business strategy- piyush

8/4/2019 Business Strategy- Piyush

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TABLE OF CONTENT

INTRODUCTION..2

TASK 1

1.1.3

1.2.4

1.3.6

TASK 2

2.1.7

2.2.....8

2.310

TASK 3

3.110

3.211

TASK 4

4.113

4.215

4.316

REFERENCES.18


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BUSINESS STRATEGY

INTRODUCTION (318 words)

Business Strategy is a term used in business planning that implies a careful selection and

application of resources to obtain a competitive advantage in anticipation of future events or

trends.

Business Strategy is concerned more with how a business competes successfully in a

particular market. It concerns strategic decisions about choice of products, meeting needs ofcustomers, gaining advantage over competitors, exploiting or creating new opportunities etc.

I would be writing my assignment on Marks and Spencer as my chosen company and a brief

introduction of the company is given below.

Marks & Spencer, founded in 1884 by Michael Marks and Thomas Spencer, is one of the

UK's foremost retailers of clothing, foods, homeware and financial services, boasting a

weekly customer base of 10 million in over 300 UK stores. Marks & Spencer operate in 30

countries worldwide, and has a group turnover in excess of lb8 billion. It has specific values,

missions and visions. It's main vision is 'to be the standard against which all others are

measured', it's main mission is 'to make aspirational quality accessible to all', and it's main

values are quality, service, innovation and trust. (www.marksandspencer.co.uk).

The purpose of this assignment is to construct a SWOT analysis, highlighting each of the

strengths, weaknesses, opportunities and threats that were highlighted in the internal audit.

Conclusions will be drawn from the SWOT analysis, which will attempt to review the

company's position and identify the marketing priorities. Also, Marks & Spencer's recent

marketing activities will be critically analysed in order to ascertain what improvements have

been made. This assignment will attempt to determine why Marks & Spencer nearly

collapsed and what they have achieved in terms of success and failure as part of their

recovery programme. Marks & Spencer is a perfect example of a company that had a


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successful strategy but failed to adapt to the changing environment and have therefore

suffered from 'strategic wear-out.

TASK 1

1.1 Explain the contexts and terminology- missions, visions, objectives, goals,core competencies

The leveraging of a firm's internal resources, capabilities and core competencies to

accomplish the firm's vision, mission and objectives in a competitive environment is

Strategic Intent'. It is about winning competition battles and gaining leadership position by

putting organizational resources to best use. When established effectively, a strategic intent

can cause people to turn out excellent performance. Strategic intent is said to exist when all

employees and levels of a firm are committed to the pursuit of a specific but significant

performance target. The intent can take the form of a broad vision or mission statement or a

more focused route covering specific objectives and goals. In a way, thus, strategic intent

tries to establish the parameters that shape the values, motives and actions of people

throughout their organization.

Mission : defines the business , the needs of covering their products and services, the market

in which it is developed and the public image of the company.

The mission of the company is the answer of the question : why does the organization exists?

Marks and Spencers mission statement is broken into 3 parts which include:

Vision - To be the standard against which others are measured

Mission - To make aspirational quality accessible to all and

Values - Quality value, service, innovation and trust.


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Vision : defines and describes the future situation that a company wishes to have, the

intention of the vision is to guide, to control and to encourage the organization as a whole to

reach the desirable state of the organization.

The vision of the company is the response to the question of: What do we want our

organization to be?

The main objectives of marks and Spencers are as follows:

- Profit maximisation

- Increase sales

- Market leadership

- Offering high quality service

- Growth

- Reward shareholders

1.2 Review the issues involved in strategic planningEffective strategic planning involves challenging the way that business has been done up

to this point. It may be that decision-making in some areas will be handed to others, or

that processes which have worked well in the past will no longer fit with future plans.


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It can be tempting for owners or managers to overlook alternatives that are uncomfortable

for them personally, but to disregard your options on these grounds can seriously

compromise the growth of your business.

Examples of the kind of issues that tend to get overlooked by growing businesses include:

The future role of the owner - for example, it may be in the best interests of the business

for the owner to focus on a smaller number of responsibilities, or to hand over control to

someone with greater experience.

The location of the business - most small businesses are located close to where the owner

lives. But as a business grows it may make sense to relocate the business to be closer to

greater numbers of customers or skilled employees.

Ownership structure - growing businesses in particular should ensure that they get this

right. The more a business grows, the more sophisticated it needs to be about meeting its

financing needs. In many cases, the best option is for the owner to give up a share of the

business in return for equity finance - but this can be emotionally difficult to do.

In the final analysis, it is the owner of the business who decides the strategic plan.

