Marks and Spencer Strategic Develpoment History
Executive Summary Marks & Spencer is most recognized British retail brands having 760 stores more 30 countries on the world, which was very successful in term of profitability and market share until the late 1990 and then its fortune turned to decline. The report depicts about the competitive strategy behind its successful growth until 1990 and the highlights the causes behind its decline. It also suggests the future competitive strategy to sustain competitive advantage in current scenario.
Generic strategy described by Porter (1985) is being used to describe the competitive strategy while supportive corporate and value chain strategies also discuss that help to strengthened strategic competitive choice of Mark & Spencer. Porter (1985) generic strategy framework describes that the traditional business formula of Mark & Spencer was partially near to the “Differentiation” strategic. M&S basis of strategy was quality which is the main essence of Porter (1985) generic “Differentiation strategy.
Porter (1985) describes that to pursue “Differentiation” organization should be customer focus, pursuinge creativity, and innovation and use of , technology, should be supportive by decentralized decision making structure. M&S differ on the ground that it tried to pursue quality but through UK base supplier, centralized control, bureaucratic structure and culture which was is the main contradiction between Porter (1985) generic strategy and M&S traditional business formula. Moreover M&S was pursuing growth investment strategy to diverse its business internationally though joint venture and franchise business.
M&S offer selective rage of quality products that was offered with the presumption that people like those goods which they known before. After successful M&S face drastic decline that started during 1990. This was mainly due to traditional business formula in which close bureaucratic structure and culture restrict the management to think beyond the its own business theory as result M&S fail to assess rapidly changing environment forces i. e. legal, social, and economical and industry competitive forces. On the other competition quickly assessed such changingchanging and respond accordingly.
Moreover it involved in aggressive investment growth strategy by using same traditional business formula without restructuring organization design and culture as result management focus just confined to day to day operation rather than long planning. The environment analysis P. E. S. T. , Porter (1985) five competitive forces, Stakeholder analysis supports that the M&S should remain continue to quality focus “Differentiation” strategy but it should be based customer focus to satisfy customer needs and wants.
The strategy should be supported by value chain activity that helps to add value for organization and customer both. M&S pursue stable and retrenchment strategy to sustain stable financial position for the time being and as soon stability sustain pursue growth strategy. Initially it is suggested that pursue investment in vertical integration in value chain. M&S should redesign its structure and culture and it should be customer focus characterized by division in different business units, flat structure, decentralized decision making.
Strategic management is continuous iterative process that should be carefully manage at each stage i. e. environment scanning, strategy formulation, implementation, control etc. [pic]MARKS & SPENCER Marks & Spencer is most recognized British retail brands having 760 stores more 30 countries on the world, which was very successful in term of profitability and market share and until the late 1990 and then its fortune turned to decline and crises. Marks & Spencer TypePublic (LSE:MKS,OTCBB: MAKSY) FoundedLeeds, England (1884) HeadquartersLondon, England, UK
Key peopleMichael Marks, co-founder, Thomas Spencer, co-founder IndustryRetailer ProductsClothing, food, household items, coffee shop, furniture, technology Revenue^ ? 8. 588 billion GBP (2007) Operating income^ ? 0. 965 billion GBP (2007) Net income^ ? 0. 660 billion GBP (2007) Employees75,871 (2007) Slogan”Your M&S” Websitewww. marksandspencer (Source: http://en. wikipedia. org/wiki/Marks_&_Spencer) It is case study analysis reports that critically investigate key strategic issue of M&S by using key principal, theories and model studied MBA module strategic management.
The key issues are:- 1. What was the basis of Marks and Spencer Competitive strategy? 2. Why did the organization suffer a downturn in 1990? 3. Why competitive strategy should M&S seek to follow and why? 4. Evaluation of theories and model applied During analysis, critical approach is adopted in which more focus is given to explain and evaluate the issue of M&S by using appropriate academic models and lesser to explain model itself, academic reference is also being mentioned by using Harvard business technique, where needed. 1. What was the basis of marks & Spencer competitive strategy?
