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Business Strategy Environment

University: Harrods of London

  • Unit No: 10
  • Level: High school
  • Pages: 20 / Words 5045
  • Paper Type: Assignment
  • Course Code: N/A
  • Downloads: 206
Question :

This sample will let you know about:

  • Discuss about the VRIO Framework.
  • Explain Porter Five Force Analysis
Answer :
Organization Selected : Marks and Spencer

INTRODUCTION

Business environment refers to all internal and external factors such as customers, employees and government that impact on the functioning of business in the market. In this report Marks and Spencer has been taken as company that operates its business worldwide and specialized in providing quality clothing, home and food products to its customers. This report covers market analysis by using appropriate framework that impact and influence macro environment on Marks and Spencer and its strategies. It also analysis internal environment and capabilities of company to identify its strength and weaknesses. It also analysis market position of the company by using Porter five force model. At last this report prepare strategic management plan that has tangible and tactical strategies priorities and objectives of the company that helps in expansion of business and achievement of objectives.

LO1

P1 Analysis the impact and influence of macro environment on Marks and Spencer and its strategies

Pestle analysis: It is an analytical tool that is used to analysis various external factors of environment that impact on the functioning of business thus helps in gaining competitive position in the market. Marks and Spencer by analysing external factors such as customers, government, employees and investor of the company is able to expand its business and gain competitive position in the industry (Jia, 2020). Thus, it helps in better understanding of competitive position or current and future position of Marks and Spencer in the market.

Political Factors: It refers to policies, procedure or rules and regulations of government that need to be considered by the company for smooth operational of business. This factor has adversely impact on the functioning of marks and Spencer in the market. Due to political instability and Brexit in UK company sales and profitability has been declined tremendously as disposable income of customers was low, and they are also less willing to make purchase. On the other hand free trade benefited company to expand its business across various nation with minimum restriction. Company is able to survive and grow in the industry by expanding its business across nation and by using various marketing strategies to induce people to make purchase. Thus, it can be stated that political factor adversely impact on company functioning and its strategies as it has to change as per policies of government. It also helps in smooth functioning of business and achievement of company goals.

Economic factors: It analysis and determine economic condition of country by identifying factors such as interest rate, employment rate and disposable income of customers. UK is suffering situation of recession thus it means high employment rate, interest rate and debt of government and people. It impacts positively to the company as high employment rate means company can hire suitable candidates at lower price. On the other hand cost of production has increased due to increase in interest rate, cost of input of raw material that has impact on company sales and profitability (Dirick, and et.al., 2019). Company by generating large number of employment and by using various method to enhances skills and knowledge of employees can reduces cost of production and wastage. It can also provide various promotional offers that influences customers to make purchase thus it helps in achievement of goals. Thus, economic conditions of UK has impact Marks and Spencer functioning and strategies.

Social Factor: It includes belief, preferences, values and culture of people living in the society so company has to consider such factor to gain competitive advantages and enhances its sales. It has impact on Marks and Spencers sales as it is not able to satisfy needs of youth customers due to long-standing existence. Most of the people tend to associate brand of company with past thus company was not able to retain customers satisfaction and loyalty. But company able to expand and survive in ready meals sectors as there was wide scale increase in consumption of ready meals. Thus, company by making use of available opportunity in food store is able to expand its market and able to gain competitive advantage in the industry. Thus, it can be stated that company by considering social factors and change its strategies is able to expands its market share.

Technology Factor: It refers to prevailing technology and technological innovations in the industry that help company in gaining competitive advantages and establishing brand image. It impacts on the functioning as Marks and Spencer has to update its technology and innovative its product to differentiate it from other competitors (Kemsa, 2019). Self- checkout and online shopping are the two changes in technology that impact on the functioning and strategies of Marks and Spencer. Company by introducing self-checkout in its food stores is able to reduce cost and able to get quick and fast feedback from customers. On the other hand company by building strong presence in e-commerce has provided ease to its customers to shop online and get their product at their doorsteps. Thus, it has change strategies and impact on functioning of company adversely.

Legal Factor: It refers to rules and regulation such as employment law, discriminative law that are needed to be followed by company to avoid itself from impose of fines and penalty. This factor has adversely impact on company brand image and sales as it had been found that Marks and Spencer has involved in multiple legal disputes (Zhao and et.al.,2019). Such as it does not able to ensure health and safety of it employees from asbestos risk which lead to fines and penalty. It was also found that company was underpaying its employees and forcing them to work overtime. This all has adversely impact on company functioning of company as it had to incurred additional cost of penalty and fines. Thus, it also impacts on strategies of Marks and Spencer as it had to change its strategies in order to build strong brand image and gain customers loyalty. Company by abiding to such legal laws made by government can enhance its market share and satisfy needs of customers and established strong brand image in the industry.

