Competitive environment refers to changing external systems in which a business competes and operates. If the number of sellers dealing with the same product is high the more competitive environment will be to operate on (Sölvell, 2015). Similarly, in the case of Marks & Spencer, there are many sellers dealing with the same product. Therefore, they should ensure appropriate strategies should be implemented to give them a competitive advantage over their competitors.
Marks & Spencer company should conduct pest analysis to help them analyze and understand the key current environmental changes that can allow the company to come up with better strategies (Menguc, Auh, & Ozanne, 2010).
1a). Political and Legal Forces
Marks & Spencer should consider political factors in their sourcing offices such as Malaysia, China, Italy, Turkey, Thailand, Sri Lanka and India, at first they should consider the rules that are set to protect both businesses and their customers. The taxation implemented by government and how they are going to affect their business (Menguc, Auh, & Ozanne, 2010). Marks and Spencer will consider how the government approaches corporate policy, customer protection, and environmental issues to determine its impact on the company. It should avoid investing in the fragile political environment.
1b). Economic Forces and Trends
For economic factors, Marks & Spencer needs to analyze the stability of the economy before establishing its business. If the economy is growing, then it would be appropriate for Marks & Spencer company to establish its business in the area (Castaño, Méndez, & Galindo, 2015. Inflation is an economic factor that has an impact on the currency. From the case study of Marks & Spencer, the UK economy is doing poorly due to a high level of inflation they experienced which was the highest amongst developed economies.
1c). Social and Demographic Forces
Social-cultural factors such as population growth rate, religious belief, lifestyle, health, education, and culture need to determine before implementing any strategy (Castaño, Méndez, & Galindo, 2015). According to the case study Marks & Spencer case in China, they failed to understand the culture and the preference of the Chinese people. This may be the reason why its sales have to tend to decrease in that region while in other regions such as India it is doing fairly well.
1d). Technological Forces
Marks & Spencer company need to embrace recent technology in order to compete in modern markets. It should introduce appropriate technology in their methods of manufacturing in order to increase the level of output. Technology will also be appropriate in marketing their products in China 19 percent of all retail sales were made online. cyber-breaches should be avoided by Marks & Spencer to prevent unauthorized access of customer’s data and credit card records.
The Porter’s five forces should also encourage Marks & Spencer Company to look beyond what their competitors are doing and examine the other factors that can impact their business environment. Marks & Spencer needs to be keen on the five forces since they are permanent parts of a business structure (Porter, 2011).
2a). Threats of New Entrants
Threats of new entrants, if the clothing industry is more profitable the number of competitors will increase in the market. Strong and barrier entry into the clothing market will give Marks & Spencer a competitive advantage. On the other hand, if there is ease of entry in the market the number of competitors will increase which may affect the company negatively.
2b). Bargaining Power of Supplier
Bargaining power of suppliers, in our case Marks & Spencer, are the suppliers in the market, the smaller the number of clothing companies the more Marks & Spencer’s company will dominate the market (Porter, 2011). Marks & Spencer should ensure that their products are differentiated or they built- up switching costs in order to dominate the market. It should also possess a definite threat to forward integration.
2c). Bargaining Power of Buyers
Bargaining power of buyers in the market, if there are few numbers of buyers and many sellers in the market automatically buyers will dominate the market and they will control supplier’s profit (Porter, 2011). when there is supplier/ buyer imbalance changes In favor of the buyer to an extreme that competition will lower the prices making the supplier believe that they can only survive upon lowering the prices below in order to make the workplace equitable and as humane as possible.
2d). Substitute Products
Threats of substitute products, in this force, the customers tend to find a different way of doing what the company is doing (Porter, 2011). According to Marks & Spencer’s company, their customer has no substitute product since clothes are a basic need and there is no product that can replace it.
2e). Intensity of Rivalry
Competitive rivalry force of Michael Porter, Marks & Spencer company should focus on the existing products, the shape of the marketplace and current competition and focus on where the competition may arise from in present time or in future (Porter, 2011). Marks & Spencer needs to consider the number and the strength of their competitors. According to the case, study Marks & Spencer established a business in China without first understanding the culture of Chinese people. Their competitors would take this as an advantage against Marks & Spencer.
Marks and Spencer should analyze and understand the external environment for them to formulate and implement strategies that are more profitable.
a). Trends
Marks & Spencer needs to understand the trends in the market. Such trends include; economic, technology, government and socio-culture. It should cope-up with the new changes that may arise (Grayson, & Hodges, 2017).
b.) Opportunities
Opportunities is another factor that Marks & Spencer company should take advantage of, recently internet has emerged as an opportunity for business to market their products. Marks & Spencer should use it to reach to their customers wherever they are.
c). Treats
Marks & Spencer should examine the threats they can arise in their daily operations. such threats include government regulation in their sourcing offices. High rent was a threat but Marks& Spencer were able to solve by coming up with extremely large flagship stores (Grayson, & Hodges, 2017).
