STRATEGIC MANAGEMENT

Strategic Management

Strategic Management

Marks and Spencer

Marks and Spencer plc, also known as M&S, is a world's renowned retailer with its headquarters in Westminster, London. It has more than 300 stores across above 40 countries and more than 70 stores in UK. M&S is famous for its clothes and food products. It was found in 1884 by Thomas Spencer and Michael Marks in Leeds (Lewis & Bridger, 2010, Pp. 01).

In1998, Marks and Spencer was the first British retailer to acquire pre-tax profit of more than £1 bn. However, after few years M&S faced crisis that lasted for few years. Since 2000 the company Marks & Spencer began rapidly to expand and explore other areas: household products, food, furniture, products for beauty, technology, financial services, etc. In recent years, Marks & Spencer stores act as full-scale shopping centres with huge grocery supermarkets, entertainment venues and cafes.

The company is covering general merchandise sector and food sector. The general merchandise is divided into menswear, women's clothing, home and beauty. All these units have contributed in shaping up company's vision stating that they want to set a standard through which other company should be measured. These units are centralized by the values of Marks and Spencer. These include trust, service, value and innovation (Riche, 2007, Pp. 56).

Porter's 5 Forces Analysis

Porters' five forces model was developed by Michael E. Porter in 1980. This model is used to identify the sources of competition in the retailing industry. These forces as described as follows:

Bargaining Power of Suppliers

More than 90 per cent of M&S suppliers were British. M&S bought directly from a few UK suppliers all their stock that they manufacture which created a situation where the supplier was reliant on M&S and vice versa. The problem of this approach is that overseas suppliers produced products on lower cost. The bargaining power of suppliers is quite low when it has concentrated purchasers. When the sales declined rapidly in late 1990s, M&S outsourced globally in order to reduce its cost similar to its competitors, which resulted in, a lower bargaining power of its UK suppliers (Facendini, 2004, Pp. 01).

Bargaining Power of Buyers

In general, bargaining power of buyers is high. Customers seeking traditional clothing became price sensitive, and some others seeking powerful image became fashion sensitive. M&S competitors were more customers focused which took away its potential customers. In addition, UK consumers were not willing to pay a premium price for supporting British products. M&S had misread its target market; therefore, a consumer oriented strategy is needed instead of product oriented strategy.

Threat of Entrants (Barriers to Entry)

In the retailing clothing sector, M&S faced a competition both in the higher and lower ends of its market. ASDA with its own brand name George and Matalan is offering high quality clothes at low prices. Both companies' clothes have a classical style, which attracted UK consumers who were traditional customers of M&S. In addition, stores like Gap, Oasis, Next BHS, and Top Man & Zara offered high quality clothes of latest fashions ...