In this report, different models will be discussed which can help the company in analysing the both internal and external business environment in effective manner. For conducting this report, Marks & Spencer Group Plc company is chosen. It is aBritish multinational retailer company whose headquarters is located in London, England. The company is specialised in dealing and selling clothing, home products and food products with its own label. The company is founded in 1884 a 134 years ago by Michael Marks and Thomas Spencer. Now, it serves it product and services all across globe.
The Porter's Five Forces is referring to the framework which helps in analysingthecompany's competitive environment. This model is introduced by Harvard Business School professorMichael E. Porter's.This model is used to guide the business strategy in order to increaseand grab effective competitive advantage. Although, Porter’s model is very useful as it helps the company in understanding the forces of business environment or in industry which can affect the business productivity as well as profitability (Barbosa and Azevedo, 2017).
The Porter knows that every business organizations should focus on rivals, as he encouraged looking on the actions of their competitors and observing thefactors which could impact business environment. Hence, the management of Marks & Spencer Group Plc has focused on this model as it helps them in developing best and effective strategy for the business(Isabelle,et. al., 2020).
Here the Porter's five forces is discussed in context to Marks & Spencer Group Plc company which influence the industry.
Figure 1: Porter's Five Forces Model
Source: (By Author, 2021).
Threat of new entries: The threat to entry is very low as for making entry, there is a need for large capital investments to set up a successful chain of stores (Irfan, et. al., 2019). Although, the new entry in Retail sector will always bring innovation as well as new process of doing things as Marks and Spencer Group Plc make entry with some innovation. Moreover, the pressure is created on as Marks and Spencer Group Plc through low pricing strategy, decreasing cost and providing new valuable propositions to the customers (Barbosa and Azevedo, 2017). Although, the management ofMarksand Spencer Group Plc is focusing on managing all thechallenges and develop effective barriers strategy.
Bargaining Power of suppliers: The bargaining power is very low as it is very reputed and listed company with huge turnover. Hence, the suppliers purchase goods on the retailer price for reaching the huge customer base. Along with this, the Marks and Spencer is not dependent on single suppliers as they can switch to other if suppliers’ power is high. It sells their own high quality branded product (Fakhimi, et. al., 2017). Thus, it means the Marks and Spencer purchases buys the raw materials in huge amount not the finished goods, that is favourable for margins (Goyal, 2020).
Power of buyers: In context to the as Marks and Spencer Group Plc the bargaining power of buyers is very high. As there are many options available which customer can switch if prices of product are not reasonable (Trevena, et. al., 2020).Although, the consumers are searching for classical clothing where its price become sensitive or the customerseekingbest quality that became fashion sensitive. Mostly, the competitors of M&S focus on customers which grab its potential customers (Frederick, et. al., 2019). However, the management of Marks and Spencer had misunderstood its market as they did not examine its marketing effective manner. As the consumer of UK consumers are not willing to pay the premium price for product and services as they want to buy product at lower price with high quality. So, the management of Marks and Spencer should focus on consumer-oriented strategy in their business as it helps in grabbing potential market and customer (Nedelcheva, et. al., 2021)
Threat of substitute products: The risk of substitute product for Marks and Spencer is high. As there areampleof substitutes to food and clothes, that brings the threat of alternates (Sánchez,2017). However, the food and apparel can be replaced by goods from other retailers. Thus, main rival in food market is possibly Waitrose, if it is talked about the clothing, while John Lewis and Peter Jones is main competitors which offer high quality product (Frederick, et. al., 2019).
Competition in the industry: The Competitive rivalry for M&S is high as there are number of competitors present in the market which are serving same product and services in market (Aithal, 2017). Although, it faces high competition with supermarkets such as Tesco, Asda and Sainsbury’s on the other hand clothes retailers like Zara, Topshop, Next etc. Thus, M&S is facing threat to competitors due to many companies are entering into its market with similar quality goods with reasonable price.
Moreover, it is analysed that the management of Marks and Spencer has effectively focused on the porter’s five force model and effectively applied this model in their business operations effectively and efficiently (Kawira, 2017).
. The barging power of buyers is high and suppliers is low. Along with his threat to competitors are also high, threat to substitute good is high and risk to new entry is also low.
