Corporate Strategy

Corporate Strategy 1

CORPORATE STRATEGY

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Corporate Strategy 2

CORPORATE STRATEGY

Introduction

Marks and spencer is textile and retail luxury Food Company that operates from United

Kingdom, which began operating since 1884 under the flagship of Thomas Spencer, and the co-

founder, Michael marks. The current operational state entails 76000 workers. a 2010 report

indicated that it had over two thousand suppliers as well. The major influence is felt within

Europe, India, Asia, Russia and Middle East (Purce 2014 67). The overall investment accounts

for 51 percent food production and 49 percent is clothing business operations. It however holds

more than 600 stores in UK. The customer feedback on its operations has been positive since its

initiation. The quality is improving while the highest amounts of profits can be dated to 1998.

However, the peak production was followed by financial crisis owing to the increase in

profit margins. Moreover, the company did not adopt the credit card system despite the vast

usage. Thirdly, it specialized on only the suppliers from British. The company had to resolve the

gaps through quick adoption of the credit card system, increase in the ranges of clothes and

better customer focus. The company realized huge improvement but did not regain full potential

held in 1998. In 2011, the company had engaged itself in other corporate social responsibility

activities. These include the plan A that had been funded with 200 million budgets (Charter and

Polonsky 2017 41). The key objectives of the project in its five-year tenure included reduction of

carbon to neutral state, elimination of wastes made on land, and the evaluation of the sourcing to

achieve sustainability.

Porter’s forces- suppliers

Mark and Spencer Company had problem with the supply system. In this case, the Porters

five forces illustrates just that supplier power was limited for the company. In this case, the

Corporate Strategy 3

supplier power is categorized into the number, size, substation effect, uniqueness and cost

involved in changing. This was among the other four elements induced by buyer, new entrants

and substitution threats, which led to competitive rivalry. This framework is used to analyze the

competition setting for any business. The strength of competition in this case was heightened by

the selective logistic processes. The company faced stiff competition owing to the new retailers

who included the capital investors (Bocken 2017 81). On the other hand, larger sellers posed

great challenge to the company since they enjoyed economies of scale and could sell at lower

prices. This happened in the supported countries yet the products were supplied from only

United Kingdom. The diversity in the market meant the pricing a challenge whose effect was

inevitable. Indeed, only loyal customers could be retained by the company if cheaper and

fashionable designs were introduced.

The supply of the UK designs alone did not penetrate well in the new Arabian customers

in Russia and Asians as well. The discounts that other competitors offered meant that the

company lost customers. The new entrants had come with substitutes especially in the textile

industry. They meant innovation in the fashions at lower costs (Rashid 2016 45). This company

also faced huge competition from other major stores such as the Tesco and ASDA (Johnson 2016

78). These stores have a variety of the products. Mark and spencer had no good capacity to offer

competitive edge over the bigger firms. The threats would as well be associated with the nature

of customers that the company targeted. The huge number was not loyal and shifts were

frequent. For instance, when the company did not accept the credit card, there was a quick switch

which led ta serious deterioration of the company outcomes (Quix and van der Kind 2016 23). In

2016, there was decline in the sales, which was associated with huge supplies due to devaluation

of the textile products.

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PESTLE analysis- economical issue

The external environmental analysis gives a gap in Mark and Spencer on the economic

aspect. The United Kingdom inflation rate is rising fast. The company had been struggling with

the ever-increasing values. This affects the purchasing and causes unnecessary fluctuations in the

market pricing. There is high level of uncertainty in the economic sphere where the clothing and

luxuries. The stiff economic state limits purchasing power of the people and they no longer have

money to indulge in luxurious activities. In addition to this case, they have experienced a huge

closure of their shops and stores (Rugman and Verbeke 2017 34). A decrease of 2 percent was

noted across their over 70, 000 workforce. The economic situation where discounts were meant

over the Christmas celebrations reduces the running costs by twenty percent.

However, efforts are underway with a remarkable increment of the commodities such as

wine. They have also adopted marketing strategies to ensure the new recession trend does not

have permanent hindrance. This company is expected to raise the sales to higher quantities as

opposed to the current low sales. The profit margin defines the core aim of operating and

business venture. In this view, the pricing will be adjusted to allow reasonable levels. The have

been issues on damages where the low turnout is witnessed in the food leading to expiry. In such

a situation, the company has devised preservative methods and tendering options where huge

organizations hire the catering services. The staffing should also match the gap in the roles

within the company so that the salaries paid out are not exaggerated (Sivalingam 2015 67). The

low production processes need to be defined by better production processes which embrace the

technology skills.

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Internal environment- Financial resources

The company records show revenue generation of £9.7 billion while the company

operating benefits were £824.9. These figures reflect the 2010 statement. The share capital

income was 34.9 pounds. The income from United Kingdom contributed to 11.7 percent of the

profits made on the textiles. The food products in UK accounted for 3.9 percent of the score. The

internal financing was contributed to the growth of the business. However, the low incomes over

the precious years have weakened the company (Sminia 2017 5). It depends on both internal and

external sources. The ploughed back profits were also supported by the money gained from

assets disposed of. These may include the obsolete machines and equipment, premises as well as

machinery.

The company had constraints in maintaining the operations under deteriorating costs. The

internal operations relied on the central leadership on decision-making issues and strategic

management. The unstable leadership affected by the business management. In the case of the

CEO change, there were notable gaps in the production. The company operations were maimed

since the operational costs need a good source of funds. The major reasons for the low returns on

investment include stiff competition. The company had too many extensions, which

compromised the distribution of the financial resources too. Finally, much of these resources

were directed to the recurrent roles such as payment of salaries.

Corporate Strategy 6

References

Bocken, N., 2017. Business-led sustainable consumption initiatives: impacts and lessons

learned. Journal of Management Development, 36(1), pp.81-96.

Charter, M. and Polonsky, M.J., 2017. Reviewing Corporate Environmental Strategy: Patterns,

Positions and Predicaments for an Uncertain Future. In Greener Marketing (pp. 41-56).

Routledge.

Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education: pp. 78-112.

Purce, J., 2014. The impact of corporate strategy on human resource management. New

Perspectives on Human Resource Management (Routledge Revivals), 67.

Quix, F. and van der Kind, R.P., 2016. Retail Marketing. Routledge: pp. 23.

Rashid, M.D., 2016. Perception of Employee’s about the Human Resource Management

Practices (Talent Management) in Marks and Spencer in Waterloo, London(Doctoral

dissertation, University of East London): pp. 45.

Rugman, A. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge: pp.

34-56.

Sivalingam, R., 2015. Strategic Management. Industry Analysis, Strategic Drift and Re-

Strategizing: pp. 67-68.

Sminia, H., 2017. Institutional theory and organizational culture. In The Strategic Manager (pp.

125-153). Routledge: pp. 5-6.

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