The basis of competitive strategy of organization is usually considered as a polemic issue in theoretical grounds (Mintzberg, 2000). In order to identify the competitive strategies of M&S, I rely mostly on Porter Generic Strategies and lesser extent to investment and some competitive tactical strategies. M&S structured business formula is being analyse by using academic model as following:- 1. 1. Generic Strategy Porter (1980) describes generic competitive strategies to sustain competitive advantage (1) cost leadership, (2) differentiation, (3) Focus Cost Leadership, (4) Focus Cost leadership. Competitve Advantage | |Efficiency |Quality | |Compe|Broand| | | |titve|Market| |Differnciation | |Scope| |Low Cost | | | |Narrow| | | | |Market| | | | | |Focus |Focus | | | |Cost |Differenciation | The competitive strategy of M&S was differentiation to sustain competitive advantage. Accordingly, M&S differentiated its products on basis of quality and customer services.
The strategy given option to charge high price but it tried to provide value for money to its customers. It provided no quibble refund on good purchased until 2 year, if customer is not happy. Surprisingly, more focus was given to quality of the products and lesser to customer response while another important factor innovation, high market segments, research and development, marketing orientation, which is the essence of differentiation generic competitive strategy (Porter 1980) was entirely ignored by M&S. It acquired products from UK based supplier. In order to maintain the reliability and other attributes of products M&S concentrate on high quality consistency and standardized products.
It offered customer selective range of high quality, well designed and attractive merchandise at reasonable price to provide value for money under St. Michael brand which was perceived by the customer as a sing of quality. 1. 2. The Value Chain Porter (1985) develops the concept of value chain to sustain competitive advantage which is “an interdependent system or network of activities, connected by linkages”. M&S used value chain to support competitive strategy as:- [pic] 1. 2. 1. Primary Activities 1. 2. 2. 1. Inbound – operation – outbound activity: M&S worked with UK based high quality UK base supplier, quality was the criteria of good relationship while encouraged its supplier to use efficient production technique.
It maintained good human relationship with its supplier. M&S controlled operating activities through central buying office operated and then allocated to stores. 1. 2. 2. 2. Marketing and Sale: There was no proper marketing orientation; M&S ignored marketing orientation with company more focus is given to selling activities and its structure business formula. M&S adopted simple price policy, charge relatively premium price. 1. 2. 2. 3. Customer service: M&S strategy to support generic strategy was to provided friendly, helpful service to its customer with great shopping comfort and convenience and good human relation with customer. 1. 2. 2. Supportive activities 1. 2. 2. 1. Infrastructure:
The structure of the M&S was tall, top-down. Top management renewed as personal control. Decision was made by boardroom. It was a bureaucracy model characterized by formulizationformulization, standardization of system, decision making at top level. The store manager followed central direction on merchandising, layout, store design, training and other activities. M&S culture catogorized as weak culture where there is little alignment with organizational values and control must be exercised through extensive procedures and bureaucracy. There was family-knit atmosphere within Mark & Spencer even top management dominated by family member. 1. 2. 2. 2. Human Resource:
M&S staff treated and rewarded well as compared to market. The criteria to recruit and retain employee was it should fit in M&S culture and served being a part of family. Almost all managers and executives are promoted internally. 1. 3. Supportive Investment Strategies M&S ware pursuing growth investment strategy that can be explained with help of Ansoff growth model. 1. 3. 2. Ansoff’s Product/Market Matrix The Ansoff matrix entails four possible product/market combinations: Market penetration, product development, market development and diversification (Ansoff 1957, 1989). Ansoff Model |Existing Products |New Product | Existing | | | |Market | | | | |Market Penetration |Product development | | |UK market |Financial products | | |Little wood stores | | |New | | | |Market |Market Development | | | |Canada |Diversification | | |America | | | |Europe | | M was pursuing marketing development strategy to expand its operation in international market by using its structure formula i. e. Europe, Hong Kong, America and at lesser extent to product development by entering in financial market and offering ethnic food etc. 2. Why did the organization suffer a downturn in the 1990? The External and Internal factor that caused to change the fortune of Mark & Spencer after continuous success up until 1990 are:- 2. 1. External factors (discussed detailed in next section)
One of major strategic issue is that M ignore or fail to assess the impact of changing environment and continued his structure formula to success in business, while the competitors, in the meanwhile, realized quickly changing environmental factor and reacted accordingly. 2. 1. 1. Macro Environment or PEST forces 2. 1. 1. 1. Political: Deregulation of economies especially after 1970 was encouraging and making the business competitive. 2. 1. 1. 2. Economic: 1990 the UK economy was experiencing the recession characterized by changing economic condition that was not assessed by M. Economic condition not only impact on society as whole but also on individual purchasing power, saving and expanding. 2. 1. 1. 3. Social: It was a biggest change in society.
