The strategic planning of Marks and Spencer

The strategic schemening of label and SpencerMarks and spencer started from pocket-size stalls start come outs one of the uks hint retail merchants with oer 15 million people visiting every year. It is giving to its guests great time value wear, advanced quality, stylish intersections as hale as outstanding quality of intellectual nourishment from different au henceticated suppliers.The livelong of the report revolves around the strategic blueprintning of well renowned political party marks and spencer, it forgeting explore the external surround, its existing business plan, major(ip) factors affecting it and the strategic option is in any case given in this report through which it can overcome the predicted barriers.Companies overviewMarks and spencer is come to existence in 1894 by the union of Michael with Tom Spencer. They employ over 65000 people, running 450 stores and as well as flourishing international business. In 2007 Marks Spencer (MS) was the UKs bigheartedst clothing retailer with a food food market piece of ground of 11.1%.Food sales accounted for 49.8% of its UK business and had a market sh ar of 4.3%. The groupsinternational business accounted for 7.1% of turnover and had grown to 219 franchise stores in34 territories worldwide as well as 8 wholly-owned stores in Hong Kong and 13 in the Republic ofIreland. During 2007, it opened 36 unfermented stores including the groups largest ever franchise store in Dubai at 52,000 sq ft. and also opened its first store in mainland China under a joint venture with President Chain Store Corporation.Strategic management provides general direction to the enterprise so Johnson and Scholes define outline as followsStrategy is the direction and scope of an ecesis over the long-term which achieves advantage for the organization through its configuration of imaginativenesss within a challenging environment, to seemly the needs of markets and to fulfill stakeholder expectations.PEST summaryPest digest is concerned with the environmental influences on a business. The acronym stands for the political, economic, social and technological issues that could affect the strategic development of a business.PoliticalEuropean Committee close to permit free flow of flock among themselves and new(prenominal) countries under foreign trade regulations makes companies to import their convergences over time easier than before. MS competitors took advantage of its high schooler embody structure and bit off some its market dowery.EconomicMS competitors argon specialised in niche markets and consumers focus which make them to provide a much better consumers satisfaction. They prefer to import their products from abroad for cost savings, this fact puts MS in a cost disadvantage for a perceived higher quality.SocialConsumers concept in the market erupt has changed they do non sense British products as of high quality. There is a shift in take in for more fashionable clot hing. Moreover the price sensitivity of the majority of the consumers has increased leaving MS in a little competitive position.TechnologicalMedia played major role of communicating new fashions to the customers. This acquaintance can be communicated to the designers and producers, so a manufacturer in Thailand or China can be aware of the current fashion trends in UK. Technology theses days are even more readily copied than before. Moreover due to the transportation speed a shipment of stock from a country in far Asia will only take a fewer days instead of a drone time period of over a month.Environmental (Ecological)Selling products produced by suppliers has a much greater affect on the environment on how these products are engrossd and disposed by consumers. Retailers use a huge range of raw materials to produce their goods. Because of this, it is critical to manage the use of these materials sensitively and pay tight-laced regard to how they affect indispensable habitats and bio-diversity.LegalOffering customers high standards of quality product are crucial to meet their requirements. MS are known for delivering world class quality products.Porter 5 Forces AnalysisThe five force postures is basically fabrication specific within which the firm exists and operates. The rationale behind this model is that industry profitability is not fixed by the product quality, nor it embodies high or low engine room. It is determined by the structure of the industry. M. Porter, Competitive Advantage of Nations, Macmillan, 1990 Porter explains that there are five forces that determine industry attractiveness and long-run industry profitability.Threat of new entrantsNew entrants to an industry can raise the aim of competition, thereby reducing its attractiveness. The threat of new entrants largely depends on the barriers to entry. High entry barriers exist in some industries whereas other industries are very easy to enter. The most common ready of entry barr iers are usually the scale and the investment unavoidable to enter an industry as an efficient competitor. In consumer product industry this dimension of competition is well prominent. All the existing domestic companies are well jell up, reputed, organized and stable manufacturers in the industry and admit their own distinct places in the market. A strength entrant whitethorn find it uneconomical to take on existing occupants and if it does the gain of market parcel out at the cost of large capital investment besides powerful