Growing a business is not something done 'at all costs'. However, an honest assessment of

the options allows for any decisions made to be as informed as possible.


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1.3 Explain the different planning techniques:Porters generic strategy:

(http://www.mindtools.com/media/Diagrams/GenericStrategies.jpg - ACCESSED ON

24-08-2-11)

Generic Strategies are characterised by an individual retailer's response to the industry

structure. For a giant retailer, such as Marks and Spencer, to obtain a sustainable

competitive advantage they should follow either one of three generic strategies,developed by Porter.

The first strategy of cost leadership is one in which Marks and Spencer can strive to

have the lowest costs in the industry and offer its products and services to a broad

market at the lowest prices. This strategy will be based on the Marks and Spencer's

ability to control their operating costs so well that they are able to price their products

competitively and be able to generate high profit margins, thus having a significant

competitive advantage. If Marks and Spencer uses another strategy of differentiation,

than it has to try to offer services and products with unique features that customers

value. Marks and Spencer will be able to create brand loyalty for their offerings, and

thus, price inelasticity on the part of buyers. Breadth of product offerings, technology,

special features, or customer service are popular approaches to differentiation.

The last strategy of focus can be either a cost leadership or differentiation strategy

aimed toward a narrow, focused market. In pursuing a cost leadership strategy Marks

and Spencer focuses on the creation of internal efficiencies that will help them

withstand external pressures. Therefore, it appears reasonable to think that Marks and


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Spencer will have frequent interactions with the governmental/regulatory and supplier

sectors of the environment. In accordance to this framework, while both overall cost

leadership and differentiation strategies are aimed at the broad market, Marks and

Spencer may also choose to confine their product to specific market areas or may

choose to offer a smaller line of products to the broad market, thus pursuing a strategy

of focus or niche (Porter, 1980). In other words, Marks and Spencer pursues a strategy

of cost leadership or differentiation either in a specific market or with specific

products.

TASK 2

2.1 Organizational audit for Marks and Spencer:PESTEL ANALYSIS

Political Factors

The government sets regulations for companies to abide by such as Health & Safety British

Standards such as, planning for hazard identification, risk assessment and risk control. Ifcompanies do not abide by these regulations they will be fined or even in some cases be

forced to close down. Marks & Spencer would be the first major retailer to go down the Fair-

trade route on both clothing and food. The fair-trade policy, which they have launched will

include, cut salt and fat in M&S foods, recycled packaging and animal welfare protection.

Economical FactorsCurrently the economic outlook is very uncertain and this is more than likely to affect retail

sales, as people do not have the spare cash to spend on luxury items such as clothing and food

luxuries. Marks & Spencer have been hit by this and have recently closed a number of stores

and have had to make job cuts of 2% of their 70,000 staff.

Sociological factorsIn the last few years society has changed. In 2006 as stated by the Guardian, Chief Executive

of Marks & Spencer Stuart Rose wanted to stretch the company brand, for example he

considered selling food online as part of a plan to become a multi-channel retailer, this was


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obviously to keep up with the competitive market such as Asda. Asda and Marks & Spencer

appeal to different markets in terms of social class and other demographics; this has a major

influence on the way they respond to current issues

Technological FactorsTechnology is vital in the retail market. Companies must manage their brands carefully. First

the brands position must be continuously communicated to consumers. Major brand

marketers often spend huge amounts on advertising to create brand awareness and to build

preference and loyalty. For Marks & Spencer to continuously communicate to consumers

they need to be heavily into advertising, which they are.

Legal FactorsLegislations are always changing. Marks and Spencer carry out re-training & update every

year, they keep up to date with new laws or legislations, and with issues regarding Health &

Safety they also ensure that their legal protection is updated. For re-training Marks & Spencer

invite business changes to the business, tax changes to the business & products changes

amongst many other things. Marks & Spencer invite objectives/methods that need to be

changed and new training, and also on going development.

Environmental FactorsWith the current environmental climate as it stands, issues are being promoted daily on the

television, in magazines and newspapers and on the radio. All companies, industries and

organizations are being pressured to change their ways when it comes to the materials they

use and how they manufacture. Marks & Spencer have established their own Green Policy

which they call Plan A The chief executive of Marks & Spencer states that it is called this

because there is no Plan B. Marks &Spencer has today announced a 100-point five-year

plan to re-engineer itself to become a carbon neutral, zero-waste-to-landfill, ethical-trading,

sustainable-sourcing,health-promoting business.

2.2 Environmental audit for Marks and Spencer:SWOT analysis of Marks and Spencer


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Strengths Weaknesses

Sales of clothes have stabilised, andfood sales have increased

New chief executive with freshideas and sales led growth

Good advertising Used iconic models to attract core

target group.