Change in life, taste, fashion, trend, especially due to impact of media impact on purchasing behaviour of the people. People not satisfied with the selective range of M cloths. They want fashion and trendy apparel. Economics and technology change reshaped their buying behaviour, expectation and demand. Moreover, social components vary country to country, area to area that was totally ignored by M and used traditional business formula. Ignored that customer no more want products from its home furnished range. 2. 1. 2. Industry competitiveness or 5 Porter competitive forces 2. 1. 2. 1. The Degree of Rivalry: Rivalry among competitors increased, they competing on price, products, and services.
Competitors timely assessed the environmental change and offered similar quality product with wide variety and design at lower price, focusing customer satisfaction. 2. 1. 2. 2. The Threat of Entry: Because of no entry barrier, new competitor came in to market at top end those competed on quality and innovation and bottom end who competing on price. 2. 1. 2. 3. Buyer Power: increase number of competitor, large number of product increase the buyer power of customer. They were no more loyal with UK base products. 2. 2. Internal Factor The major internal factor of M failure is:- 2. 2. 1. Management style, structure culture Bureaucratic management style and structure of the M was not supportive and integrate with uncertain competitive environment of the company.
The company was controlled through tall structure, centeralized authority, riged business operating sytem and process. In uncertain enviornement, bureucratic model fail to respond properly (Daft, 2002). Culture of the M was close directed the all employee to follow central direction. Culture was strongly reinforced by the top management. The top management consisted of men. 2. 2. 2. Single unit, No buseinss portfolio Moreover M was running as one unit while there was need to split the compnay into different business unit to control and evaluate business. 2. 2. 3. Human Resource Human resource policy was not flexible. Store manager failed to maintain required staff at outlet due to policy to have full time sale assistant. 2. 2. . Marketing / Customer focus M strategy was not customer focus. It failed to understand to customer changing needs of its target market. Its offerings based on its top management perception rather to focus on customer preference and trend. Buyers tended to select merchandise that they knew CEO would approved instead of customers need and liking. It stocked generic clothing range with a wide appeal to public: buyers often made choices which would outlast the current fashion and trends seen in other high street retailer. Moreover M wanted to keep the company on traditional trend. Greenbury did not want M to be the cutting edge of fashions.
