- Continuation of Rose’s transformation stage because he has not finished all of his 11- steps strategic plan
- Development of better strategy to achieve middle age demographic (30-55 year old)
- Strong competitor from George Davies designed clothes for 30 year old segment
- Constipated culture which restricts creativity, decision making in organization
- Profit warning in 2008
- Furthermore, during the recession time, sales revenue and profits of M&S were fluctuated. This could be result of ineffective strategy and management in organization culture.
External Analysis
Stakeholders
In term of stakeholders who contribute considerably to M&S success, M&S has good strategies for win-win situation. Most of suppliers of M&S are reliable with providing high qualified materials such as fresh food, luxury fabric for clothes and be well-equipped with modern machines. M&S also has campaigns to support their existing suppliers in innovative ideas. For the process of high qualified product, M&S always ensure the process followed the standard from the starting point. As a result, in term of customers, M&S is confident to provide the best quality products and service to customers. For clothing sector, M&S concentrates on 30-55-year-old market segment with Per Una brand name, Simply Food with the most convenient design and health and nutrition consideration. Furthermore, developing a loyal card scheme combined with credit card ‘&More’ which allows customers could earn voucher for further purchase in M&S could bring more value to customers and increase their loyalty. For the M&S stores, there are always renovations for more customers’ conveniences and attracting new customers with attractive design. “Simply Food” concept is launched to bring nutritious foods to customers, which increase customers preference toward M&S with health concern campaign. Those could create competitive advantages for M&S to compete the competitors. Asda and Waitrose are considered as direct competitors with the same market segmentation for women wear at 30-55 year old. Asda is second ranking in improved food retail in UK after M&S. To business partners, M&S is successful in creating good collaboration with BP to sell “Simply Food” in BP stations for widening distribution channel and support sales, marketing. To satisfy the society’s concern, M&S takes commitment to Corporate Social Responsibility (CRS) to protect environment with gas and waste controlling program and 5p charge for one carrier bag.
PESTLE Analysis of M&S
Political factors
Operated in food industry, M&S has to update regulation from government for Health & Safety British Standards. In some cases, the regulation could be obstacle for M&S operation when it could affect on profits or current process of manufacturing.
Economic factors
The world economic is still in downturn, having considerable influence on consumers’ decision making for purchase. They will restrict to purchase luxury items as food and clothes luxuries and consider carefully about the price based on their budget. This affects dramatically to profit of M&S when they seem to have to give many discount programs for customers to ensure good provisions and stock. It could be big challenge for Mark Bolland to recover M&S from declining net profit and sales revenue.
Social factors
The trend of clothing is always changing fast. Therefore, M&S needs to update the trend frequently to satisfy customers and compete to competitors in this industry. What is more, focusing on customers over 30 year olds, M&S must concentrate on providing clothes made from good fabric, smart cut and other high qualified materials (Modernwomenworld 2011).
Technology
At this modern age, advertisement is the most effective means to get loyalty of existing customers and attract new customers. As a result, the content of adverts should be invested and M&S must use innovative means to bring the brand name to customers and maintain relationship with existing customers by offering vouchers, promotion campaigns, updating their point in their loyal card. Furthermore, convenience is the most consideration to shoppers. Therefore, self-service machine maintenance and effective distribution channel could satisfy customers.
Legal factors
Most of legislation affecting M&S operation relates to taxation, new regulation relating to Health and Safety for consumers because M&S provide foods product. For example, M&S must follow with the regulation for standard packaging to ensure to use safe containers for foods.
Environment
Similar to other companies, M&S is under pressure for eco-friendly materials and process of manufacturing which are promoted daily on television, newspaper with protecting environment purpose. Therefore, they must be careful with every action in production.
SWOT Analysis
Portfolio Matrices
BCG Matrix
Source: Vectorstudy
In BCG Matrix, M&S could be positioned as “Question Marks” when their market growth rate is high with large cash usage for many projects and campaigns but they could not achieve large market share as they want. In the objectives to achieve the clothing market of mid-age range, M&S must face with the direct competitors from Asda and Waitrose who are quite successful with this segment, especially give brand name of saviour George Davies. Moreover, the international operation seems to not get large market share as expected. As a result, M&S is in Question Mark stage and aim for Star position.
