1 INTRODUCTION.....................................................................................................2

1.1 TERMS OF REFERENCE.........................................................................................2

1.2 AIMS AND OBJECTIVES........................................................................................2

1.3 RESEARCH METHODS..........................................................................................2

2 STRATEGIC FORMULATION..............................................................................3

2.1 CONTEXTS OF BUSINESS STRATEGY.....................................................................3

2.2 SIGNIFICANCE OF STAKEHOLDER ANALYSIS........................................................4

2.3 ORGANIZATIONAL AND ENVIRONMENTAL AUDIT.................................................6

2.4 STRATEGIC POSITIONING TECHNIQUES.................................................................8

3 STRATEGIC PLANNING.....................................................................................12

3.1 STRATEGIC THINKING........................................................................................12

3.2 STRATEGIC PLAN................................................................................................12

4 STRATEGIC EVALUATION AND SELECTION..............................................13

4.1 ALTERNATIVE STRATEGIES –.............................................................................13

4.2 FUTURE STRATEGIES..........................................................................................16

5 STRATEGIC IMPLEMENTATION.....................................................................17

5.1 ROLE AND RESPONSIBILITIES FOR STRATEGY IMPLEMENTATION IN TWO

ORGANIZATION...............................................................................................................17

5.2 RESOURCE REQUIREMENT TO IMPLEMENT NEW STRATEGY...............................19

5.3 TARGETS AND TIMESCALES FOR ACHIEVEMENT TO MONITOR A GIVEN

STRATEGY.......................................................................................................................21

6 CONCLUSION........................................................................................................24

7 References..................................................................................................................25

1 Introduction

1.1 Terms of Reference. The purpose of this assignment is purely for academic reasons; this

assignment has been made primarily to complete the module of “Business

Strategy” under the course HNC Business (Management) which I am studying

1.2 Aims and Objectives.The assignment is to develop learner’s ability to evaluate and select

strategies appropriate to business organisation. This will involve an analysis of

the impact of the external operating environment and the need to plan

organisational strategies to ensure effective business performance.

1.3 Research Methods.

Research Methods.

Mark & Spencer Ltd web sites articles, news, case studies. Theoretical studies

from different books and Handouts from our tutor. Scenarios given in the

assignments and support of William’s college health and safety officer.

Personal academic knowledge about business organisation.

2 Strategic formulation

2.1 Contexts of business strategy"Strategy is the direction and scope of an organization over the long-term: which

achieves advantage for the organization through its configuration of resources within a

challenging environment, to meet the needs of markets and to fulfill stakeholder

expectations".

Strategy is about:

Business vision in the long-term

Targeting, positioning and segmenting market.

Business competitive advantage

Resources are required to compete in such market

Business environment

Stakeholder’s analysis.

Strategy at Different Levels of a Business

2.2 Significance of stakeholder analysis

To achieve Stakeholders objective an organization should be able to separate their

interest from each other and as such act according to the power they exert in the

organization.

Employees of M&S

Have a welfare department established in 1930.

Financial interest safeguarded - bonuses

Job performance appraise and financial incentive

Benefit package - interest free loans granted, Buy as you earn shares, bonus or

right issue

Suppliers

Always used UK based suppliers, ensuring consistent quality

Relationship to built reliance on suppliers

Life long relationship.

Mutual dependability respects the specification and standard.

Social commitment

Strong tradition of CSR

Sponsorship of Charities.

Community development efforts

Government social projects.

Environment friendly

Removed artificial color and flavoring from its entire food and soft drinks range-

April 2008

Launched school wears made from recycled plastic bottle

Despite tough economic conditions Mark and Spencer stick to Plan A, as it gives them

brand and differentiation.

AL Gore said “a sustainable business can be profitable one”

2.3 Organizational and environmental audit

Macro factors influencing Marketing decision

PESTEL – The External Environment

SWOT ANALYSIS – M&S

Political –EU and Free Trade Agreement the

market has opened up for British companies

opening in Europe.

Technology – E-commerce. M& S

promoting people to buy on line with

incentives likes discount. Flexibility 24hr

Economy – Retail sector very sensitive to

changes in the interest rates.