Customer concentrated on the types of product they knew he would like- classic, wearable. Moreover product was not rotated timely and remains in outlet more than one year. Lacks of marketing orientation resulted in wrong offering to customers that not only tarnish the customer loyalty; goods remain unsold and lose of resources as well. M did not have loyalty card while competition offered. Consumer satisfaction ignored. Forecasting based on financial or statistical basis not market base. Product were wrongly displayed that given the impression of whole seller outlet. Same structure formula adopted internationally, while local market environment ignored. 2. 2. 5. No scenario planning:
Future planning based on sales figure and personal observation not on scenario based to consider growth, trends, local market, and environment factors. 2. 2. 6. More efficiency not innovation M entirely focus on to run the function department efficient but not give importance to innovation and novelty in their product rang. 2. 2. 7. Supplier: The decision to acquire products from UK base supplier increase cost. 2. 3. Competitive Strategy (stuck in the middle) Porter (1980) said a company’s failure to make a choice between generic strategies implies that the company is stuck in the middle. There is no competitive advantage for a company that is stuck in the middle and the result is often poor financial performance (Porter, 1980)
The essential of differentiation are i. e. customer focus, market segmentation, innovation and creativity while cost leadership based on efficient use of resources. If critically analyses the business formula of M&S in porter generic strategy frame work, it adopted differentiation though quality but totally ignore customer focus, market segmentation, research and development and great extent focused on efficient use resources and operation that was not needed for differentiation strategy. Moreover differentiation strategy needs flat organization structure, decentralized authority, decision making at lower level, customer feed back that was not followed. Stuck in the middle | |Efficiency |Quality | | |Broand| | | | |Market|Low Cost |Differtitiation | | |Narrow| | | | |Market| | | | | |Focus |Focus | | | |Cost |Differenciation | 2. 4. Growth strategies: M&S excessively planned growth strategy rather to use collaborative strategy i. e. concentration, growth, retrenchment etc. Aggressive growth strategy to expand internationally loosed it concentration of current business performance and management just confined to focus on day to day operation activities which was reason of failure as well. Moreover organization structure should be changed with growth. 3. What should be the competitive strategy of M&S
Strategic management is an ongoing process to develop and revise future-oriented strategies that allow an organization to achieve its objectives, considering its capabilities, constraints, and the environment in which it operates (Mitchell, 2003). Strategic is an iterative process that starts with environment scanning (Peter, 2005). • Environment Scanning 3. 1. External Analysis External analysis helps M&S to identify opportunities and threat within environment. 3. 1. 1. Macro- environment / PEST analysis A PEST analysis, results can be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans (Byars, 1991; Cooper, 2000). 3. 1. 1. 1. Political: Political and legal is framework relatively favourable for M&S.
It operates in free capitalistic economy without any political inter country conflicts but have to carefully consider particularly employment law, consumer protection, environmental regulations, industry-specific regulations, competitive regulations, taxes, health and safety that need to be assess carefully to avoid incident like violation of employment law in 2001 in France after announcing retrenchment strategy. 3. 1. 1. 2. Economic: Economic condition Economic conditions affect how easy or how difficult it is to be successful and profitable at any time because they affect both capital availability and cost, and demand (Thompson, 2002). Global changing economic factors i. e. conomic growth trends (various countries), high taxation, inflation or deflation, saving, job growth/unemployment, exchange rates, tariffs, import/export ratios, and production levels potentially major threats for M&S business and impact on competitive strategies business. Changing economic factors are reducing the purchasing power and reshaping the consumer behaviour. It impact to reduce the profit margin of M&S and on the other hand increases high dividend expectation of shareholders. 3. 1. 1. 3. Social Changing social components results departure of traditional values, fashion, lifestyle, leisure activates and earning capacity. This is one reason why people were not satisfy with selective range offered by M&S and demand current fashion and trends. Increase number of immigrant is the opportunity for M&S.
The socio cultural environment encapsulates demand and tastes, which vary with fashion and disposable income, and general changes can again provide both opportunities and threats for particular companies (Robinson, 2005). 3. 1. 1. 4. Technology: Technology is not only providing opportunity in creation and innovation of product or service but also helping to gain efficiency in production and operation of the organization. Technological change force the management to consider its impact to develop competitive strategy i. e. cost leadership or differentiation. It helps M&S to acquire, hold, and deliver the product and service in better way. 3. 1. 1. 5. Globalization
This process is a combination of economic, technological, sociocultural and political forces (Croucher, 2004) It can be described as a process by which the people of the world are unified into a single society and functioning together. Globalization provides both opportunity in sense to enter in international market and threats to allow other enter market in competition of M&S. 3. 1. 2. Porter five forces analysis Porter (1985) provides five forces analysis to consider when pursuing competitive strategy. Understanding of each force gives organizations the necessary insights to formulate the appropriate strategies to be successful in their market (Thurlby, 1998). These forces are:- [pic] 3. 1. 2. 1. Force 1: The Degree of Rivalry
The degree of rivalry is high on the basis of price, product style and trend, product quality, product range, brand, outlet design, promotions, customer services within inside or outside the country. Competitors at the top end of market i. e. The Gap, Oasis and NEXT offering similar priced products, yet more design focus with up to date fashion against traditional M&S merchandise. At the bottom end competitors i. e. Matalan, supermarket such as George range at Asda offering essential and basic clothing, but at significantly lower price. Tesco and Sainsbury’s moved in to offering added value goods, which had been pioneered by M. 3. 1. 2. 2. Force 2: The Threat of Entry
No legal barrier to enter in the market but due to high entry cost of it is quite difficult to compete neck to neck M. But market is attractive for new entry particularly for Nichers and small outlets. 3. 1. 2. 3. Force 3: The Threat of Substitutes Porter (1998) refers the substitute’s product as product of other industry. The threat of substitute’s products is relatively low. 3. 1. 2. 4. Force 4: Buyer Power Buyer power is high due to potential number of supplier providing similar products more trendy even cheaper as well. 3. 1. 2. 5. Force 5: Supplier Power Supplier power is relatively low, switching cost is low but any change could impact on quality in garments business.