Ansoff Matrix
Examining the Ansoff Matrix, M&S seems to apply all matrices with market penetration, product development, market development to satisfy both existing customers and new customers by enhancing quality of products and services and bring new products. In term of diversification, new products could be launched for new geographic market.
Source: TaydeAburto.com
Porter’s Generic Strategy
Source: Vitalsix.co.uk
Although M&S’s rivals changes to low-cost strategy because of economic downturn effect, M&S still keeps their strategy which creating their brand recognition and values for brand name. This strategy could help M&S maintain their strong brand name and brand recognition with high quality products and services.
Strategy Recommendations
Expanding market in emerging market such as China and India is good strategy direction for M&S to pursue. M&S is on the way to develop their objectives as international multi-channel retailer. According to Oliver P. (2010), consumption in luxury products and service has been increasing, but be careful to select durable products, the price/ quality ratio prices because of effect of economic crisis on their budget. Moreover, there is an increased awareness of raw materials, with consumers paying attention not only to their quality but also to the standard of processing”. This strategy seems to be suitable for capability and capacity of M&S with high quality of raw material and standard process which are core products and services M&S provides. These are profitable market when it could be get preference of customers easily. However, there are some disadvantages for M&S when entering these markets. Firstly, M&S is original from European countries which have totally different culture to emerging markets countries which mostly are in Asia, Latin America and Africa. Therefore, M&S needs to spend a lot of money for market research to understand local market needs and develop suitable products and services for culture, particularly religions. Secondly, regulation for investment and business in emerging markets has many limitations. Furthermore, with current of constipated culture of M&S, employees are not empowered to decide; decision making process is quite complicated and controlled by CEO and Chairman. It is necessary for a change to empower regional managers in each country for effective management leading to good profits.
There are some strategies recommended for M&S.
Takeover
Mergers & Acquisitions
With Mergers and Acquisitions, M&S could acquire strong companies with strong brand names in local countries to get market share and local knowledge. The pros and cons of this strategy are explained below:
Business Alliance
With this strategy, M&S could have collaboration with suppliers for development of new products and partners to provide the services, adverts.
After examining several strategies, takeover and business alliances seem to be the suitable strategy for M&S although M&S had many failures when trying to takeover before. Thanks to this strategy, M&S could not only achieve the objectives to expand market share, but would also increase market growth and sales of both domestic and international market. M&S could take over the successful brand names in clothes for 30-55 year old market and food companies in new geographic countries to provide the best products that customers expect. Thanks to this strategy, Mark Bolland could give his trust to current managers of companies and assign more responsibilities to them. The organizational structure could be changed to regional or divisional structure which is more effective for managing human resources. The operational level strategy will be conducted effectively. According to Sarah S. (2011), M&S had a good year with rising market share by recruiting an experienced executive staff from Tesco for more advice with international operation. It is a good signal and good example of changing organizational culture. Continuing with the use of franchising in international market is a sufficient mean to not only expand market, introduce M&S brand name over the world, but also to control the brand name and core business better. M&S could also effectively and efficiently take advantage of their capacity and capability to maximize the profits. Furthermore, with business alliance, M&S could develop innovation with win-win situation and use it as means to widening market all over the world.
Conclusion
By analysing external factors and M&S’s capability and capacity, M&S totally has all factors to be a leading retailer in UK. With 800 stores in UK with high qualified products and service, M&S could completely satisfy customers in food and clothes with five cores which are quality, value, service, innovation and trust. The main issues for M&S is working culture and market segmentation focusing on customers choosing differentiation not cheap products and failure in achieving clothing for 30+ year-old market. M&S has taken many strategies and their profit has been fluctuated during many years. However, with new CEO, Mark Bolland, there is a hope that M&S’s profit could be increased. There are some strategies recommended for M&S with analyzing pros and cons of each strategy to get along with their objectives. It is found that takeover seems to be good strategy and suitable for capacity and capability of M&S which assists M&S could get highest achievement in both domestic and international market. Based on this, there is hope for brighter future for M&S next years.
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References
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