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Strategic Perspectives On Marketing : M&S Case Study February 3, 2013

Filed under: MSc Marketing (Advertising and Communications) irinamoise29 @ 4:50 pm

Executive summary. 3
1. Introduction. 3
Macro environment: analysis and recommendations. 4
1.2 Micro environment: analysis and recommendations. 5
2. Internal environment: analysis and recommendations. 6
2.1 Capabilities and Culture: What was done wrong in the past and improved in the present to face the future 6
3. Marks and Spencer and Social Responsibility (Mission, Vision, Values) 7
3.1 Mission. 7
3.2 Vision. 8
3.3 Values. 8
4. M&S in China. 9
4.1 Why China? (Shanghai) 9
4.2 How?. 10
List of references. 12
Bibliography. 13
Appendices. 15
Appendix 1: PESTLE UK.. 15
Appendix 2: SWOT. 16
Appendix 3: Porter`s Five forces UK.. 17
Appendix 4: Porter`s Value Chain. 18
Appendix 5: Pestle Analysis China. 19
Appendix 6: Porter`s Diamond. 20
Appendix 7: Cage matrix. 21
Appendix 8: Porter`s Five Forces China. 22

Marks and Spencer

In China

Executive summary
The report has as a subject the M&S Company in UK, analyzed internally, externally, in terms of social responsibility with a reference to
mission, vision and values, using the appropriate frameworks. Also in the report, the analysis is made critically both concerning the M&S
case and the matrixes, in order to find out if the brand is competent enough and has enough resources and knowledge to extend abroad, in
China, Shanghai. In the last part, one growing strategy is explained and justified for the M&S extension in China. The frameworks used in
the report for investigating the brand in UK are: SWOT, Pestle, Porter`s Five Forces, Porter`s Diamond, Tows, Porter`s Generic Strategies,
Porter`s Value Chain, Caroll`s four-part model and for the entry of M&S in China: Pestle (China), Porter`s Five Forces (China), Cage matrix
and last but not least the Ansoff matrix, most of them being found in the appendices. The conclusion reached is that M&S has improved its
targeting, focusing more on the customers and improving its services and also the way it recruits and promotes staff.

1. Introduction
Marks & Spencer is a brand with a rich heritage and a story behind that along time had many ups and downs according to Collier (2004). At
first, at its beginnings it encountered a remarkable success, but in time, because of the changes in the market and the inability of using a
strategy that match that changed expectation and the lack of competent people to do it, it suffered a decrease. Its current position is
improved, the focus on the customers increased along with the chances of succeeding abroad (2012 Annual Report and Financial
Statements). Also the way they focused on the CSR by creating the Plan A, not only as a growth strategy but as a help for people,
resources and planet is admirable.

Macro environment: analysis and recommendations

According to Jobber (2010) the most appropriate matrix for analyzing the factors that cannot be controlled, from the macro environment, is
the Pestle analysis. Regarding the social factors ( see Appendix 1: Pestle UK), can be noticed that the consumers habits and trends
changed and will keep on changing and if in the case study by Collier (2004) M&S had difficulties and challenges in adapting to the
changes, according to the up to date NTU case study, the brand current position is improved. A support to this argument is found in the
brands` 2012 Annual Report and Financial Statements where the consumer barometer is presented as a tool to stay updated in terms of
changes in the customers behavior concerning the clothing department.
SWOT analysis is more analytical and focused on the company threats than Pestle which is referring to the general external factors and
according to Ward and Rivani (2005) provides a satellite view (2005:p.203) on the external environment .The threat (see Appendix 2) is
the fact that the competitors for clothing department such as New Look, H&M offer more fashionable clothes to more accessible prices. The
recommendation is to focus more on young audience, revise their segmentation strategy and change the style of their clothes range, make