In food business power is quite high when it sells products of other manufacturer that have strong brand demand by customers. 3. 2. Internal Analysis Internal analyse is concerned to identify the strength and weakness of the M for which resources of the organization should be analyse. 3. 2. 1. Tangible Resource: 3. 2. 1. 1. Physical assets: Physical assets include:- • Technology: M is using information technology, modern infrastructure and diversified in internet selling. • Capacity: Have potentially outlet capacity; product can be segmented in its outlets. • Distribution: distribution system was centralized, but now moved supply chain demographically. Demographic: M is operating in diverse areas nationally and internationally • Marketing Aspects: instead of traditional formula now customer focus policy is adopted. Marketing department established, customer survey, Outlet promotion, marketing infrastructures, customer service, product displays is good as compared to past. M have potentially strong physical resources that can be used to strengthen sustainability of competitive advantages. 3. 2. 1. 2. Financial resources Financial performance is relatively stable. Key indicator Net Profit, Return on capital invested is being improved but Earning per share and Dividend per Share is still disappointed. Gearing also increase that shows risk factor. Indicator |1999 |2000 |2001 |2002 |2003 | |ROCI |9% |8% |8% |12. 3% |15% | |NP |6% |6% |5% |8% |9% | |EP |13. 0p |0. 9p |0. 0p |5. 4p |0. 7p | |DP |14. 4p |0. 9p |0. 9p |9. 5p |0. 5p | |Gearing |0. 16 |0. 16 |0. 16 |0. 60 |0. 70 | [pic] 3. 2. 1. 3. Organizational resources Infrastructure: A part from radical infrastructure changes in M there is still elements of conflict between senior executive that need to be resolved. There is still impact of bureaucracy in decision making that should be more delegates to lower level. There is change in culture toward customer response that is good. Sub division in business portfolio have positive impact. • Human Resource: M have market best human resource strategy. Its closed salary pension scheme to new member is perceived best in UK. Top management consist of women and people outside family. Senior executive are being paid motivational shares option. Sales assistant are recruit on full time and part time.
M recruit senior executive that are very experience in their field and well perceived in the market and helping to boost the image of M i. e. Vandevelde, Vittorio Radice, Yasmin. Its strength of M. 3. 2. 2. Intangible Resources Intangible resources include: • Knowledge base: Staffs are skilled, professional and experience in their field top to lower level. • Brand: M brand is perceived as good as a sing of quality and value for money but not a trendy, fashion symbol. Change in outlet infrastructure, packaging, Brand name have positive impact and perceived well by customer. • Relationship: M have good business relation with supplier, customer, employee, and community. 3. 3. Capabilities
Capabilities refer to the ability of resources to utilize its resource effectively. M have ability to utilize its resource to produce quality, unique, product by having skilled human resource, technology aspects, and geographic operation, well perceived quality brand, outlet capacity and finance. 3. 4. Distinctive competencies Distinctive competencies arise from two complementary sources: resources and capabilities (Barney, 1991). By using efficient value chain, strong quality brand, distribution channel, creative employee skill, outlet capacity, international operation, M have competitive advantage (differentiation) over rival. 3. 5. Stakeholder analysis
Shareholder and customers is the major powerful stakeholder of the M that potentially can influence the decision to decide any strategy of M. 3. 6. M Corporate strategy Keeping in view macro environment and competitive industry forces the Strategy of M should be as:- 3. 6. 1. Mission and Objective There should be only one objective that is “attainment of customer satisfaction. ” As soon customer satisfaction achieved it would definitely result in greater profitability and return. 3. 6. 2. Strategic Business Unit M have a very large operation internationally, operating in diverse product range i. e. clothes, foods, homeware, financial services.