Environment Factor: This factor was recently includes as increasing awareness among people the affect caused by company on environment. As the resources in the environment are limited, so they need to be protected by company while operating its business. Company in manufacturing its product clothing, food has ensured safety of environment by using less energy. Company is well know for providing sustainable products within its customers thus able to build strong brand image and customers satisfaction. Thus, environmental factor also impact on company functioning and strategies as it has to consider such factor for gaining customers loyalty. Get Assignment Examples.Talk to our Experts!

LO2

P2 Internal environment and capabilities of Marks and spencer

Swot analysis

SWOT analysis is a strategical tool which analyses the internal business micro environment in terms of strengths and weakness of company, the various opportunities and threats it has to work towards for positioning itself firmly in the volatile business environment.

STRENGTHS -

  • High recognition of brand- Marks and Spencer established high recognition value in the customers preferences when it comes to offering high fashionable clothes. The company has high goodwill among customers which is a great internal strength affecting the business growth (Büyüközkan and Ilıcak, 2019).
  • Wide variety of products-Marks and Spencer has wide variety of products under the brand catering to various segments of customers who look for high quality shopping experience. High skill sets in employees are a great strength for company as it enables to gain competitive advantage in long term sustainability.
  • Large number of outlets – The company has 900 stores all over world and around 600 stores in UK which offers wider business opportunities and high sales target. It increases the internal strength of company as being large availability of stores the overall structure of company functioning is enhanced.

WEAKNESSES-

  • Bad publicity as non trendy store- Mark and Spencer has created wrong assumption in minds of people as non trendy clothing store which has affected the business greatly. Company must formulate strategies to attract customers in all age groups and enhance its range of clothing, quality by working towards changing preferences of segmented customers.
  • Manual working increases the overall cost.- Company has been long following traditional methods of producing their products and services which has lead to overall increase in their cost. It has been affecting their profit margins greatly and leading to less cost efficiency in operations(Erofeeva and Egbert,2020). The company must increase the innovative technologies to speed up the whole process of manufacturing clothes.

OPPORTUNITIES

  • Internalization- The company must aim towards increasing its presence globally by increasing number of store outlets in new countries where they have large opportunities for growth. Global expansion is the extreme need in changing business scenario for companies for gaining long term growth in the market spread.
  • Market Segmentation-M&S has the opportunity to segment its customers worldwide by targeting them according to various needs and preferences. Company must aim to formulate strategies for satisfying the various customer demands depending on their preferences and changing fashionable scenario fp clothing industry to establishes a firm business structure.

THREATS

  • Increased competitive business environment – There are large number of brands emerging every day globally in clothing industry which has becoming an increasing threat for S&M. Competition in the retail sector and changing business scenario is a real worry due to which reputation and goodwill of company has been largely affected. M&S need to come with new operational strategies for developing risk management and increase the stores globally (Phadermrod, Crowder and Wills, 2019).
  • Volatile customer preferences- With high increase in customer preferences for fashionable clothing it is becoming an increasing threat for S&M to adapt to their preferences quickly. Company must formulate new strategies and enhance the use of innovative technologies in their products, analyse the changing market demands and upgrade its products and services. Order assignment help from our experts!

VRIO FRAMEWORK

VRIO Framework is a strategic analysis tool that is used by company to identify and evaluates its internal resources and capabilities that are used to gain sustainable competitive advantages in the market (Lüttgens and Montemari, 2016). Marks and Spencer is able to achieve its objectives and gain competitive advantages by identifying its internal capabilities to make use of available opportunities. The four attributes of Marks and Spencer resources that promote long term growth and survival of business are as follows:

 

Valuable

Rare

Cost to imitate

Organized to capture value

Product quality

Yes

No

No

Yes

Global presence

Yes

No

No

Yes

Employee management

Yes

Yes

Yes

Yes

Organization culture

Yes

No

Yes

Yes

Pricing policies

Yes

No

No

Yes

Value: It refers to the value or price of product that is offered to customer and helps in exploitation of opportunity or neutralize competition by using internal capabilities. Marks and Spencer by providing valuable and qualitative products to its customers is able to maintained and retain customers satisfaction and loyalty. Company continually evaluates its value of product for achievement of company objectives by offering product at reasonable price. Thus, company has set appropriate value for its product by effectively pricing of valuable products that helps in expansion of market share and achieve of goals.