it more fashion updated in order to increase cloth sales that were according to the brand 2012 Annual Report the lowest ones comparing to
the other (Annual Report and financial statements:2012).
Another factor from Pestle (Appendix 1) is the environmental one and M&S took it in its advantage by their emphasis on the social
responsibility. A good example is the Plan A (NTU Case Study) that demonstrates the care of the brand for the customers, planet and the
awareness and support in the increasing environmental issues. But Pestle is not the accurate matrix for analyzing the threats, so SWOT
and Porter`s Five Forces are used in this case, more exactly, it identifies the threat represented by the fact that the M&S competitors such
as John Lewis, Tesco, Asda started using in their campaigns social responsibility as well.
Concerning the Pestle analysis, an important and strongly influential economic aspect is the recession. In M&S case, the economic crisis is
taken by the brand as a threat as seen in the SWOT matrix. More detailed, the threaten concerning the recession is that customers may
choose cheaper products, considering price over brand image, brand loyalty and premium products.
But on the other hand, recession can be seen as a positive factor in the SWOT analysis as well, as an opportunity, because it determines a
number of customers to eat out less and more often at home, representing an advantage for M&S. But alternatively, according to the NTU
case study, other supermarkets such as Tesco, Sainsburys and Waitrose offer now already prepared foods as well. So a threaten can be
also perceived as an opportunity. A recommendation in terms of food can be either to differentiate their already prepared foods by
advertising, adding a unique view, such as special ingredient, emotional association or by keep using seasonal offers, for example three for
two, or when buying one product and the second one is free.
Relating again to Pestle analysis, the technological factors such as internet, e-commerce and mobile applications have registered an
increased use, so M&S conformed and has created a website and mobile application for online shopping. The recommendation is to keep
focusing on their weakness and transform them in opportunities.

1.2 Micro environment: analysis and recommendations

A way of analyzing the factors from micro environment is using the Porter`s five Forces model that compering to Pestle which generally
analyses different types of external factor, this one is more applied, analytical and focused than the traditional SWOT analysis as well
(Grundy: 2006) and it also focuses on the level of power possessed by the micro environmental factors. An important external factor from
the micro environment is the customer/buyer who, as seen in the Porter`s five forces model ( see Appendix 3) for M&S has a high level of
power because of the variety of options, also is the one to set trends and makes changes in the market. Also the threat of substitutes is high
due to their close competitors so is recommended to react faster to the changes in market in order to keep up with the competitors.
Another significant factor analyzed in the Porter`s five Forces is the suppliers, that have a low power and according to their Annual Report
from 2007 M&S is not as dependable as other supermarkets on the suppliers as it produces its own branded goods. Having many of their
suppliers in developing countries according to an article in Guardian (2012) is an advantage in this context cause the costs are lower and it
also represents an advantage for the suppliers that depend on the Westerns companies regarding their contracts (Guardian:2012). In terms
of new entries, according to Porter`s Five Forces, the level is low because the market is mature and saturated and also because is difficult
to successfully enter a market where customer loyalty is increasing and represents an important aspect according to Doyle (2002).
Referring to competition, it is fierce as the brand has different competitors for each department (Porter`s five Forces).