George Davies Product diversificationhome and

furniture Turnaround in sales and growth

Resignation of three key membersof staff: George Davies, finance

director; Andrea White and MelanieDavieshead of merchandising

Previous poor performance, sevenstraight quarters of falling sales

More expensive than other highstreet storeslimited market.

Focusing on older generation maylose younger market.

Opportunities Threats

Rebuild the companys image withcontinued advertising such as the

successful M & S food adverts Focus on core market UK has an ageing population Introducing wider ranges such as

Per Una, Autograph and Classic

collection to stores

Use younger more contemporarymodels to attract youngergeneration.

Internet food shopping butopportunities may be limited

Other serviceseg banking,insurance, savings etc.

Previously tarnished reputation andimage

Competitor product ranges whichdirectly compete with M & S food

such as Tesco finest

Decline of the high street May lose youth market General increase in internet

shopping

Social tastes

Branding


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The selling strategy should be complementary to the branding strategy; the selling strategy

has the push effect on the customers, sale assistants should push customers to buy. M&S

should spend more on designing fashionable products and branding because branding

fashionable products is the key to the market.

Integration of communication approach:

The communication strategy in M&S should communicate the value of M&S products to

customers. This value has to be essential to customers; the communication approach should

consider the following factors in order to be fully integrated with the organization.

1- Budget: the mix of tools that the communication approach will use has to fit the budget of

M&S and be able to maximise the revenues resulting from this spending.

2- Work force: M&S should allocate the communication mix labour force in favour of

branding and advertising efforts in order to pull the customers to the shops.

3- Time scale: the time scale of every campaign is one season; this will leave the chance to

M&S to learn from its previous errors and improve the quality of its branding and

advertising.

4- Measurement: the effectiveness of the campaign should be measured by the increase in

sales, M&S should develop a formula in order to measure the increase of sale resulting from

branding and advertising; this measurement is very important in evaluating the effectiveness

of the communication strategy.

3.3 Future Strategy for Marks and Spencer:a) Total focus on UK retail

The Company will only own brand products and brands exclusive to M&S so it can guarantee

customers the quality, value and service they have come to expect.

Recovery plan for Clothing

The Company has plans to regain the confidence of its customers in the quality and fit of its

clothing. It will sharpen pricing by rebalancing the price architecture, extending the range of

entry-price merchandise and communicating this clearly to customers.


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Expansion in growing product areas such as Food, Home and Beauty

M&S Foods continues to perform well and has earned customers' trust for providing quality,

innovation and convenience. The business is a key platform for future growth and the

Company is considering opportunities to expand its reach through new locations and selling

channels.

The Home business is growing strongly, with home furnishings and gifts the fastest growing

product areas. Beauty, albeit relatively small, is also growing rapidly. Both of these areas

offer promising opportunities for development and will be expanded.

Accelerate Store Renewal Programme: M&S will accelerate the rollout of the successful

elements of its new concept format under a plan to refurbish more stores faster and at lower

cost.

More intensive use of space

Selling space will be reallocated to higher growth product areas to maximise returns per

square foot.

Being closer to the customer

In order to be more customer oriented, some stores in big cities will be opened 24 hours per

day.

b) Value realisation, cost cutting measures and closure of loss-making businesses

In order to focus all its efforts on the recovery of the UK business, Marks & Spencer intends

to divest or close non-core businesses and assets, subject to consultation with its employees.


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TASK 4

4.1 Strategy implementation in two different organizations:The speech and extracts from Marks & Spencer Press Releases, presented below, provide a

valuable insight into the nature of strategic planning within large organizations, and the role

of the Chairman and Chief Executive in this process.

Recovery PlanMark & Spencer

1) Putting together the right teamthe values that the founder instilled into thisCompany.

2) The Strategic Review and Selling the Plan- quality, value, service and innovation,drawing on strengths which still exist to inspire trust in our customers.

