Marks And Spencer

EXECUTIVE SUMMARY

This report critically analyses the impact of external and internal influences on the business strategies of Marks and Spencer (M&S) between 1996 and 2002, evaluates the factors, and modifies its business strategies.

The major finding is that M&S has successful business strategies and marketing plans. However, the company does not maintain these advantages continuously. Indeed, it causes some disadvantages.

The purpose of this report is to evaluate how M&S survives in the changeable market. Moreover, its concludes how macro- and micro-environment affect M&S to make its marketing plans and investigates the strengths, weaknesses, opportunities and threats of M&S. By analysing current business situation, M&S needs to revise its marketing segmentation, divide its products into different target markets, and serve consumers effectively.

1 INTRODUCTION

M&S is an international company, which spreads through Europe, North America and Asia. It sales clothing, footwear, gifts, house appliances, and food (Marks & Spencer, 2002b). This report includes three parts. Firstly, it analyses the macro-environment and micro-environment of M&S. Secondly, it uses the SWOT chart to analyse the four aspects of its business. Finally, it draws a conclusion about the whole analysis and gives the recommendations of M&S's future.

2 MACRO-ENVIRONMENT AND MICRO-ENVIRONMENT

2.1 Macro-Environment

The broad external factors that indirectly impact upon an organisation are consist of political, legal, economic, social and technological factors. These factors use to analyse how macro-environment affects M&S to make their marketing decesions.

2.1.1 Political and Legal

It is important for companies to follow government policies and global organisation systems, such as World Health Organization, while they make marketing plans. Governments, especially in the developed countries, consider ecological environment and human's life. Governments set up policies and organisations to monitor firms and their products, such as energy saving policy and genetically modified food control.

The UK government has introduced energy saving organizations, such as 'Climate Change Levy'[1] and 'Green Tax'[2] on energy use to reduce CO2 by 2010 by 20% against 1990 levels, and supplied subsidies to improve its policies (Marks & Spencer, 2002a). M&S has claimed: "[it] launched an incentive scheme where stores can keep the value of 10% of any savings the make over and above [it] budges" (Marks & Spencer, 2002a). This scheme helps M&S saving around 5% of its energy saving (Marks & Spencer, 2002a).

In recent years, gene technologies have increased substantially. Some of these technologies have used to produce food. However, some of these technologies may cause natural environment pollution and endanger human's health. "Some European supermarkets are moving towards selling only meat from animals produced fed on non-GM feeds. This is building on moves by many retailers in the UK to go non-GM" (Meat & Livestock Australia, 2001). M&S also announced that it supplied all non-GM foods on its shelves (BBC News, 1999).

2.1.2 Economic

Economic factors have affected companies to extend their business or retrench its business, such as close loss-making operations, and sale their non-core business. For example, the 11th September 2001 accident in USA has caused many companies to face the recessions in North America and European countries.

The 11th September accident in USA caused economical crisis in North America and other countries. It caused consumers to change their purchasing habits, and retailers were seeing sales decreases (BBC News, 2001). In fact, M&S lost its profits around 8.6 million pounds between 2001 and 2002 from its international retailers (Marks & Spencer,2002b). M&S has closed its loss-making operations in Continental Europea and sold its non-core business in North America (Marks & Spencer, 2002b).

2.1.3 Social

The requirements of consumers are changeable. People want to feel special, modern, and convenient. Hence, people purchase fashionable clothing and use credit cards to satisfy their needs.

M&S keeps with the latest style and colour, although it has high quality goods. M&S does not consider with customer needs, especially in clothing market, it may cause M&S to lose its sale to competitors (Jobber, 1999). Another social factor is that credit card acceptance has increased more than 10% of all trade (BBC News, 2000). M&S has allowed its customers to pay by credit cards from 18 April 2000 to contend with its compatitors who have accepted credit cards for a long time (BBC News, 2000).

2.1.4 Technological

At the present time, information technology changes fast, and most companies has built their own websites, online shops, and databases to help them to increase their sales from online customers. They collect information and analyse their customers to know their customers' needs and wants. Therefore, M&S has invested its information technology, such as online shop in 1999. In addition, most stores in the UK and Western Europe were running a trial of the EPOS (Electronic Point Of Sale)[3] systems. M&S has also used this system to drive sales, increase customer service, and improve its efficiency (Yorwerth, 2001).

However, M&S did not control its online shop and EPOS system effectively. Actually, its website could not show its stocks immediately. Customers, who use its online shop, still feel inconvenient.

2.2 Micro-Environment

The task of marketing management is to attract customers and establish good relationship with customers by creating the worth and satisfaction of customers. However, marketing managers not only pay attention to the needs of target market, but also need to realize the effect on microenvironment that are suppliers, distributors, customers, and competitors