Environmental – M&S commitment to the

environment - top ten "green brands" in the

UK recently - * Global Warming

Social – Changes in consumer taste and

lifestyle give rise to new market and

consumers but also threats in terms of social

acceptance to alcohol

Legal – National Health and Safety

National Minimum Wage

Taxation Policy

Use of renewable resources.

STRENGHTS

Reputation/Brand/Goodwill

Market position

Quality products – Detail in

supplier control

Internet Shopping

Simon Marks – understanding of

customers preferences and trends

WEAKNESSES

Lack of newness

Clothing- segmentation

Lagging to provide up to date

fashionable clothes

Using most British suppliers

believing higher quality but low

cost

Competitors using overseas

suppliers to cut cost

OPPORTUNITIES

Define target age group

Store a new upbeat look

Respond to customer taste and

purchasing power

Improve CRM systems to retain

existing customers and target

potential new customers.

To go global and expand the

business

Use technology to improve their

functioning and thus gain

competitive advantage

THREATS

Loss of market share of intense

competition

Strong competition with Next

same price product but more

fashionable

Discount stores like Matalan

Threat from Giant Tesco and

Sainsbury who penetrate in the

market to supply added value.

Porter’s Five Forces – M&S

The threats within the immediate industry and M&S

Stakeholder’s expectations developed according to changes in the market. M&S

brand loyalty concept is less likely to survive where there are several substitutes of same

standard in the market. As such M&S has to be creative and innovative and constantly

reacting to the change in the buying behavior of the consumers.

2.4 Strategic positioning techniques

Strategic Positioning is thinking in reverse: instead of starting with yourself, you start with the mind of your prospect.

Three main generic strategies

Cost leadership,

Differentiation,

Focus.

The case of M&S’s core products (food and clothing), it implements a focus generic

strategy as it concentrates on a narrow segment (a particular buyer group (executives),

market segment (high-end), product feature (freshness) and within that chosen segment

M&S attempts to achieve differentiation from Tesco’s Asda, BHS, Top Shop etc. The

premise is that the needs of the group can be better serviced by focusing entirely on it.

Scope Competitive advantage :-

Lower cost Differentiation

Broad target (industry wide) Cost leadership Differentiation

Suppliers

Low in this IndustryDual Sourcing

Strategies

Rivalry

Low CompetitiveIn this

Industry

Bargaining

Power - BuyersAggressive

Pricing Strategy

SubstitutePremium

Branded FoodSainsbury

John Lewis

New EntrantsLow Price Low cost

BHS/ASDA

Porter’s Five

Forces

Narrow target (market segment) Cost focus Differentiation focus

Force Field Analysis - Kurt Lewin 1951

When decisions are made by managers they have to weigh up the reasons for and against

that particular decision. If there are more ‘against’ then a decision has to be made

whether they should go ahead with that particular route. The manager also needs to assess

whether these reasons against can either be turned into ‘for’ or whether they can be dealt

with or the severity of the ‘against’ reduced. If there are more things going against you,

say for a launch of a product then you would need to deal with those factors. Each forces

for and against are allocated a number based on the severity. 0 is usually neutral and 4 are

strong.

To sustain competitive advantage the product must be:

Valuable – Exploits opportunities and / or neutralizes threats in a firm’s

environment.

Rare – Among firm current and potential competition

Uniqueness – must be imperfectly imitable

No substitute

Mark and Spencer will use the BCG matrix to decide about their position in the market...

Value chain analysis highlighting Mark and Spencer core competence.

Source: Business essential Business Strategy formulation page 82

To have a competitor analysis to try and assess what like Tesco, Asda does and thus

enable them to have a competitive advantage. A detail Gap analysis to see where they

stand with the sum of projections and already planned projects. They should include

printed press in their advertising channel just like their competitors Tesco ,Asda and so

on. Printed press catch the audience attention mainly if M&S want to deliver a specific

advertising message. M&S should be more present in creating fashion trends, sponsoring

fashion events which will boost sales and reduced unsold .

Mark & Spencer markets its products based on superior quality and reliability

3 Strategic Planning

3.1 Strategic Thinking

To raise the bar of performance in your business from where you are now to where

you want to be it will require a level of strategic thinking that is in perfect harmony with

your vision for the business. Strategic Thinking will create a structured and progressive

path forward to your vision.