Plan: 1- Focus the entire organization on our UK business

100% Own Brandsell only M&S brand Improved Segmentation of Clothing- satisfy aspirations and traditional demands Build on Success in Foods- fast-growing sectors as ready meals and prepared foods Accelerate Store Renewal Programmed- under a plan to refurbish more stores faster

and at lower cost

More Intensive Use of Space Improve the Supply Chain - direct relationships with our suppliers Financial ServicesDeveloping M&S store cardPlan: 2 - Sell or Close loss-making businesses

No longer afford to support non-core activities Stop subsidizing loss-making businesses To divest or close non-core businesses and assets 10 stores in Hong Kong will be sold to become a franchise Direct - to close its loss-making catalogue business, a dedicated call centre and

fulfillment centre


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Plan: 3 - Change the Capital Structure

To reduce the dilution from the relatively low returns from property investment

Tesco's Strategy

Strategy of cost leadership-

lowest costs - products and services to a broad market at the lowest prices Ability to control their operating costs and price their products competitively. Able to generate high profit margins- significant competitive advantage

Market DevelopmentStrategyJoint developments and Strategic alliance

Entering new markets like China and Japan Key growth driver for revenues and expansion strategy Asian markets - increase in consumer spending and trend towards retailing. New markets demographically high opportunity markets International alliances with the local retailers in Asian markets. Method of development - exploit current resources and competence Entering into joint ventures or partnerships, to gain larger economy of scale and larger

market presence.

Extensive local knowledge and operating expertise of the partner. Sustainability - strategy addresses the circumstances in which the company is

operating.

Acceptability- expected return from the strategy, the level of risk and the likelyreaction of stakeholders.

Feasibility - whether Tesco has the resources and competence to deliver the strategy.Product DevelopmentDiversification, expanding and diversifying Tesco's product mix

To implement internal development when new products are developed. The nature and the extent of diversification


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the changing needs of the customers Tesco can introduce new product lines Require more attention to R&D, leading to additional spending. also develop different store types in Eastern European and Far Eastern markets value added by the uniqueness will eventually lead Tesco to command a premium

price

4.2Resource requirement to implement new strategy

Product- Building on our knowledge and understanding to provide exactly what our

customers want.

Satisfy aspirations and traditional demands. Consolidate and developed sectors as ready meals and prepared foods.

Stores-the changes will extend to around two-thirds of their space, so most of their customers

will notice the difference.

More Intensive Use of Space Develop the distribution channel Nurture our brand names

People- recruit top talent to strengthen the team.

The values that the founder instilled into this Company. Quality, value, service and innovation, drawing on strengths which still exist to

inspire trust in our customers

LeadersLeadership and management synergy

Leaders focus on the ends; Managers focus on the means. Both together reach more. Leaders provide vision; Managers provide execution. Both together achieve more

Capitalallocation should be efficient and effective
http://www.1000ventures.com/business_guide/crosscuttings/leadership-mgmt_synergy.htmlhttp://www.1000ventures.com/info/leadership_12roles_brief.htmlhttp://www.1000ventures.com/info/vision_brief.htmlhttp://www.1000ventures.com/info/vision_brief.htmlhttp://www.1000ventures.com/info/leadership_12roles_brief.htmlhttp://www.1000ventures.com/business_guide/crosscuttings/leadership-mgmt_synergy.html


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Should be wisely invested and monitored.

4.3 Timescales and targets to monitor a future strategy:Marks & Spencer wants to become the UK's leading multi-channel retailer, with an

aggressive plan to grow sales to 1bn by 2013/14.

It plans to develop a new website platform, ending its current contract with Amazon in 2013.

The platform, the company said, will "enable us to provide a customised multi-channel

experience that links all our channels".

Over three years it will build our multi-channel and international capability. This will develop

M&S into an international multi-channel retailer, making the M&S brand more accessible to

more customers around the world.

Its current offering M&S Direct performed well in the first half, with sales up 49%. The

website had 1.2 million unique users during the period, generating 13,000 orders. But it said

it wants to develop this further.

The retailer will install touch-screen, web-based ordering points in stores, and will start

selling online internationally in one market in 2011.

It does not intend to offer its full food range online at the moment, but does plan to expand

the online wine, flower and 'food to order' business from 80m today to 150m by 2013/14.

M&S is also targeting the international market, with plans for more tailored websites for

specific local markets set for 2013.

IT savings

The retailer has increased its target cost savings from its Project 2020, which will transform

its IT and logistics.

It originally planned to save 250m with the project, but has now increased that to 300m. Of

this, 125m will be saved via improvements in IT. It said the savings have not involved anycapital investment.


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Project 2020 will see a restructured supply chain, new information systems and improved

operational execution.

References:Web-sites:

www.cipd.co.uk-accessed on 24-08-2011

www.sps.org.uk-accessed on 224-08-2011

www.tesco.co.uk-accessed on 24-08-2-11

www.businessballs.org-accessed on 24-08-2-11

www.marksandspencer.com-accessed on 24-08-2-11

Books and Journals:

Grant R- Contemporary Strategy Analysis (Blackwell, 2004)

Mintzberg H- The Rise and Fall of Strategic Planning (Prentice Hall, 2000)

business strategy- piyush

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