rare, valuable and imperfectly imitable resources will not be able to create a competitive advantage.

Besides this, the effective use of Value chain analysis which will help in effective planning of the strategic capabilities of a business organisation in an effective manner. The Value chain model of M&S is as follows:

  • Inbound logistics: the goal of these activities is to provide the customer a level of value that exceeds the cost, therefore, increases profit margin. Inbound logistic refers to the process of receiving and warehousing of raw materials and then distributing them to manufacturing. It involves the business operations and activities that have been followed within Mark & Spencer that helps in proper receiving, storing and distribution of inputs or raw material to produce an effective product and services. It helps the company to carry out its supply chain in an effective manner (Hammond and et.al., 2015).
  • Operations: M&S is now targeting to improve its customers experience and thus is spending more funds on the improvement of customer welfare. The operations related to shopping and providing of other retail services has been improved to such a greater extent that it has helped the firm to retain its old buyers. Proper implementation of IT tools and carrying of supply chain has helped in increasing quality of business operation's that are been followed within cited retail firm. It is determined that if the operations are up to the mark and the manufactured product is in the right manner and meets quality standards, this will lead to major increase in the customer value.
  • Outbound logistics: it involves the proper stacking, manufacturing and distribution activities that are been carried within the organisation. It involves the improvement of accessibility of products and services that are been offered by M&S. Other than this, it also involves proper warehousing and distribution of goods and services like clothings, food and groceries in an effective way (Leonidou and et.al., 2015). If the outbound logistic activities are carried out in time and with minimum cost & the product is delivered to the final customer without affecting its quality then the value chain receives a boost.
  • Marketing and sales: the proper promotion and raising the awareness of a business entity will help the cited retail entity to undertake suitable measures which will help M&S to improve its market share and profitability. The suitable use of marketing techniques will help the firm to increase awareness about their products and services. This is required to be handled with great care and capability in order to carry out the business activities and operations in an effective way. Any loop hole or restriction within the promotional activity may lead to have negative consequences on growth and development of a business entity in a significant manner. Marks & Spencer exists to make profit and if profits can be increased by sales & marketing then the company has to use these tools. However, to build brand equity marketing has to be done in a right manner and sales should also be done in a proper channel to add value to the finished product.
  • Services: It involves the services or customer care that is been offered by the firm to its buyers after they make the purchasing. This helps the organisation to improve the good will and meet the business operations in a very significant manner. The effective following of these activities and operations will help the firm to adopt proper measures and execute them with elaborative concern in order to improve the customer satisfaction level. Also, it will help in improving the quality of operations and meeting the needs and demands of their customers (Peng, 2017). If the service of Marks & Spencer is not proper and up to the mark then no customer will buy its products and the brand will lose its market share & there are chances that it may be taken out of the market. Thus, service is very important in the value chain.

Besides this, additional factors like technology, infrastructure, procurement strategies and HR of firm also impacts the business activities and operations in an effective way.

M2- Critically evaluate the internal environment to assess strengths and weaknesses of an organisation’s internal capabilities, structure and skill set.

The internal assessment of business operations and activities help in suitable rise in strategic capabilities and business activities that are been followed within a business entity in an effective way. This will help in suitable rise of various operations and business activities. The internal capability will help in improving the quality of services that are been undertaken by M&S to meet their customers needs and demands. The handling of internal capabilities, structure and skill set will help in improving the quality of products and services. The responsibility of marketing management is to attract customers and establish a strong relationship with them by making them satisfied. The internal micro environment of Marks & Spencer include, suppliers, customers, distributors and competitors. From the SWOT analysis, the most important factor for the company is to satisfy needs of the consumer. The disadvantage of the firm is that it lacks in clothing market segmentation that affects it to lose its brand awareness.

TASK 3

P3- Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector for an organisation.