3.2 Strategic plan

Marks and Spencer, or M&S, the high street retailer has launched an ambitious waste

management transformation project to greatly improve its environmental performance, as

part of its Plan A commitments, required innovative systems, company-wide behavioral

change and an extensive education programmed.

M&S Key highlights:

-Recycling stood at 41% in 2009 and reached 88% in March 2010 -New waste management processes introduced across 420 stores in 10 months

-62,500 tones of food, cardboard, plastics, metal, wood, paper and general mixed dry recycled diverted from landfill in the last 12 months

-Waste management costs for M&S reduced by 20%

-Currently 16 months ahead of Plan A targets at store level

- A direct contribution being the positive attitude of the staff, encouraged by the extensive company

-wide internal communications programmed.

As part of its Plan A commitments, M&S set specific sustainability objectives to divert all operational and food waste from landfill by January 1, 2012

4 Strategic evaluation and selection

4.1 Alternative strategies – Substantive growth, limited growth or retrenchment

Product market mix

Ansoff’s product/market growth matrix suggests that a business’ attempts to grow

depend on whether it markets new or existing products in new or existing markets

Market Penetration -Here we market our existing products to our existing customers.

This means increasing our revenue by, for example, promoting the product,

repositioning the brand, and so on. However, the product is not altered and we do not

seek any new customers.

Market Development -Here we market our existing product range in a new market.

This means that the product remains the same, but it is marketed to a new audience.

Exporting the product, or marketing it in a new region, are examples of market

development.

Product Development -This is a new product to be marketed to our existing customers.

Here we develop and innovate new product offerings to replace existing ones. Such

products are then marketed to our existing customers. This often happens with the auto

markets where existing models are updated or replaced and then marketed to existing

customers.

Diversification -This is where we market completely new products to new customers.

There are two types of diversification Related diversification means that we remain in

a market or industry with which we are familiar. For example, a soup manufacturer

diversifies into cake manufacture (i.e. the food industry). Unrelated diversification is

where we have no previous industry nor market experience. For example a soup

manufacturer invests in the rail business.

Diversification and Synergy

Synergy occurs when the combined results produce a better return than would be achieve

by the same resources used independenlty.

Marketing synergy – Use of common marketing facilities –Distribution channel

Operating synergy- better use of operational facilities, personnel, bulk purchasing.

Investment synergy – Wider use of common investment in fixed assets, working

capital and research.

Management synergy-Management skills gained for current operations are easily

transferred to new operations.

Divestment strategy

It is the selling off part of a firm’s operations or pulling out of certain product market

areas. Reason for :

Company’s business buy and sell businesses

Resource limitations

Insolvency

Market entry strategies

Methods of growth (Domestic market).

Building up new businesses – from scratch and developing them

Acquisition – existing business from their current owners

Merger- of two or more separate business

Joint ventures- Spreading the costs and risks and with other forms of co-

operation.

Methods of growth (International market).

Direct export-The organization produces their product in their home market and then

sells them to customers overseas.

Indirect export-The organizations sells their product to a third party who then sells it on

within the foreign market.

Licensing - less risky market entry method. Licensor will grant an organization in the

foreign market a license to produce the product, use the brand name etc in return that they

will receive a royalty payment.

Franchising- The organization puts together a package of the ‘successful’ ingredients that

made them a success in their home market and then franchise this package to oversea

investors. The Franchise holder may help out by providing training and marketing the

services or product. McDonalds is a popular example of a Franchising option for

expanding in international markets.

Contracting- The manufacturer of the product will contract out the production of the

product to another organization to produce the product on their behalf. Clearly

contracting out saves the organization exporting to the foreign market.

Manufacturing abroad- to establish a manufacturing plant in the host country. There may

be tax incentive as the host government wish to attract inward investment to help create

employment for their economy.

Joint Venture- two organizations may come together to form a company to operate in the

host country. The two companies may share knowledge and expertise to assist them in

the development of company; of course profits will have to be shared.

4.2 Future strategies

Marks & Spencer PLC future growth strategy under the banner "2020 doing the Right

Thing"

Improving its operations to save costs,

Expanding the options for customers to buy products - especially online

online sales are expected to almost triple to GBP57 billion in 2020 from GBP21

billion this year according to research by Verdict, Forrester and Javelin Group

Driving its business outside of the U.K.