retaliation of existing manufactures. It may take years (at-least 5 6 years) for an entrant to build reputation for product quality no matter how large its initial advertising campaign is.Threat of substitutesThe presence of substitute products can cut choke off industry attractiveness and profitability because they limit price levels. The threat of substitute products depends on Buyers willingness to substitute the congeneric price and performance of substitutes the cost of switching to substitutes The product category Marks and Spencer has is subjected to great threat as different other companies of UK like Primark deals with the same kind of products.Bargaining power of suppliersSuppliers are the businesses that supply materials other products into the industry. The cost of items bought from suppliers (e.g. Raw materials, components) can have a significant impact on a ac caller-outs profitability. If suppliers have high bargaining power over a company, then in theory the companys industry is less attractive. The bargaining power of suppliers will be high when There are many another(prenominal) buyers and few preponderating suppliers there are undifferentiated, highly valued products suppliers threaten to integrate forward into the industry.Bargaining power of buyersBuyers are the people who create demand in an industry. The bargaining power of buyers is greater when there are few dominant buyers and many sellers in the industry products are standardized buyers threaten to integrate backward into the industry suppliers do not threaten to integrate forward into the buyers industry. At the same time Pull dodge is followed as bottom up approach where end users pull the preferred product.Intensity of competitionThe gaudiness of challenger between competitors in an industry will depend on The structure of competition for example, rivalry is more intense where there are many small or equally sized competitors rivalry is less when an industry has a slang market leader The structure of industry costs for example, industries with high fixed costs encourage competitors to fill unused capacity by price cutting. Degree of differentiation industries where products are commodities have greater rivalry industries where competitors can differentiate their products have less rivalry. Switching costs rivalry is reduced where buyers have high switching costs i.e. there is a significant cost associate d with the decision to buy a product from an alternative supplier Strategic objectives.Swot Analysis prepare analysis is an important tool for auditing the overall strategic position of a business and its environment. Once rouge strategic issues have been identified, they feed into business objectives, particularly marketing objectives. beat analysis can be used in conjunction with other tools for audit and analysis, such as PEST analysis and Porters Five-Forces analysis.SWOT ANALYSIS OF MARKS AND SPENCERSStrengthsMarks and Spencer is a powerful brand. It has a reputation for value for money, convenience and a wide range of products all in one store. M S has grown substantially over re centime years, and has experienced global enlargement. The company has a core competence involving its use of information technology to support its international logistics system. For example, it can see how individual products are performing country-wide, store-by-store at a glance. IT also suppo rts M S efficient procurement. A focused strategy is in place for human resource management and development. People are pick out to M S business and it invests time and money in training people, and retaining a developing them.WeaknessesM S is the Worlds largest retailer and control of its empire, despite its IT advantages, could leave it puny in some areas due to the huge span of control. Since M S sell products across many sectors (such as clothing, food, or stationary), it may not have the flexibility of some of its more focused competitors. The company is global, but has a presence in relatively few countries Worldwide.OpportunitiesTo take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region. The stores are currently only trade in a relatively small number of countries. Therefore there are tremendous opportunities for future business in expanding consumer markets, such as China an d India. New locations and store types offer M S opportunities to exploit market development. They diversified from large super centers, to local and mall-based sites. Opportunities exist for M S to continue with its current strategy of large, super centers.Threats world number one means that you are the target of competition, locally and globally. Being a global retailer means that you are exposed to political problems in the countries that you operate in. The cost of producing many consumer products tends to have go because of lower manufacturing costs. Manufacturing cost has fallen due to outsourcing to low-cost regions of the World. This has lead to price competition, resulting in price deflation in some ranges. Intense price competition is a threat.Stakeholders ExpectationStakeholders Expectation are those without which our strategic analysis will remain incomplete is about the expectation of stake holders. Stakeholders are those individuals or groups who depend on the org anisation to fulfil their own goals and on whom the organisation depends. Share holders expectation includes, Corporate governance chain, ball requirements and boundaries within which