The effective application of porter five force model will help the cited retail firm to improve the performance and quality of services that is been offered by M&S. The effective planning of business operations and activities will help in suitable placing of strategies and measures that will help in effective placing of business operations and activities. The assessment of business activities and operations will help in suitable planning of the firms strategies and activities. This will help in effective rise in meeting of retail functionalities. It will help the firm to handle the risk factors that are been associated within the firm. The Porter five force model of M&S is as follows:

  • Threats of New entrants: this is the major factor that is required to be handled with effective knowledge and skill set. As with the increase in globalisation, many new retail firms are emerging in the retail market that are creating a stiff competition for the firm. The case of peer's is different, however, Marks & Spencer popularity and focus on quality would make competition fight hard for breaking its loyal customers. However, the cited retail firm is well established and recognised to be affected by entry of new retail organisations. But Marks & Spencer requires undertaking certain preventive measures that will help the cited business entity to carry out its operations with efficiency. The effective assessment of these factors and operations will help in suitable rise in its competitive advantage.
  • Threat of substitution: Marks & Spencer requires constant innovation to keep its brand position strong & to stay distinctive to meet the demands of the customer base. Thus, in order to carry out business actions and activities, the cited firm needs to look after the proper management of business operations and activities that will help in suitable growth and development of firm. Moreover, the company focus on its food line which is expected to offer clear advantage over the competitors. Effective market research, assessment of customers demands and requirements and coming up with effective product line. This will provide a uniqueness and competitive advantage over its rival firms like Morrisons. Sainsbury etc. This will help the organisation to gain a good customer satisfaction level (Matt, Hess and Benlian, 2015).
  • Bargaining power of buyers: The buyers or clients of Marks & Spencer that forms its loyal customer base are required to be managed effectively by cited retail business entity. Marks & Spencer needs to build up its loyalty and offer its consumers unmatched value & comforts that are difficult to match. The suitable pricing strategy over products and services that is required to be carried out by the cited retail business entity which will help in effective execution of operations and meeting of cited retail enterprise. Failing to maintain the effective costing, the buyers are tended to be move away from cited business entity. This can cause a drastic reduction in profitability and market share of a business organisation and handling of cited retail enterprise.
  • Bargaining power of suppliers: the suppliers forms a very crucial part of stake holders of a firm. Thus, in order to carry out the business operations and activities in an effective way, M&S has to effectively negotiate with them. This is necessary for a business entity as in order to carry out the suitable business operations and actions. The proper handling of pricing of business operation's (Eaton and Kilby, 2015). The company has to maintain a balance between the suppliers needs and customers requirements in order to have a significant amount of revenue for the firm. Besides this, the increase in effective planning of a business operations and activities will help in suitable rise in handle the management of business activities in an effective way.
  • Intensity of competitive rivalry: the extent of competition within retail sector is quite high that will help in suitable management of business operations and activities. As many retail enterprises are emerging within the sector, it is creating a big competition for M&S to have a proper and suitable market share and sustain it effectively. The firm is required to have a good market share and develop an effective strategy to have a good competitive advantage and thus will help in meeting the business operations and activities in a suitable manner. It is also noticed that Marks & Spencer is shifting to older female customers and everyday low pricing than discounting. Also it has now announced plans to open new “simply food” outlet which have upmarket positioning.

M3 Devise appropriate strategies to improve competitive edge and market position based on the outcomes.

Based on the assessment, this can be said that the effective planning of business operations will require to have a competitive advantage over its rivals and competitors. Besides this, the cost differentiation measures can be followed by organisation to maintain its market presence and customer base (Spender, 2014). Appropriate strategies to improve competitive edge and market position based on the outcomes are:

  • Be the first to the market :- by being the first to the market, Marks & Spencer will be able to take advantage of having no competition with its offering.
  • Focus on market expertise :- Marks & Spencer should expertise by focusing on one specific niche to develop marketing specialisation.
  • Make product stand out and improved :- the company must study its competitors and learn how to target their problem. Then try to reposition this market problem with is own unique solution.

