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Marks And Spencer: The Biggest High Street Retailers

Paper Type: Free Essay Subject: Marketing
Wordcount: 3111 words Published: 24th Apr 2017

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Marks and Spencer is one of the biggest high street retailers in UK with over 600 UK stores and nearly 303 stores in 41 territories. The home country of Marks and Spencer is United Kingdom. The head office is located in central London at Waterside House. As the company’s principle is to value quality, innovation, personalize service and security to their customers in a very unique manner which builds the trust of the customers towards the company.

M&S offers stylish, high quality clothing, home products and outstanding service especially their own food brands since 125 years. Through massive supply chain including more than 2000 suppliers globally we have used the analytical to tools which are explained as follows:

Pestle analysis

Political Analysis:

In spite of cultural differences M&S have functioned very efficiently in terms of macroeconomic policies and also improved good relations with other countries to expand the business.

Economical Analysis:

As the current scenario the economic conditions are adverse because of the recession therefore M&S is not able to achieve the desired targets due to which they have to reduce their cost of products and even bargain with the suppliers. ( )

Socio-cultural Analysis:

M&S adopt certain social and cultural aspects which vary from country to country in terms of their lifestyle, values and beliefs. This leaves the impact on diffusion of products onto the market. As changes in the lifestyle results in both opportunities and threats to the firm.

Technological Analysis:

M&S uses advance technology in order to serve their customers such as enhanced online shopping were customers can make choices from various products that are available in relation to clothing, food etc. This provides flexibility in running the business more efficiently. (http://www.oxbridgewriters.com/essays/marketing/marks-spencers-corporate-objectives.php).

Environmental Analysis:

M&S has developed plan A which makes the company to fight against climate change, waste reduction etc. This is the first company that has removed the artificial colours from the food items. They give points to the customers if the customer uses their bags while shopping. This way the M&S is environmental friendly.

Legal Analysis:

M&S has high holding status, so this will influence the environmental regulation with which in duties must comply. M&S has standard accounting methods. M&S is listed in on London stock exchange, they are founding member of business in the community.

Industry life cycle period

There are 4 phases in the life cycle, the M&S had started from introduction phase it had taken a long time to developed and move towards the growth phase. In 20th century the growth of M&S was strong enough to compete in the market. The company is still in the growth stage as they are innovative and creative in terms of developing new products and because of this only they haven’t reached to the maturity and decline stage.

Five Forces

Threat of New Entrants:

In 19th century; there were new entries like Asda, Tesco, and Sainsbury. Even Zara and Top Shop were entering the market. So M&S faced high threat from them and started avoiding product differentiation & decreasing the cost through mass production.

Bargaining Power of Buyers:

M&S bargaining power increases because the quality and the price of the products are high therefore they cannot hold the customers as Tesco, Asda and Top- Shop do so they have come up with quality products with cheaper prices to attract the customers, thus M&S is becoming more price sensitive.

The Bargaining Power of Suppliers:

M&S bargaining power is very high as it is known for its quality & value products. So supplier can threaten the market by increasing high price or decreasing the quality. As M&S is doing partnership widely which increases bargaining power of supplier.

Threat of Substitute Product & Service:

Due competition substitute products & services are available, M&S is having brand name which is valuable, but substitutes are also available like Tesco, Asda, Manchester United, Zara and Top Shop.

Intensity of Rivalry among competitors:

The Rivalry among the competitors is strong, In case of M&S, there are many competitors so they use tactics like sales promotions, advertising, product differentiation and diversifying the structure by introducing other brand products.


Due to high competition, the products substitution is possible & this will further reduce the price of product e.g. Primark. M&S products are value perspective but there are very small group which constitute value perspective and consumer perspective products as it is having value added pricing methods as other retailers use market skimming method.


The competitive advantage helped the company to expands its business keeping in mind the futuristic vision in terms of diversification to help market development from the existing products by welcoming new products and make them exist in the global market this denotes the expansion matrix in terms of M&S as the company is on the edge of establishing its brand across the territories.

External Analysis:

From the above mentioned analysis one can state that M&S produces the superior quality products and thus M&S can sustain in strategic market for long time but have to be protective from competitors. M&S has strong advertising strategy (example: clothing). Mostly there sales promotions are done by online purchases and creating awareness in all the public places like tube station, train station, bus station etc. Buyers of M&S are gradually falling because the Tesco and Sainsbury are providing quality products with cheaper rates. So through all this we can say that M&S needs to take quick decision regarding various polices and strategies that they are following.