It is necessary that I should structure M in different business units on the basis of geographically such as UK retail, overseas business, and financial services and then split in products division range lingerie, women wear, beauty, men wear, children wear, foot wear, Food, Home ware, Food motorway. It will help M to build customer focus strategy keeping in view products offering and geographic environment. Moreover, it also helps to pursue investment strategies. To analyse the performance of each business BCG matrix or GE model can be used. 3. 6. 3. BCG matrix model |Market |High |[pic]Question Mark |[pic]Stars | |Growth | |Financial Service |E-selling | |Rate | |Hong Kong |Home ware | |Cash | | | |Usage | | | | | |Low |[pic]Dogs |[pic]Cash Cows | | | |Traditional cloths |UK Foods | | | | | | |Low |High | |Relative Market Share | |(Cash Generation) | Henderson (1970) develop matrix for Boston Consulting Group categorized business unit as Stare, Cash cows, Dogs, Question marks on the basis of marketing growth and market share. Note: just strategic evaluation concept is presented due to limited information about business units available to use this model. 3. 6. 4. GE / McKinsey matrix model McKinsey (1970) develop matrix on the basis of market attractiveness and business strength. These model should be used to analyses the performance of each business unit. |Business Unit Strength | |High |Medium |Low | |Market |High | | | | |Attract| | |UK- Retail |Europe | |iveness| | |Food |America | | | | |Cloths |Hong Kong | | | | |Home ware |Traditional Cloths | | | | | | | | |Medium| |Financial Service | | | | | | | | | | | | | | | | | | | | | |Low | | | | | | | | | | | | | | | | | | | | | | | |GE Matrix | The results of each model can be used to pursue investment strategies. 3. 7. Investment Strategies M should pursue stable strategies or retrenchment strategy and stopped growth strategies for the time being.
The business unit that are performing profitability should be hold while other can be retrenched fully or partially. Growth strategy can only be advocate in vertical integration of in value chain that will add value in its competitive strategy. M should continue to establish joint venture in Home ware, Food like it made with Desmond & Sons in children cloths range, George Davies in “Per Una” brand etc. It may sale out (fully or partially) financial service segment to any specialized financial institute. As soon M sustain or stabilize its competitive position it can pursue growth strategy, may be related or unrelated business or other market. 3. 8. Business Competitive Strategy:
It is suggested that M entirely focus on differentiation based on high quality but more focus give to customer focus, market segmentation to penetrate in market, research and development of products, innovation and creativity to offer fashion and trendy cloths rather than traditional, these are the essence of competitive strategy. |Competitve Advantage | |Efficiency |Quality | |Compe|Broand| | | |titve|Market| |Differnciation | |Scope| |Low Cost | | | |Narrow| | | | |Market| | | | | |Focus |Focus | | | |Cost Differenciation | 3. 9. Value chain strategy Porter (1985) said value chain help to sustain competitive advantage. When the value chain system is managed carefully, the linkages can be a vital source of competitive advantage (Pathania-Jain, 2001). Value on the one hand help M to differentiation and on the other and help provide value of money to the customer by proving value added feature i. e. customer service, after sale service etc. 3. 9. 1. Outsourcing: Differentiation definitely increase the cost of products that can be overcome by outsourcing products outside the rather to depend on UK base producer. 3. 9. 3. Cross functional process management
Rather to run value chain in functional, M should use cross functional process approach i. e. supply chain management to get efficiency in value chain. TQM approach is useful quality focus technique that involve every on to conquest for quality or customer satisfaction, it can be adopted. 3. 9. 4. Procurement M should improve their procurement system. Use modern technique to improve inventory system like Economic Order Quantity, Just in Time. 3. 10. 5. Marketing Aggressive advertising of differentiation products should be consider as investment (Porter 1985) and it will help to attract the customer on the basis of distinctive attributes with value of money. 3. 9. 6. Infrastructure, Culture