It would improve its supply chain.

Implement new IT systems which would save it GBP250 million by 2015/2016

through capital expenditure over the same period of GBP1 billion.

Consolidating distribution sites which would mean further warehouse closures on

top of the 21 already closed,

Sending products directly to the country of sale rather than routing everything

through a central U.K. hub, and refreshing stock systems and data collection.

Store sales are expected to shrink slightly by 2020 to GBP206 billion from

GBP212 billion this year

The final plank in ITV's strategy is to grow its international.

5 Strategic ImplementationStrategy implementation skills are not easily mastered, unfortunately. In fact, virtually all

managers find implementation the most difficult aspect of their jobs

5.1 Role and responsibilities for strategy implementation in two organization

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

The management of technological innovation is increasingly involved in strategic

decision-making. Tesco have to exploit their internal strengths and minimize their

internal weaknesses in order to achieve sustained competitive advantage

From the above comparison it is very clear why Tesco is dominating the retail market.

The success of the Tesco shows how far the branding and effective service delivery can

come in moving beyond splashing one's logo on a billboard. It had fostered powerful

identities by making their retiling concept into a virus and spending it out into the culture

via a variety of channels: cultural sponsorship, political controversy, and consumer

experience and brand extensions. Tesco's strategy at a corporate level defines the

businesses in which Tesco will compete, in a way that focuses resources to convert

distinctive competence into competitive advantage

5.2 Resource 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 our space, so most of our

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.

5.3 Targets and timescales for achievement to monitor a given strategy.

Focus the entire organization on our UK business -100% Own Brand – sell only M&S brand:

Envisioning – need to be communicated at different levels of the organization

Activating - Share the vision and ensure others support

Supporting – Leaders need to support subordinates particularly in times of change

Installing – Developed detailed plans to enact and control the strategy.

Documents the responsibilities – of divisions, departments and individual

managers

Prepare responsibility charts –for managers at divisional, departmental and

subordinates level

o Manager’s major objective

o Manager’s general performance for achieving that objective

o Critical assumptions underlying the objectives and the performance.

Prepare activity schedules- for managers at divisional, departmental and

subordinates level

Controlling - Control process to ensure work is done and deadlines achieved.

Recognizing - those contributed to success of the organization.

Management by objectives - is setting objectives for managers and sub units, rather than

imposing detailed planning specifications on them.

It implies organization hierarchy:

It empowers managers.

Assumes objectives are not in conflict but can be reconciled easily

Assumes that senior management and junior managers to cooperate if they are equal.

Business Communication Defined

Business communication is any communication used to build partnerships, intellectual

resources, to promote an idea, a product, service, or an organization – with the objective

of creating value for your business.

Internal communication

communication of corporate vision, strategies, plans, corporate culture, shared values

Guiding principles, employee motivation, and cross-pollination of ideas.

External communication

branding, marketing, advertising, selling, customer relations, public relations,

media relations, business negotiations

The main objective is to create business awareness, identifying core competence and

adding value to the business.

6 Conclusion

In a rapidly changing business environment with a high competitors' pressure Tesco have to

adopt new expansion strategies. To sustain its leading market position in an already established

retailing market Tesco need to continuously identify, select, implement and execute their goals

and objectives. Tesco already have an integrated HRM approach and a very strong brand which

will support to formulate strategy and implement them instantaneously. Tesco image and brand

has fostered powerful identities by making their retiling concept into a virus.

7 References

http://www.examstutor.com/business/resources/companyprofiles/marksandspencer/

strategyinsight.php - Extracts from the Speech

www.guardian.co.uk/business

http://plana.marksandspencer.com/media/pdf/planA-2010.pdf

http://bizcovering.com/major-companies/a-case-study-on-marks-and-spencer/2/

www.thetimes100.co.uk

www.tescoplc.com/plc/ir/corpgorv/boardprocess

http://www.edie.net/news/news_story.asp?id=18931

www.bized.co.uk

www.1000venture.com

Books –

Johnson and Scholes (Exploring Corporate Strategy)

Buisness essentials business strategy – BPP publications

ACCA Business Strategy – BPP publications

MR Saud handouts

Pevious knowledge and materials from marketing and business environment unit of the

same course

Personal experience from working for Tesco