The greatest strength of Marks & Spencer is its brand image which influences the customers’ choice. For quality assurance the consumer can confidently rely on St Michaels Brand Label (Benady D 2005). It has diverse products – Clothing, food, furniture, financial products, etc. This is an advantage to the company as the customers who believe in the quality of one item will be drawn to another item hoping for the same quality. Their human resources are very good which is very important for running any business. Their presence in the international market is a good advertisement for them.
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It is clear from research findings that the company was successful till late nineties and then the decline has begun. This decline is because of inexperienced people at the helm of affairs. The company was blind to the changes in the market and continued their traditional thinking. They didn’t adapt to the changes as they occurred. This is evident from thier lack of appeal of the St Micheal brand to the under 30s age bracket(Tony Grundy 2005). According to a channel 4 programme the management was focused more on the day to day operations rather than long term strategies. The same programme revealed that the company was tied to the generalised view of the market instead of thinking about the different market segments.
M&S was very late in introducing the loyalty card to its customers. When all the other retailers were having those cards the customers of M&S didn’t not have them which is a weakness of the company. Most of the merchandise of M&S was women’s wear. Most of the customers must have been women. There should have been few women in the management who could have understood the taste of women. There were internal conflicts between the management personnel which has affected the company.
Financial Times, 19 May 1999 stated, “M&S has behaved more like a wholesale buyer of products â€¦ rather than thinking about the sort of person that was buying the item and what else they could sell to that customer.”
M&S has a flair for diversified products. Introduction of innovations in this regard can help the company to come up some more new products that can create increased taste in the customers for the company.
Re focus on international markets
In the early 2000s we find that the company started cutting down the European expansion programme. We find that the trading conditions have become tough for the company to compete well at the international level. If the company can review its marketing mix and rectify their shortcomings in regard with their proper use of 7Ps, the opportunities in the international market are immensely huge.
There is big opportunity for better alliances for the existing companies with proven history of past success. M&S should grab this opportunity to develop thoughtful and fruitful alliances.
Assets and established structures
Being in the business for a considerably long period the company has assets and established structures which can be used for the expansion of the business. Retrospection into the existing flaws of the company can help rejuvenate its business by developing overseas supply chain.
New & existing competition
For every existing business there is always the threat of the new competition that is likely to crop up. This is evident from the history of the company the M&S lost the market share to Oasis which offered more fashionable with similar prices. Others like the discount stores and supermarkets posed a great threat the company. BHS, Top Shop and ASDA can be potential threats in this regard.
Volatility in Price of raw material
Price of raw material is always volatile. This volatility can be a big threat to the company because the budget plans will have be to changed according to the changing prices of the raw material
During the time of this case study recession was slowly peeking up with few incidences like twin tower attack which affected the global economy. People will become more economical during these times where they cut down their expenses luxuries and comforts and concentrate more on basic needs.
Internal and Corporate Appraisal
Porter’s Five Forces
Threats from Potential entrants
Potential entrants of that time include BHS, Top Shop, ASDA, TESCO, Morrison etc. These have the potential to take over the market from M&S.
Suppliers’ bargaining power
The suppliers of the raw material have developed a bargaining power due to the entry of the new companies into the market. If they get a better bargaining power of supplying things from other companies then they will obviously have more choices to make than sticking on to M&S.
There is a stiff competitive rivalry seen in the market for M&S. Labels like Gap, Next, Primark, New looks, Acadia Group etc, are the leading rivals. Oasis has offered different fashions to the customers with the similar prices. Others like the discount stores and supermarkets posed a great threat the company. It has brought lot of loss to the market share of the company. If M&S doesn’t take precautions to check this condition, competitors will take away the complete market share from M&S.
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Buyers bargaining power
In a growing market and with the emergence of new companies the bargaining power of the buyers has always risen up. In the market where once there is only one option now there are many options available to them. This has increased the bargaining power of the buyers to a large extent. With the economy playing heavily on the minds of people loyalty is the final thing that they would think of when someone else like Oasis and the like are ready to give a better offer.
Threats from substitutes
There is a big threat from the substitutes. This threat posed mainly by retailers like John Lewis, Sainsbury, Rackhams, etc.
External Environment – PESTLE Analysis
The pestle analysis helps us to understand the external environment of Marks and Spencer better.
POLITICAL – The door for British Companies was opened to invest in Europe due to the Free Trade Agreements and European Integration. These political factors helped M&S to stretch the wings of its expansion globally. In response to the global dictate of off shoring M&S has launched a new franchise operation in Poland and Australia (Olins,1997)
ECONOMIC – Being in the Retail sector M&S is volatile in regard with any changes made in the interest rates. The twin tower collapse of September 11 has affected the economy of the world so much. Prices have fallen low. This has changed the figures of profit completely. Fortunately, things slowly changed for better.
SOCIAL – The taste of a consumer keeps changing always. These changes are both an opportunity and a threat to the industry. Its an opportunity because of the new market of the consumers. It is however a threat if the company doesn’t adapt itself to the change which is exactly what has happened with M&S. It went on with the traditional thinking not giving adherence to the changes.
TECHNICAL – The Marks & Spencer Charge card was launched nationally in 1985. Online shopping was launched on the Marks & Spencer website in 1999. The introduction of such technology helped the business to work fast and efficiently.
LEGAL – There were few legal problems that the company had to face especially in the international operations. But they are short lived.
ENVIRONMENTAL – The company was involved in using environmental friendly resources in the production of cotton and wool. The threats are in terms of legal consequences for livestock’s in terms of health and safety.
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