TASK 4

P4- Applying a range of theories, concepts and models, interpret and devise strategic planning for a given organisation.

It helps in suitable management of business operations and activities that helps in increasing the quality of products and services manufactured by the firm. Some major theories and concepts that are been applied are:

Cost and price leadership strategy: this strategy includes the firm to have a very good and effective cost advantage over its rivals and thus will help the firm to decide the proper market strategy that will help in improving the performance of a business operation's and activities (Bentley-Goode, Newton and Thompson, 2017). Besides this, it supports the effective pricing of goods and services offered by M&S to attract more and more customers. The management of Marks & Spencer has to continuously work towards reducing the cost of not just single product but the whole range of products in its portfolio. Cost leadership does not mean that the company not only produces the goods which are of inferior quality at cheap rates, it rather leads to failure.

  • Differentiation strategy: this includes the process of making the suitable changes within the product range that will help in suitable rise in the business operations. This will help in providing a uniqueness to the business operations and thus will help in suitable rise in effectiveness of firm. Besides this, it will help in improving customer satisfaction level. It is a way through which M & S develop a unique product or service that consumer will find better than competitors. If successful, it will allow the company to charge premium for its services and goods.
  • Diversification strategy: it is the strategy that Marks & Spencer adopts for the development and growth of its business. It is determined as the form of growth strategy which helps the firm to grow. It includes the practice of entering within a new market with a new range of products. However, it is a risky approach and thus requires a proper placing of business operations and activities that will be followed by cited retail enterprise. Even in the recent years it is quite for some organisations to operate in diversification mode because there are different range of requirements that must be considered by them.

Vertical/horizontal integration: vertical integration is a competitive strategy by which Marks & Spencer takes complete control over one or more stages in the distribution or production of the product. The firm opts for this approach to ensure full control over the supply of the raw material to its manufacturing. The approach includes the acquiring of a firm working in the supportive sector of retail firm while vertical integration involves the taking over of Marks & Spencer as a whole that will help in improving the performance of cited retail entity (Fontana, Sastre-Merino and Baca, 2017). Horizontal integration is determined as the another competitive strategy that the firm uses. It is basically acquisition of activities of the business that are at the same level of the value chain in similar or different industries.

On the basis of these assessments, an effective marketing plan can be drafted that will help the Marks & Spencer to improve its performance.

M4 - Produce a strategic management plan that has tangible and tactical strategic priorities and objectives.

A strategic plan will be formulated that will help in improving the quality of products and services that are been followed within organisation. The suitable acquisition of a business entity and management of business operations will help in good growth of firm.

A strategic plan should be adaptive to survive in the changing condition. Marks & Spencer mission and vision may remain same while their objectives and goals will need to be revised or update. Strategic management is an ongoing activity that an organisation uses to align resources with mission, vision and strategy throughout an organisation. There are different steps for strategic planning:

  • analyze
  • strategy formulation
  • execution
  • evaluation

D1 - Critique and interpret information and data applying environmental and competitive analysis to produce a set of valid strategic directions, objectives and tactical actions.

On the basis of the various interpretations that are been carried out within the cited business organization. It will help in setting up of a proper business plan and developing of an effective strategy that will help in meeting needs and requirements of customers. Other than this, it also supports in maintaining of the quality of services and products offered by firm. The analysis will also help Mark & Spencer to determine the effectiveness of the industry. It can be used to compare the impact of competitive forces on the company with their impact on competitors.

CONCLUSION

On the basis of different sort of interpretation, this can be concluded that the effective following of business operations and activities will help in meeting operational and marketing requirements of cited retail enterprises. The suitable assessment of macro-environmental factors, internal strategic capabilities will help in finding the suitable planning of the business entity in an effective way. Besides this, the proper management of competition using the porter five force model and effective assessment of different strategies will help the organization to improve their business performance, it will help the organization to develop a suitable market plan and strategies, in order to fulfil their customer's needs and demands.

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