Marks & Spencer should conduct value chain analysis to help them analyze internal business activities to understand which activities are most valuable. It is classified into two; primary activities and support activities.
Primary Activities
They are directly concerned with manufacturing and delivering of products. Marks and Spencer needs to be accurate with their primary activities which include the following:
i). Inbound Logistics
Marks & Spencer should ensure availability of raw materials to manufacture their products. They need to come up with strategies that will ensure quality raw materials and reliable sources.
ii). Operations
These are processes that Marks & Spencer’s company performs in order to convert raw materials into finished products. They should improve on their technology to increase their output to cater for the demand (Savino, Manzini, & Mazza, 2015).
iii). Outbound Logistics
Refers to activities that come in after the manufactured products are ready to be delivered to the customers. Marks & Spencer should minimize the cost incurred in either the storage or transportation of its products.
iv). Marketing and Sales
Marks & Spencer need to ensure that they understand their target customer to ensure that their marketing and sales activities are effective. Like in India they need to create a better relationship with their customers.
v). Services
Marks & Spencer needs to understand the activities that will maintain the value of their products (Savino, Manzini, & Mazza, 2015). They need to offer after sale services to give their customers confidence for their product. They should, for example, give warranties for their products to customers.
Support Activities
These are activities that boost primary activities to ensure organization achieve a competitive advantage. Marks & Spencer should be keen on support activities such as firm infrastructure to ensure that their resources flow efficiently to help the organization to move forward.
Human resource management, Marks & Spencer needs to ensure that their methods of recruiting and training are effective to ensure accuracy. Marks & Spencer should retain its experienced employees to maintain its performances. Technology development deals with new innovations and improvements of products. Marks & Spencer should keep up with the changes by improving their products through innovations. Lastly, procurement which deals with the purchasing of materials Marks & Spencer should make a purchase agreement with their suppliers (Savino, Manzini, & Mazza, 2015).
4b). Core Competencies
Core competencies of value chain analysis will enable Marks & Spencer to gain a competitive advantage in the market, this is because they will be able to perform their activities in a way they provide superior value relative to their competitor. This will also enable them to perform activities that their competitors cannot perform.
4c). Values Created for Customers
According to the case study, Marks & Spencer company offered better prices in India for their products thus enhancing affordability. They also ensured that taste and preference of their customers are met.
Slow decision making in Marks & Spencer company is one of the major problem. It is affecting its performance and giving its competitors a competitive advantage. In China misadventure is another weakness that is why their sizing of materials are being wrong to their customers. Finally lack of understanding the culture of customer is another problem, they are failing to understand tastes and preferences of their customers.
Marks & Spencer should adopt Michael porter generic strategies which include cost leadership, differentiation and focus in order to gain a competitive advantage over their competitors. In a differentiation strategy, they will ensure that they make product or service different from their competitors but with attractive features. To make a success of differentiation it should conduct a good research and innovation (Greckhamer, & Gur, 2015). In cost leadership, Marks & Spencer should be able to reduce production cost without affecting the quality of their product. Lastly, a focus which will enable Marks & Spencer to concentrate on a specific group. According to case Marks & Spencer attracts 60 years old Chinese women, therefore, they should concentrate on that age group.
References:
Castaño, M. S., Méndez, M. T., & Galindo, M. Á. (2015). The effect of social, cultural, and economic factors on entrepreneurship. Journal of Business Research, 68(7), 1496-1500.
Foss, N. J., Lyngsie, J., & Zahra, S. A. (2013). The role of external knowledge sources and organizational design in the process of opportunity exploitation. Strategic Management Journal, 34(12), 1453-1471.
Grayson, D., & Hodges, A. (2017). Corporate social opportunity!: Seven steps to make corporate social responsibility work for your business. Routledge.
Greckhamer, T., & Gur, F. A. (2015). A Set Theoretic Study of Generic Strategies and Firm Performance Differences. In Academy of Management Proceedings (Vol. 2015, No. 1, p. 15849). Briarcliff Manor, NY 10510: Academy of Management.
Menguc, B., Auh, S., & Ozanne, L. (2010). The interactive effect of internal and external factors on a proactive environmental strategy and its influence on a firm’s performance. Journal of Business Ethics, 94(2), 279-298.
Porter, M. E. (2011). Competitive advantage of nations: creating and sustaining superior performance (Vol. 2). Simon and Schuster.
Savino, M. M., Manzini, R., & Mazza, A. (2015). Environmental and economic assessment of fresh fruit supply chain through value chain analysis. A case study in chestnuts industry. Production Planning & Control, 26(1), 1-18.
Sölvell, Ö. (2015). The Competitive Advantage of Nations 25 years–opening up new perspectives on competitiveness. Competitiveness Review, 25(5), 471-
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