strategy is developed, Organisational stakeholders, Other groups (internal and external) which have expectations and potential influence The expectation of the stake holders of M S conflicts between, Short-term profitability versus growth, Family control versus professional managers, Financial independence versus piece/loan funding, Public deal out ownership demands openness and accountability, Cost efficiency may mean job losses, Mass markets may via media quality, Mass public service provision versus specialist servicesGeneric models for strategic plan correspond to Porter, Marks and Spencer is followed by a strategic generic model and the main categories areCost leadersDiffferenciationFocusMarks and Spencer is a fascinating case of a company that has lost its strategic focus. Its narrative ill ustrates how even the strongest of businesses cannot afford to take their eyes off the competition.MS lost its way as the UKs direct retailer in the late nineties. Its profits, which had peaked at over 1bn pounds sterling. fell by hall as consumers rejected its clothing. In response to competitive pressure from new and existing players, MS made major changes to its strategy in 1998-2000. These included decisions to more away from its St. Michael brandand to accept credit cards.By 2004 the company was lacing a huge number of issues, including problems with service standards, dated store formats and the alienation of its traditional customer base. MSs stock was falling sharply. The share price, which had been as high as 650p in 1997, had declined to 270p.By this time, Rose had unveil his recovery strategy selling MS Money buying the Per Una brand refunding around 2.5bn pounds sterling to shareholders closing the new Lifestores concept and some Simply Food stores improving products an d services and broadening MSs appeal and customer base. leafy vegetable stated that his offer was final, which meant he would not increase it again for six months unless another bidder appeared. The shareholders decided to back Rose. Green withdrew his offer and the share price fell back to 340p, which was 60p (or a total of 1.3bn pounds sterling) less than putting green final offer.He faced following challenges while doing this right.Increase sales and market share without losing margins. (Rose has been modestabout this, putting the emphasis on cost savings.)Cut costs without undermining quality or service. In 2004 MS planned around 300m pounds sterling of cost savings, but clearly a proportion of these in 2005-06 would be needed to cut prices to competitive levels.The recent history of MS highlights the need to manage shareholder value and deliver quickly, especially during turnarounds. In this situation, Rose might find the strategic option power system attendful.This grid has been used by number of major companies, including Tesco and Diageo, to develop strategies. The options for MS includeIncrementalstrategyThis would not really improve MSs long-term competitive advantage and it would be a high-risk approach, because the business would become even more exposed.Float off foodThis would make shareholders better off, since the business is probablyundervalued. It would not be inherently hard to do this.Close more storesThis would focus the company on its key outlets, but it might damage the brand and decrease customer loyalty in the process.Rationalisethe productFor example gunpoint selling mens shoes. This would declutter the business and provide an opportunity for growth.Increase franchise spaceThis would appropriate in other products, which would create more interest.Strategy of Marks and Spencer to Improve PerformanceMarks Spencer plans to communicate 200 million over the next five years on going green strategy as the battle to become the most env ironmentally friendly retailer steps up.The high street giant, which launches its strategy with an advertising campaign in March, has set some challenging targets, including a pledge to stop sending all waste to landfill and to reduce CO2 emissions by 80 per cent.However, the aspirations will be most scrutinised by non-governmental organisations, which will want to see if MS will be able to maintain its loading to them in future years as the deadline to meet its targets near. Stuart Rose, the chief executive, verbalize that he hoped that the cost of the political platform would be offset by increased sales.Last year the retailer launched a Behind the mark off campaign, which highlighted Marks Spencers environmental and ethical business practices and was one of the retailers most successful advertising schemes.Mr Rose said We think this is the right thing to do because our customers, employees and, increasingly, shareholders are asking us to. We believe those people will embra ce a responsible business.MS has worked on the project for six months, taking advice from Jonathon Porritt, the former handler of Friends of the Earth, who said This plan raises the bar for everyone else not just retailers but businesses in every sector.MSs detailed 100-point plan covers climate change, waste, raw materials, fair trade and healthy living.Elements also include reducing the amount of food imported and labelling those goods flown in, opening a model green factory and four stores and using 50 per cent bio-diesel in its lorry fleet.The retailer also wants to reduce packaging by 25 per cent and to use recycled plastic bottles to make polyester for use in clothing and home furnishings.Rosemary Byrde, global