2. Internal environment: analysis and recommendations

2.1 Capabilities and Culture: What was done wrong in the past and improved in the present
to face the future
Porter`s Value Chain compering to SWOT is created for analyzing the activities of a company in relation to the competitors and to create
competitive advantage (Porter: 1985). Using the Value Chain ( see Appendix 4) can be seen that in their current position, the brand ability
to read the market improved, along with the changed decision, not to promote internally, staring at the bottom. A recommendation made in
order to avoid the repentance of the history is to use the KPI, more exactly to gather people from different departments to inform and
engage them in the strategy.
According to Leonard-Barton (1992) the managerial system of capabilities implicates formal and informal ways of creating and controlling
knowledge (1992:p.10). Applying the theory to the M&S case, the internal issues in the company in terms of the managers knowledge are
also confirmed by Bevan (2002) in her book about Marks and Spencer, where information about over promoting staff that was lacking of
skills and competence, arguments between staff and disagreements with directives sent down from top (2004:p.2) is found. But from 2004,
changes were made in the company, the brand capability increased because of the new CEO`s, who came with new strategies of rebuilding
the company (Plan A) and with improved operating efficiency as seen in the Porter`s Value Chain. For their current position the
recommendation is to keep promoting and focusing on the eco-ethical Plan A and to try to keep the staff motivated, because in order to
keep the customers satisfied the staff should be satisfied first.
The matrix used in order to match the internal strengths with opportunities, in M&S case, regarding their latest strategy, Plan A is the TOWS
matrix, which is more useful than the SWOT when it comes to creating a strategy (Weihrich :1982). The brand is using SO strategy, more
exactly, it maximizes the strength it has, being social responsible and transforms it in an opportunity (see SWOT) over five years period in
order to reinforce the brand image based on the ecological and ethical culture.
According to the Porter` differentiation strategy, M&S use the focused differentiation one by differentiating from the other retails by offering
premium own branded products with value for money in three departments.
The brand current capabilities for competitive advantage, found in the SWOT analysis, come from the intangible resources of the brand, the
identity and image (based on its heritage) which are unique characteristic (McMillan and Tampoe: 2000), and the tangible ones, the high
quality products and services according to Johnson (et al 2008). Even though the competitors could not imitate the brand identity and
heritage, there is still a risk of substitution because other supermarkets offer quality products as well, to better prices.
In terms of the brands` current culture, it changed in the way it promotes staff, and it focuses on social responsibility, being transmitted to
the customers by the Plan A. Another aspect that has changed in the brand culture according to Collier (2004), that can be seen in the
Porter`s Value Chain is the different and improved approach to the customers, which in the past was neglected (Financial Times: 1999) and
now is under constant focus .Also improvements in terms of stock management and a more efficient website , the services: more selfchecks tills resulting in less waiting time in queues, improved delivery, the innovation: scanning QR codes, more effective IT system were
made (2012 Annual Report), were made, as can be noticed in the Value Chain.
On the other hand, according to Porter`s Value Chain, what have not changed are the type of strategies that were and are still intended and
conceived at the top and followed by the employees as in the past, also the approaches are still being rational. A recommendation in terms

of capabilities and culture is to keep focusing on social responsibility and try having strategies with a more emergent aspect and the most
important point is to try having even more focus on the consumers and understand and follow the trends they set, especially in the clothing
area, this way learning and avoiding what happened in the past.

3. Marks and Spencer and Social Responsibility (Mission, Vision, Values)

3.1 Mission
According to Boddy (2008) M&S has a strong association with its values: quality, value, innovation, trust and service and they built their Plan
A strategy on one of their strengths, the one of being a social responsible brand as seen in SWOT. According to the same author, the
mission statement should represent the beliefs and values of a company, the one of M&s being: To make aspirational quality accessible to
all (M&S Official Website). The mission statement stay as a support for the Plan A which it goes further than offering quality, but addresses
the environmental problems and offer a healthier choice for customers.
According to Jobber (2010) concerning the societal concerns, more exactly the short-termism, M&S, being an ethical company, is
concerned in terms of customers and planet for a long term period. Also According to Jobber (2010) the CSR can affect some organizations
in a painful way, but for M&S, social responsibility underpins their values and is the way they were and are still conducting the business
(Social Responsibility Annual Report: 2006) . Plan A offers to customers better quality products, so the brands` mission statement is
supported by actions, another reason to consider the brand ethical. Taking into consideration the slow adaption to the market change that
the brand showed in the past, now, the brand proved to respond in a responsible and time effective way to the environmental issues that
threat the people and the resources, turning it into a strength, being social responsible.

3.2 Vision
The vision: To be standard against which all others are measured found on their Official Website can be said that it represents a
benchmark against the competitors. It is related to the mission that says they want to offer quality products accessible to all, so standardize
them, make them different and also make them the first choice for the customers.
Relating to what Porter and Kramer (2006) said in their article, CSR is increasingly asked in the society, the Government regulations in this
area are more demanding, so this means that many companies have started focusing on it. So taking into consideration the fact that the
brands` primary competitors such as Tesco, Asda, and John Lewis turned their attention to CSR in the same way as M&S, each brand
having a Corporate Responsibility Annual Report , could not anymore be a source of competitive advantage.