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Isabelle, D., Horak, K., McKinnon, S. and Palumbo, C., 2020. Is Porter's Five Forces Framework Still Relevant? A study of the capital/labour intensity continuum via mining and IT industries. Technology Innovation Management Review, 10(6).https://www.timreview.ca/article/1366
Kawira, B., 2017. Effects of porter’s five forces on strategy formulation: A case study of Standard Chartered Bank Kenya (Doctoral dissertation, United States International University-Africa).http://erepo.usiu.ac.ke/bitstream/handle/11732/3219/BESSY%20KAWIRA%20MBA%202017.pdf?sequence=1&isAllowed=y
Nedelcheva, Y. and Filipova, M., 2021. Applying five forces model to pharmaceutical industry. RevistaInclusiones, pp.162-173.https://revistainclusiones.org/index.php/inclu/article/view/191/155
Sánchez, M.A., 2017. A framework to assess organizational readiness for the digital transformation. DimensiónEmpresarial, 15(2), pp.27-40.http://www.scielo.org.co/pdf/diem/v15n2/1692-8563-diem-15-02-00027.pdf
Trevena, H., Neal, B., Downs, S.M., Davis, T., Sacks, G., Crino, M. and Thow, A.M., 2020. Drawing on strategic management approaches to inform nutrition policy design: an applied policy analysis for salt reduction in packaged foods. International Journal of Health Policy and Management.https://www.ijhpm.com/article_3945.html
In this task, VRIN/VIRO framework is discussed which helps the management of M&S in analysing their internal resources and their capabilities ion effective and efficient manner.
The VRIN is defined as a tool which is used for analysing the business internal resources as well as its capabilities in order to find the effective source for attain and sustained potential competitive advantage. This model is developed by Birger Wernerfelt in the 1980 as it offers the effective and powerful way for evaluating thevalue proposition in the competition (Lu and C g, 2019).
The VRIN stands for Valuable, Rare, Costly to Imitate and Non-Substitutable (Alexandru-Ilie, et. al., 2019).Although, the VRIN framework is very useful for measuring the competitive power of capability or resources in effective and efficient manner.
Here the VIRO framework is applied to the operations of M&S company as it helps them in analysing its internal business environment.
Figure 2: VRIO Analysis
Source: (By Author, 2021).
Valuable: The resources and the brand position of the company M&S are also valuable which helps the business to manage the competitive advantage in the market. Other than this, the valuable resources are the brand reputation and store locations near to the customers. This helps the customer to make M&S as their primary choice for the business operations. Other than this, the innovative products produced by the company are also adding valuable to the business (Devaux, et. al., 2018).
Rare: The employees and the staff performance are also very rare which helps the business to make competitive advantage in the market. Taking value further in order to have rareness M&S has made their marketing strategy business performance and the faster payments for the customers. Distribution network and the patents of the business are also rare within the business (Iftikhar, et. al., 2019).
Costly to Imitate:The skills and talent of employees of the business are not imitable because they are the one helping the business to gain competitive advantage in the market. Another business item that is difficult to imitate is the faster payments method provided by the business. Faster payment methods will help in making secure payments and will also gain the trust of the customers (Bashir and Verma, 2017). This is slightly imitable. Skilled and trained professionals are difficult to imitate. This is because other businesses are hiring the candidates and train them to improve their skills for improving the performance of the business (Kontu, et. al., 2019).
Organization: In this, the ideal source cannot be replaced by any other resource. The business performance and the activities of M&S are organized with its mission in order to gain sustainable competitive advantage. The resources here can help in investing the right business opportunities and management. The mission and vision of the business are organized with respect to these inimitable resources as by applying faster payment method and having skilled workforce. The distribution network of M&S Company is also organized because this way the business is able to satisfy the needs of the customer (Ariyani and Daryanto, 2018).
Alexandru-Ilie, B., Alexandru, P.D., Iulian, C.C. and Valentin, W.P., 2019. Managing organizations for sustainable business development: interaction between VRIO framework and Mckinsey 7s framework.http://basiq.ro/papers/2019/Managing_Organizations_for_Sustainable_Business_Development_Interaction_between_VRIO_Framework_and_McKinsey_7S_Framework.pdf
Ariyani, W. and Daryanto, A., 2018. Operationalization of Internal Analysis Using the VRIO Framework: Development of Scale for Resource and Capabilities Organization (Case Study: XYZ Company Animal Feed Business Unit). Asian Business Research Journal, 3, pp.9-14.