Fairtrade policy advisor at Oxfam, said Marks Spencer is to be applauded for leading the way. We look forward to seeing the difference this will make and to other major retailers following suit in the near future.Robert Napier, chief executive of WWF-UK, the saving organisation, said Such bold aspirations as outlined by Marks Spencer can only help to drive other supermarkets and the retail sector towards supplying products in a way that protects our planet and sustains the natural resources we depend upon.The first change that MS shoppers will notice is a range of fair trade cotton T-shirts. About 20 million garments will be produced over the next 12 months, method of accounting for about a third of the worlds supply of fair trade cotton.Retailers fought to seize the green agenda passim last year as environmental and fair trade issues had become increasingly important to shoppers and regulators.Marks and Spencers Mission, Vision, Values and ObjectivesMarks and Spencers merged objectives are incorporated in its mission statement. This outlines what the business is and what it should be. Mission statements set out in writing what the firm wants to achieve and often include information on the set of the business. MS outlines its core busines s as clothing and Food. Its financial objectives is to deliver shareholder value in terms of increase returns, but also in terms of increase sales and market share in retailing. It beliefs and values are outlined as Our customers continue to see Marks Spencer as the place to shop for special food, produced to exacting standards. MS also sees its workforce as an important part of its plan and also considers modernising its stores as a key corporate objective.Vision The standard against which all others are thriftyMission Making aspirational quality accessible to allValues Quality, value, service, innovation and trustMS also outlines its corporate social responsibility in its mission statement and considers the needs of other stakeholders too.We have a strong tradition of corporate social responsibility (CSR) but we want to make sure CSR is merged into our operations at every levelFinally, MS also outlines its strategic intent (vision) in its corporate objectives. MS wants to conti nue its differentiation strategy by delivering freshness, quality and innovation.Strategic ImplementationThis process involves dispersal of resources (financial, personnel, time, and technology support). The next step involves assigning tasks or responsibilities to specific individuals or groups to make the environment livid and it needs to disseminated into the company effectively and efficiently, monitoring the progress and results. Careful judgment of the process, controlling for variances and making the required adjustments form vital components of this process.Strategy EvaluationAs the term suggests, this process includes evaluation of the efficacy of the organizational strategy implemented.Therefore, successful strategic management moldiness include clearly defined objectives, careful assessment of both the internal and external situation to formulate the strategy, implementing the strategy and making the required adjustments as and when required.The company must possess a clear vision of its long term plans or a clear business vision. This also includes assessing the financial and strategic objectives. Financial objectives involve measures such as sales targets and compensation growth. Strategic objectives are related to the firms business position, and may include measures such as market share and reputation. (quickmba, 2007). The Environmental scan includes the following elements Internal analysis of the firm, Analysis of the firms industry (task environment) and External macro environment (PESTanalysis).After deriving and inferring the information from the environmental scan the company should be able to carefully fall upon and address its weaknesses and external threats and evaluate its strengths. A competitive edge in the market in the market can be based on cost or differentiation.The stage of implementation essentially involves scattering and organization of the companys resources and staff motivation to achieve the set objectives or goals . Evaluation and control includes monitoring the strategy and fine-tuning it as required.CONCLUSIONAfter mid 1990s MS began to experience internal problems such as information flow breakdown and together with the fact that top management was concerned with international expansion MS was drifted away from its core values such as consumer care and customer satisfaction. MS failed to have intercourse that consumers were becoming wiser and its competitions much stronger. Most of consumers consider MS to be old fashioned company, this image has to be changed to be in line with the market demand and regain its lost customers to other competitors. Based on the analyses, the author feels that MS requires to be focus on its strategic plan therefore, in formulate a strategy envirmental analysis is required, which will be analysed through pestle, the current situation of Marks and Spencer is also captured then a strategic plan is constructed to overcome the barriers, then it is implemented an d evaluated to ensure long-term success.Business must try and use as many tools as possible in order to come out with the best strategy for the organisation. However, firms must try and evade the limitations of these tools so as to formulate the best strategy.