M should adopt flat structure, promote democracy, decision making at lower level, and use feed back as input to make decision, promote adaptive culture. 3. 10. 7. Human Resource Management M should adopt motivational HR policies that increase employee involvement in decision making, informal communication, sense of responsibilities, creative ideas to respond dynamic environment. There should be job specification, training and development, job rotation and enrichment, flexible contract, performance base reward system. 3. 9. 8. Vertical Integration Vertical integration in back end or forward helps the M to maintain the consistent quality and achieve innovation by controlling cost as well. 3. 10. Corporate social responsibility and ethics
Orlizty, Schmidt, and Rynes (2003) found a positive correlation between social/environmental performance and financial performance. Corporate Social Responsibility (CSR) is a concept whereby organizations voluntaritly consider beyond the satutory obligation, the interests of society by taking responsibility for the impact of their activities on stakeholder environment in all aspects of their operations. This will help the M to strenthend and differentiate its brand and customer loyality and profititablity. 4. Limitation: • Despite of facts that all model and theories applied are reliable and is being used successfully to make strategic analyses, but attached with some limitation that considered in M strategy analyse. Porter (1980) described five forces that should consider sustaining competitive advantage but (Haberberg and Rieple, 2001) argue in addition to it other strategic frameworks of SWOT and PEST analysis should also be used. Moreover this model ignore the impact of some other forces i. e. employee, government, shareholder, public so stakeholder analysis should also be conducted. • Moreover porter (1985) just focus on value chain and competitive forces as basis of competitive force while ignore corporate strategies. Porter (1985) value chain model is that it describes an industrial organization but I discussed it M term. The limitations of the model include the fact that ‘value’ for the final customer is the value only in its theoretical context (Svensson, 2003), and not practical terms.
The real value of the product is assessed when the product reaches the final customer. • The study report considered, Ansoff matrix only just express the strategic choice and can only be effective when it use with PEST, 5 competitive forces or SWOT matrix. • The report also considered GE model valuation of the realization of factor determinants of market attractive and business strength is very difficult. Moreover, core competences are ignored. • When using BCG matrix model, it should be noted it fail to consider the provision of synergy among product/business unit of M. moreover, the computation of market share and market growth is also difficult. Corporate social responsibility come into conflict and objected by shareholder on the view that it is use of its own share of profit. • Despite of the some limitation, all model used are very successful to attain competitive advantage over rival. • Moreover, business strategy is a continuous (because of dynamic environment) iterative (serious of step) process keeping the organization as whole to achieve its object. If M adopt any specific strategy, the rival can use as well. So there is need that M continuously analyse dynamic environment and react quickly. • Strategic businesses units may result in inter competition and conflicts as M experience between Davies (fashion cloths) Yusuf (Traditional cloths) regarding space and designs, and may increase operational cost. Growth investment strategies increase may impact to increase the financial risk and organization infrastructure (management, design, culture) i. e. M experience during its decline 1990. (Management focus just confined to day to day operation not long term prospective. • Strategy can only achieve its objective if it communicate, implement and control effectively, as planned. Formulated strategy may need to bring change in culture, design and management style that could also create problem for organization. M has to make sure supportive organization structure to achieve objectives of any strategy formulated. • Strategic management is a continuous process because of dynamic components of environment and should continue to achieve competitive advantage.