Bashir, M. and Verma, R., 2017. Why business model innovation is the new competitive advantage. IUP Journal of Business Strategy, 14(1), p.7.https://www.researchgate.net/profile/Makhmoor_Bashir3/publication/316644311_Why_Business_Model_Innovation_is_the_New_Competitive_Advantage/links/5a4f02eda6fdcc7b3cda8858/Why-Business-Model-Innovation-is-the-New-Competitive-Advantage.pdf
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Value Chain Analysis of M&S Company helps the business to manage the competitive advantage and make sure that both the activities (primary and secondary) of the company are able to satisfy the need and demands of the business. The value chain analysis includes logistics inbound, operations, logistics outbound, sales and marketing.
Figure 3: Value Chain Model
Infrastructure-Talking about the infrastructure of M&S Company, it can be analyzed that the business is operating in a leading competitive market. Also, the company makes use of the high technology instruments helping the business implement new and innovative strategies in the market.
Human Resource -The HR of the company is also making sure that the employees are getting positive environment in the business. The HR of the company is there to identify the new trends and even hire the employees with innovative and qualified skills.
Information Technology- IT systems used in the business is there to make sure that the business is able to manage the high customer traffic and even gain competitive advantage in the market. The IT used in M&S helps the business to practise online delivery and even make faster payments.
Procurement- M&S makes sure that the company is purchasing raw materials at a lower price and in bulk saving the extra expenditure of the business and even saving the money for the future.
Inbound Logistics: M&S won the GBS supply chain award and has launched the sustainability program to manage the competitive advantage in the market (Powell and Mustafee, 2017).
Operations: M&S Company is operating in the market to improve the business operations. The business wants to improve the business by making sure that the customers are getting what they want and therefore, proper research and development department of the business is making efforts to provide the products, consumers want and knowing about the expectations of the customers from the company (Gilmore, et. al., 2018). Earlier in the year 2015, there was a 2% decline in the sales of M&S because the company was there to manage the online operations of the business and even improve it to make sure that the business is succeeding. Therefore, to manage the online traffic and also improve serving the customers online, M&S Company is working on improving the IT operations of the business (Voutilainen, 2020).
Outbound Logistics: Considering the M&S Company and its outbound logistics, it works well in-store shopping and shopping through online platform and collect various options. M&S Company continues in warehousing and helped in National Distribution Centre (NDC) for the clothing and the home business (Han, et. al., 2018). It also focuses on merging the small warehouse to make supply chain efficient and distribution effective of the business. The value chain analysis of the business also helps in improving the management of the business and also helps in gaining competitive advantage in the market. M&S Company has to make sure that there is an improvement in the business operations by providing an online platform that helps in serving the customers for the management of the business operations.
Marketing and Sales: Marketing and Sales of the business helps inincreasing awareness among the customers about the business working and operations. Digital division of M&S Company helps in improving the work with lean start up technologies to improve the experience of the customers while shopping (Voutilainen, 2020). M&S Company will also allow the customer to use mobile applications, apps, catalogues, supermarkets and retail stores. Online working and managing the customer engagement helps the business to improve its performance. Other than this, online customers help M&S Company to gather the attention of the customers. M&S Company helps in increasing the value of the customers (Pietrobelli and Staritz, 2018).
Services: Services of the company involves the activities that help in maintaining the value of the customers. Maintaining the loyalty of the customer is the main working of the business by gaining competitive advantage in the market. Other than this, M&C Company provides hallmark on the products so that the authenticity of the products and services. Other than this, free delivery of the goods and services is also provided to the customers. Online delivery of the products on the orders costing above £50 is given free delivery (Voutilainen, 2020). Return policy of M&S Company is also applicable for 35 days after the purchase of the products and services.
The assessment discusses about the competitive position of M&S Company in the market using various models and theories helping the business to manage the operations. Other than this, the assessment also discusses about the competitive position of the company using Porter’s Five Forces Framework. Other than this, the assessment is also discussed about the VRIO analysis highlighting the resources that are Valuable, Rare, Imitable and Organized. Other than this, the assessment also discussed about the value chain analysis for the company.
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