Strategic Alliances

Economy of scale:

In case of M&S economy of scale it uses the concept of mass production and through this they could reduce the cost per unit as well they raise more revenue. As it is one of the trustworthy brands it had to keep hold on efficiency.

Economy of scope:

M&S has varieties of products in the different range of stores and locations. This diversification of their products and services as this core quality is giving greater opportunity to compete in the global market.

Economy of learning:

M&S has additional competence as learning of new markets, new customers and new preferences according their previous pitfalls and achievements. (http://www.marketingteacher.com/Lessons/lesson_PEST.htm)

Evaluation of Company Performance by Balanced Scorecard Approach.

Customer Perspective:

M&S has now understood its quality & value attributes were not working longer as their business strategy because customers are trying to get quality goods at a cheaper price. As a result now they moved from product focus to customer focus to attract the customers towards them. E.g. innovative online shopping and giving more value added services.

The Internal Business Perspective:

This perspective highlights the internal capability of firm. M&S has invested to open a retail park, food stores in different towns & travel hubs in airports, stations etc. The speed and flexibility of getting the products into the stores has improved by managing inventory. To provide a good service to the customer, the company has invested in systems & infrastructure. This helps to reduce the export cost & ignites distribution. M&S have launched an expertise division to fight against the climate change, waste reduction & trading in ethical way etc. (Marks & Spencer Annual Report 2009, http://annualreport.marksandspencer.com/).

The Innovation & Learning Perspective:

From time to time; it is coming up with new ideas. For e.g. It has introduced “Per Una” in 2008 and introduced ‘Cook Asian’&’ Bakery cup cakes’ along with lingerie collection in 2009. M&S is conducting activities to train leaders of next generation with the ‘Flagship leadership programme’ & ‘new line management developing programmes.’ They even have benefit package for their employees (Marks & Spencer Annual Report 2009, http://annualreport.marksandspencer.com/).

The Financial Perspective:

In this year the total revenue of the company have increased by 0.4%. Whereas international market revenue has increased by 25.9%.But the UK market has decreased by 1.7%. Company interim dividend has decreased from 8.3 pence per share to 5.5 pence per share. M&S company shares increased by 5.87 per cent to 361 pence per share in, 2009(Marks & Spencer Annual Report 2009,http://annualreport.marksandspencer.com/).It is satisfied with its performance in the first half of this year as the Company has increased the shares of the clothing & food market.

Financial Ratio Analysis:

The previous sections we have used numerous tools and techniques to analysis the company the strategic performance. In addition to conclude the precise strategic appraisal of M&S is explained below.

M&S Company Current Ratio is 0.62 times in 2009.It was 0.60 times in 2008. It is less than 1; M&S’s networking capital is negative. It is unusual in a company like M&S. In 2009; Quick ratio was 0.33 times in 2008 but it has decreased to 0.32 times in this year. The stock has increased because of slow moving inventory. Cash ratio is 0.13 times in this year; it was 0.16 times in 2008. In 2009 Total Debt ratio is 0.74 times & 0.75 times in 2008. In this year its profit margin is (0.03). This helps M&S to sustain in the market. This analysis helped to explain the internal structure of the firm which is explained as follows. (Marks & Spencer half year results 2009/10, http://corporate.marksandspencer.com/page.aspx?pointerid=3e7ce29a8f244dc38e22943f16d954d3)

Environmental Scanning

Internal analysis:

The M&S has some powerful strength as their competitive advantages to sustain in the market:

Strong brand name:

M&S achieved popularity in UK because of their quality, service and innovation; and effectively stepped in global market to diversify their brand internationally. M&S also developed very high reputation from all kind of customers by maintaining their standard and never compromised the quality standards.

Good Financial Position:

The Company has a very strong cash flow position where the company doesn’t require taking any loans from any financial institutions. They can easily manage funds from the revenue they generate. The company indicates to have a strong balance sheet as there is increase in their turnover and trading profits.

Generic Strategies:

Cost leadership:

To compare with Industry competitors M&S is not focusing to be a cost leader as to maintain their quality.


M&S always differentiate their products and services to keep their position in the retail market. For example to be a UK’s leading clothing retailer maintain fashion trends and great value with more clarity and newness of all range from children to old generation.

E.g. Women wear PORTFOLIO and INDIGO, AUTOGRAPHF, SLIMFIT SHIRT, AND NORTH COAST and for Men, etc. limited collection and ’35 and under’ for younger customers ‘DINE IN FOR TWO FOR £10’ in Food and also always customer focusing and removing duplication that are priority issues.