Defiantly competition respond against M strategies or may be follow the same strategy then to remain competitive it has to react may be by competitive strategy or through value chain. As soon M fail to assess environment factor it lose its competitiveness. 5. Conclusion The essence of traditional business formula of M before 1990 was delivery of quality products through UK base supplier and bureaucratic organizational infrastructure that partially near to differentiation strategy described by Porter (1880) in generic competitive strategy framework but M ignore other components like creatively, customer focus and response while organization structure was also not support differentiation.
The M experienced great downfall in 1990 that is basically due to lacks of customer focus strategy rely of traditional business formula, aggressive investment policy, and bureaucratic organization design and culture. M need to pursue differentiation strategy that should be based on customer focus, market segmentation, innovation, creatively, supportive corporate strategy and value chain activity. 6. Reference: Ansoff, I. H. (1957), Strategies for diversification, Harvard Business Review, Vol. 35, No. 2 Byars, L. (1991) Strategic Management, Formulation and Implementation – Concepts and Cases, New York: HarperCollins. Capron, N. and Glazer, R. (1987) Marketing and technology: a strategic coalignment, Journal of Marketing, Vol. 51 Issue 3, pp. 10-21. Cooper, L. 2000) Strategic marketing planning for radically new products, Journal of Marketing, Vol. 64 Issue 1, pp. 1-15. Frank L. Schmidt, Sara L. Rynes (2003). “Corporate Social and Financial Performance: A Meta-analysis”, Organization Studies 24 (3): 403–441. London: SAGE Publications. Retrieved on 2008-03-07. Jan, Y. (2002) A three-step matrix method for strategic marketing management, Marketing Intelligence and Planning, Vol. 20 Issue 5, pp. 269-272. Johnson, G. and Scholes, K. (1993) Exploring Corporate Strategy – Text and Cases, Hemel Hempstead: Prentice-Hall. Kotler, P. (1998) Marketing Management – Analysis, Planning, Implementation, and Control, 9th Edition, Englewood Cliffs: Prentice-Hall. Kotter, J. and Schlesinger, L. 1991) Choosing strategies for change, Harvard Business Review, pp. 24-29. Pearce, J. and Robinson, R (2005) Strategic Management, 9th Edition, New York: McGraw-Hill. Peter C. (2005), Integrated Strategic Management, 3rd Edition, New York: McGraw-Hill. Porter, M. (1980a) How Competition Forces Shape Strategy, Harvard Business Review, September-October, pp. 137-145. Porter, M. (1985), Competitive Advantage, New York: Free Press. Porter, M. (1998) Competitive Strategy: Techniques for Analyzing Industries and Competitors, New York: Free Press. Porter, M. E. (1985), Competitive Advantage: Creating and Sustaining Superior Performance, New York: Free Press. Porter, M. E. 1990), The competitive advantage of nations, New York: Free Press. Robinson, S. , Hichens, R. and Wade, D. (1978) The directional policy matrix-tool for strategic planning, Long Range Planning Journal, Vol. 11, pp. 8-15. Sheila L. Croucher, (2004). “Globalization and Belonging: The Politics of Identity a Changing World”, Rowman & Littlefield. (2004). Thompson, J. (2002) Strategic Management, 4th Edition, London: Thomson. 7. Bibliography Baker, M. (1992) Marketing Strategy and Management, London: Macmillan. Freeman, R. (1984) Strategic Management: A Stakeholder Approach, Boston: Pitman Hill, C. W. L. , Jones, G. R. , (2007), Strategic Management, Houghton Mifflin Co. New York Thompson, A.
A. & Strickland, J. A. (2003), Strategic Management: Concepts and Cases, Thirteenth ed. , McGraw-Hill. http://www. mindtools. com/pages/Newsletters/20Jan05. htm http://www. themanager. org/Strategy/BeyondPorter. htm Wikipedia, The free encyclopaedia www. netmba. com www. quikcmba. com ——————–Thank You——————– ———————– Porter Value chain model M&S M&S Secondary Activities Firm Infrastructure Human Resource M&S Primary Activities Customer Service Marketing and Sale Outbound Activity Operation Inbound Activity Porter (1985) five competitive forces Buyer Competitors Substitutes Rivalry Supplier M&S M&S Margin