Rare: It includes such resource that are limited in environment or few companies only acquired it ,so company that have both rare and valuable resource gain competitive position. Marks and Spencer provide valuable product but its products are not rare as company such as Tesco, ASDA offers similar products to its customers so it has competitive parity. As the company operates its business across various nation so it does not have rare global presence. Thus, company is able to expand its market share and gain customers satisfaction by use of its strength to provide specialized product.

Cost to imitate: It explains cost incurred to imitate or to manufacture similar product of company so it is threat for the company if other competitor can easily imitate the products or services. Marks and Spencer deals in clothing home and food product that can be easily copied by other competitors in the market (Matila, 2017). Organisation culture can also be easily imitated without much expense. Thus, cost of imitation of product is low and there are many competitors in the market that deals in similar product.

Organized to capture value: To provide value to its product and services company has to organize its management, policies, structure and work environment to gain sustainable competitive advantages. Marks and Spencer is able to satisfy needs of customers and make use of available opportunities by effective organize policies and structure. It is able to coordinate individual goals towards organisational goals due to effective management of resource. Thus, it can be stated that it helps in identifying strength and capabilities of the company that helps it in gaining competitive advantages in the market.

LO3

P3 Porter Five Force Analysis

It analytical tool that is used to identify competitive position of businesses and strategy potential profitability in the industry. Porter five forces helps in identification of company position in the market by analysing five factors such as degree of competition, number of substitute products, power of supplier and customers in the market (Click, 2017). Thus, it is useful strategy management tool that helps in achievement of company objectives or goals in an effective manner.

Competition Rivalry: It refers to number of competitors and power of each competitor and quality of product offered by other competitors in the industry. Competition in retail industry is intensive due to large numbers of competitors offering clothing, home wear and food products to customers. Online competition has also tremendously increased as every company want to expand its market share by offering its product online or through its website. High competition in the industry stated that Marks and Spencer expand its market share by satisfying customers needs by offering differentiate and quality product to its customers (Namada, 2020). Therefore, specialized in providing quality product helps company in expanding market share and achievement of company objective. It can also use update technology or trained employees to enhance their skill and knowledge for bringing economic of scale and to provide qualitative products at reasonable rates.

Power of buyer: It explains the ability or power of buyer to bring down price of product or force company to cut down its price. It is determined by identifying number of prevailing customers and importance of each customer for the company. Marks and Spencer operate in retail industry so there are number of competitors that offers quality product at reasonable rates so customers have wide varieties of option to choose among. Switching cost of customers is also low thus they can easily change their preferences without incurring much cost. Marks and Spencer by building and maintaining customers loyalty and satisfaction is able to retains its customers and promote growth and survival in the industry.

Power of suppliers: It refers to ability of supplier to charges high prices of its input thus it is determined by number of supplier and uniqueness of raw material. Marks and Spencer has well-established brand image and number of supplier in the industry are also large so company can easily bargain from such supplier (Palkovits-Rauter, 2018). Cost of switching is also low so company can easily avail its product at lower cost. Thus, it can be state that low Bargaining power of supplier helps in reduction of cost of production and increase profit margin of the company. Due to strong established brand image of the company in the market bargaining power of supplier is less and it can easily avail products at lower cost.

Threats of new entrance: Company power and position is also affected by how easily new company can enter into the market. It identifies time and amount of capital required to enter into industry and gain competitive advantages in the market. Marks and Spencer operates its business in retail industry so threat of new entrances is low as it required large amount of capital to established business in the industry (Lüttgens and Montemari, 2016). Company is able to create barriers for new entrances as it provide specialized and quality products to its customers. It has also patent and copyright its technology and products to gain competitive position in the market and create barriers for new entrances. Thus, it can be stated that low threat of new entrance in the industry promote growth and survival of company in long run and helps in gaining competitive advantages in the industry.

Threats of substitute products: It refers to similar product or product that can be used in place of companies products thus it posses high threat for the company. As when close substitute are available customers will change their preferences and buy products of another company. The industry in which Marks and Spencer operates has high substitute such as clothing can be easily copy and design at reasonable cost. Threat to food business from other competitors such as Tesco, ASDA, ALDI that offer similar products to their customers. Thus, high threat substitute of product is minimized by providing qualitative services to its customers and differentiate it from other competitors in the market. It helps in would expansion of market share and achievement of organisational o

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