Thursday, December 12, 2019
Internal Analysis Strategic Capabilities
Question: Write an essay onInternal Analysis Strategic Capabilities. Answer: Internal Analysis Strategic Capabilities Strategic Capabilities Threshold or Basic Resources- The resources of MS that are required to meet the minimum customer requirements are the experienced staffs that serve a diverse base of customers. MS also has tie-ups with the suppliers that assure high-quality products. The financial resources are abundant to meet the needs and fund operations (Corporate.marksandspencer.com, 2016). Unique Resources- These resources underpin the competitive advantages possessed by MS. As MS has a long heritage, not only the home market UK is aware of the company, but the brand is renowned globally. The brand is deemed as a symbol of trust and quality. The organizational structure of the organization is well managed that continues to perform outstandingly (Corporate.marksandspencer.com, 2016). Threshold Competences- MS possesses certain competences that are necessary to stay in the retail industry. Not only has it provided retail services, but also financial services (MS Bank, 2016). The company groups the stores on the basis of demographic characteristics and not the allocated merchandise (Marksandspencer.com, 2016). Core Competences- According to Drucker (2012), the core competences add to the competitive advantage. The core competence of MS is the ability to identify, design and develop the merchandise. The organization does not own factories that gives it a competitive advantage and boosts supplier relationship. It buys directly from the suppliers that are beneficial for product quality, availability and value of supply. The brand distinction improves customer satisfaction. Business Functions The functional areas of MS are human resources, finance, marketing and sales, design and production, and research and development. Human Resources- MS employs or recruits the most talented people who are keen to give their best daily. It also offers retail management graduate programme for building confidence and determination among the employees while working with perfection (Marksandspencer.com, 2016). Finance- According to Iia.org.uk (2016), the finance functions are broad and MS believe that the primary audience for the integrated report is key investors and that the report should focus on the matters that the organisation perceives are material to success. Marketing and Sales- MS create marketing campaigns for various occasions such as Christmas, New Years and various others that helps in inducing customers (Marksandspencer.com, 2016). Design and Production- Gonsalves (2015) argues that the designers in the team help in sparking back the fashion as a high-street brand. Research and Development- MS has people responsible to derive market information. The company needs to invest more for making technological and process innovations (Marksandspencer.com, 2016). Basis of Competitive Strategy According to the strategic clock developed by Bowman and Faulkner, there are eight strategic positions that represent a unique cost and perceived value combination (West, Ford and Ibrahim, 2015). It is analyzed that Marks Spencer occupies Position 4: Differentiation as they offer high value products. The company either increases its price or sustains to produce higher margins, while keeping the price low and seeking a greater market share (West, Ford and Ibrahim, 2015). It usually attempts to adopt the differentiation strategy by adding additional features or services and competing with the other retailers such as Tesco, Sainsbury and various others. MS is trying to gain market share and it needs to invest for it (Piercy and Lane, 2012). The organization is still suffering on profits (Armstrong, 2016). There is weakness in the highly competitive retail market. As stated in the mission statement, the company provides access to aspiring quality of food and clothes (Corporate.marksandspencer.com, 2016). Sky News (2016) reports that the company is committed to meet the customer needs consistently in this highly competitive retail environment. The food prices and fuel prices have an impact on the disposable income of consumers. This change in the economy is weakening the demand for non-food products for which MS is slashing down its prices. Strategic Choice and Strategy Evaluation Ansoff Matrix The Ansoff matrix shall help in identifying the strategic direction for MS in terms of product and market coverage. 6.1.1 Market Penetration MS can develop new products as the clothing lacks variety. This could be a good strategy for the company in gaining competitive advantage. New markets can be entered using niche marketing strategy. According to Armstrong and Kotler (2011), an aggressive promotional campaign can help in striking out other competitors. Overnight shipping can be introduced on selected item purchase. Loyalty schemes can be introduced for increasing shopping revenues. 6.1.2 New Product Development MS can consider entering new product segments such as catering for special events such as marriage, parties and conferences. MS owns Per-Una brand for women that can be further expanded into other demographic segment for men (Marksandspencer.com, 2016). 6.1.3 New Market Development Market can be developed by entering new market segments such as teenagers and children wear. As argued by Armstrong and Kotler (2011), new territories can be explored and stores can be set up in new geographical locations. This shall help in enticing new customers. 6.1.4 Diversification Following the diversification strategy, MS can start gourmet services where ingredients to prepare a particular recipe can be delivered at home. MS can also start its new venture manufacturing and selling mobiles. Western cuisine can be introduced in the food lines that would provide greater opportunity (Armstrong and Kotler, 2011). Evaluation of Strategy From the above choices, Marks Spencer can consider following market penetration strategy. It is important not just to create new products, but also sustain the existing customer base. 6.2.1 Suitability As stated by Armstrong and Kotler (2011), the selected strategy is suitable as it would make economic sense. With the new clothing designs, the economies of scope can be utilized. The customers shall fell that they are obtaining value for the money paid. 6.2.2 Acceptability There is no current competitive advantage in the clothing line that creates gap for MS. Thus, the strategy is acceptable as it would help in satisfying existing customers and penetrate new markets (Armstrong and Kotler, 2011). 6.2.3 Feasibility The strategy is feasible as MS has abundant staffs, financial resources and information of the markets. The strategy shall help in converting threat into opportunities and satisfy the stakeholders (Armstrong and Kotler, 2011). Conclusion and Recommendations Marks and Spencer sells high quality products. They share excellent relations with the employees and customers. The organization has stores established both in UK and internationally. It is a highly profitable company in the retail sector. It shares a long heritage that makes it valuable, trustworthy and efficient. However, the company has certain weaknesses as it does not focus much on the younger generation. The clothing industry is not efficient and lacks variety of designs. They are slow to adapt with the changing lifestyle and trends. The company has several opportunities for recovering after the global recession. There is growing demand for clothing and can focus on online shopping. The company can expand in areas such as food, home and beauty. MS also faces threats as the companies such as Zara, Tesco and Sainsbury offer high quality products at competitive prices. The government interventions and regulations can obstruct the efficiency and operations. References Allen, K. and Butler, S., 2016.The way we shop now: the revolution in British spending habits. [online] the Guardian. Available at: https://www.theguardian.com/business/2016/may/06/the-way-we-shop-now-the-revolution-in-british-spending-habits [Accessed 16 Jul. 2016]. Annualreport.marksandspencer.com, 2016.MS Annual Report 2016. [online] Annualreport.marksandspencer.com. Available at: https://annualreport.marksandspencer.com/ [Accessed 16 Jul. 2016]. Armstrong, A., 2016.MS boss Steve Rowe warns profits will be dented by turnaround plan. 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