M&S gearing a focus generic strategy by concentrating on narrow market segment such as a particular buyer group and age, social class, income and occupation. Market segments through value like premium price, high quality, mid-priced and low-price segment.

These are the key points applied to achieve differentiation from their competitors like Tesco, Asda, Top shop, Clarks, Zara and Next. As a tacit skill they come up with new ideas to improve the business e.g. M&S maintain to keep their own brand products in stores. M&S have decided to introduce the other brand products like HEINS, NESTLE etc.

Value Chain Analysis:

Due to the effect of the recession few years back M&S had face some drawback in business especially in food industry but they quickly rectified most of the problems. To overcome from problems they have restructured their supply chain and technology recently. Before M&S depends on middle man as their main clothing supplier which led 5% to 7% additional cost plus more operational cost ultimately the cost of the products are more as compared to their competitors.

Inbound Logistics:

M&S has controlled and improve effective computerised inventory control system which is centralised over the globe in order to delivery each item to the shop floor. According to Stuart Rose (Annual report 2009) M&S always focuses on environment friendly manufacturing, recycling process through ‘Plane A’ project which gives very successful achievement in food and clothing industry as well as very controlled operational cost led the company to reduced the price of goods . As an added value the company has a powerful website to integrate the online order management to fulfil the potential benefit. M&S has signed an agreement with Amazon for e-commerce services to the retail sector (Press release 2009) which has efficient work flow design.

Outbound Logistics:

In order to provide continuous replenishment services and products to the customers M&S has efficient automated system such as RFID to improve stock accuracy and inventory processes and delivery method. They have their own delivery vehicles and warehouses all over the world. They have closed 21 warehouses to consolidate their GM operations into four large warehouses within UK. In addition to this M&S made agreements with third party logistics operators to integrate their suppliers in the supply chain. In case of International distribution they moved forward with direct sourcing as an add strategic value planed to implement SAP within their core commercial system in 2010 and going to outsource their HR system to save time to consent rate in core business (M&S case study 2009)

Sales & Marketing:

M&S has excellent approach in sales and marketing in advertising, store & seasonal promotions. They have proved that products are value for the money. Their recent sales improvements and marketing campaigns are such substantial achievement in retail industry (Annual report 2009)


To retain the existing customers and to attract new customers M&S targeting more on value added services such as Insurance, Credit card, Tourism, Home delivery etc. Not only this M&S has also established in HRM, Technology development, Procurement and General Administration and still keep looking to improved through standard dedicated R&D team.

In regards to Boston Matrix M&S have penetrated into the market through its various new products and services which deals with selling products into the market and achieved main objective in terms to increase the market share of current products; also it has secured a dominant growth in the market. As they are diverse in their products the company has also opened new retail outlets in different countries and have occupied the market in a better manner. Therefore, the Boston Matrix analysis in terms of M&S doesn’t have any dogs and problem child because they are not losing any revenues which they have invested but in terms of cash cows they are not successful in gaining revenue from some international territories due to recession. But in terms of stars M&S hold a strong market due to their reputation.

Boston Matrix in a very simplified manner:

In relation to the diamond porter’s competitive advantage in the market M&S hold a very strong position as it has withstand in the international market keeping in mind firms restructuring strategies which has helped to increase the productivity and innovativeness as per the demand of the customer. The company is supported by skilled personnel, capital and infrastructure thus gaining sustainability in the world market. Even the government inspires M&S to launch its desired products because of the company’s loyalty towards the customers.


M&S is the largest retail industry in the global market. It has strong financial backup and also holds good reputation among the customers, suppliers and the distributors. The brand is very famous among the market in UK as well as over the globe. Even they have diverse range of products which makes them unique in their behaviour as they have their in house production. These key points have helped M&S sustain in the global market.


Marks and Spencer is in strong competition with Top Shop, Zara and Next for example the production life cycle of Zara is just 6 weeks even when it comes to clothing outlets these retailers offer the same price range as M&S and even more fashionable products. In terms of food shopping M&S faces competition with Sainsbury’s and Tesco as they offer high quality value added foods.


Using both environmental analysis techniques (SWOT and PESTEL) and portfolio analysis we have seen that M&S have various internal strengths and weakness in its current business activities as well as number of opportunities and threats. The portfolio of M&S’s products in terms of BCG matrix is either ‘dogs’ (cash in balance) or question marks (cash cow). In food and clothing (with its focus differentiation generic strategy) relative market shares is low with low industry growth and Financial services industry growth is high but M&S’s market share is low and will require substantial capital investment to turn them into ‘stars’.


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