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

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 of customers, 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

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.

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 planning Effective 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.

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.

 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

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. If companies 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 Fairtrade 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 Factors

Currently 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 factors

In 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

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 Factors

Technology 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 Factors

Legislations 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 Factors

With 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

Strengths Sales of clothes have stabilised, and food sales have increased New chief executive with fresh ideas and sales led growth Good advertising Used iconic models to attract core target group. George Davies Product diversification home and furniture Turnaround in sales and growth

Weaknesses Resignation of three key members of staff: George Davies, finance director; Andrea White and Melanie Davies head of merchandising Previous poor performance, seven straight quarters of falling sales More expensive than other high street stores limited market. Focusing on older generation may lose younger market.

Opportunities Rebuild the companys image with continued 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 contemporary models to attract younger generation. Internet food shopping but opportunities may be limited Other services eg banking, insurance, savings etc.

Threats Previously tarnished reputation and image Competitor product ranges which directly 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

 2.3 Significance of stakeholder analysis: Understanding and managing stakeholders is a key part of strategic analysis. Yet it is often overlooked in strategy development. Stakeholders include customers, employees, shareholders, regulators, suppliers, lobby groups, the general public, neighbours, family of customers, family of employees, contractors, associations and local government. The actual list will depend on the business. As we arguably come out of the current recession, the relationship with stakeholders couldn't be more important. As the organization plans its growth strategy, it needs to think about whom its stakeholders are and if they have changed. There are a number of useful approaches which will help the organization analyse its stakeholders. The organization should start by making a list. Then see if it can identify what their demands are. The next step is to draw a map which shows the relationships between the organization business and the stakeholders and the relationships they have with each other. To get a deeper understanding try drawing a power matrix plotting the power the stakeholder has over setting the rules for the business against the operational power (resources, funding, people). Finally the organization needs to understand the salience each stakeholder has. This is the power, urgency and legitimacy they have over the business and it helps the organization to identify the priority its management team need to follow to get the best outcomes.

Once the organization has this detailed analysis of its stakeholders, it is in a much better place to prioritise its efforts. TASK 3 3.1 Evaluate possible alternative strategies: Usually communication strategies are based on striking a balance between push and pull strategies. The employees of M&S are loyal to their company and they have developed excellent product knowledge and direct selling skills. M&S provides its employees very good package (pay, holiday, sick pay) compared to other retailers. M&S should not invest too many resources to improve the selling skills of its sales force.

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.

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.

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 Plan Mark & Spencer

1) Putting together the right team the values that the founder instilled into this Company.

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 Brand sell 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 Services Developing M&S store card Plan: 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

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 Development Strategy Joint 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 likely reaction of stakeholders. Feasibility - whether Tesco has the resources and competence to deliver the strategy. Product Development Diversification, expanding and diversifying Tesco's product mix To implement internal development when new products are developed. The nature and the extent of diversification

 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 Leaders Leadership 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

Capital allocation should be efficient and effective

 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 any capital investment.

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)