3.3 Values
As it is shown in the Annual Report (2012) of the brand and in their Key Lessons from the Plan A business case (2012) their strategy and
the way they conduct the business is made around their values: quality, value, innovation, trust, service. Different authors have different
opinions and views on values, for example, Simon (1945) sees the survival of a company by adapting its objectives to the values of the
society, and even if in that time, 1945, the society was different than nowadays, it can be said that his theory still applies today. One
example to stand for this is M&S that said in their How we do business report (2012) they made some researches which proved that
customers appreciate and see important the CSR so that was the point when the brand started focusing in depth on this aspect.
According to Jobber (2010) in terms of the nature of CSR after Carroll`s four-part model, is stated that a company does not fully achieve
CSR if it is not meeting all the four layers of the pyramid. An example to support that M&S has economic responsibilities, is the one
according to Drucker`s (1954) view on values, in the journal of Joyner and Payne (2002), who states that First responsibility to a society is
to make profit . In the M&S case, they used the fact that the CSR is an increasing demand and the fact that their values were supporting
their ethical behavior, to make from CSR, one of their strengths as seen in SWOT, a growing strategy for five years period. Considering the
brand`s Annual Reports from 2012 ,M&S meets in general the four responsibilities, but still, on the other hand, there is a gap in the
company social responsibility, more exactly, against their ethical views and environmental concerned persona stays the fact that they
moved their plants in developing countries. A recommendation for the company is to move back their plants in UK so they would complete
their social responsible profile and in general to keep continue in the same way with the Plan A because is a benefit for society and for the
brand itself.

4. M&S in China
4.1 Why China? (Shanghai)
There are couples or reasons that justify the opening of M&S in China, the most important one being the fact that, according to the Pestle
analysis made for China, the country has the fastest moving economy, representing an opportunity for investment. But this reason was not
enough to support the decision, if was not followed by other reasons like the fact that, according to Pestle (China) (see Appendix 5) and to
an article by Kollewe (2012) in Guardian, China has encountered a growth in a new layer of social class, more exactly, the urban, who have
a taste for western products. According to the same article, another important motivation for choosing China is because the Chinese
population started to shift to more expensive foods because of the economic growth.
Also relating to Pestle analysis and to Li (1999), from 1985 the Chinese started to be more selective when it comes to purchasing, so
nowadays, according to Jing (2012) for Chinadaily newspaper, the population from Shanghai is willing to pay more for quality products and
also prefer foreign brands.
Concerning the Porter`s Diamond (see Appendix 6) , according to Hodgetts (1992), is exploring and analyzing the international markets
more in depth than Pestle, with focus on different factors: demand, barriers, substitutes, etc , Pestle offering only the general external
factors influencing a country. So taking into consideration the Porter`s diamond, a reason to enter the Chinese market is also the cost of the
labor, that is lower than in UK and because even though the technology level in China is not very advanced as seen in Pestle, in Porter`s
Diamond can be seen that in Shanghai the technology is in a fast process of growing.

4.2 How?
The products with which M&S will enter China are only the foods category, excluding the other departments like clothing, because even in
UK, according to their Annual Report and Financial Statement from 2012 the clothing department has the lowest share are revenue and
also because Chinese prefer to wear clothes from big, popular, foreign brands, specialized in clothing according to a report by Guild and Hu
(2011) for McKinsey&Co. Also a reason why entering the market only with the food department is because the Chinese eating habits started

to imitate the Western ones as can be seen in Pestle analysis (China).In terms of prices, will be lower than in UK because according to the
Cage matrix (see Appendix 7), comparing to UK, China is a country in developing process with lower incomes.
The way of entering the market will be by exporting, because of couple of reasons. The first one is because exporting is the quickest and
simplest way of entering a new market according to Bradley (2005).Also, an advantage of exporting, according to Onkvisit and Shaw (2004)
is the lower unit costs due to the increased volumes, with a minimum implication of risk and commitment, according to Young et al. (1989). A
reason why the acquisition or merger way of entry were not chosen, even though they have a benefit from innate information about the
Chinese environment from the other firm is because of the risk of the two management teams not being able to integrate due to the culture
differences (see Cage) and also because of the risk of misperceptions according to Jeannet and Hennessey (2004).
Another advantage of exporting in China is the bilateral trading agreement between them and UK as seen in Pestle (China). According to
Porter`s five Forces (China) (see Appendix 8) in terms of the industry rivalry, other supermarkets such as Carrefour, Wall-mart and Auchan
as well as local supermarkets represent a strong competition for the brand in Shanghai and also the buyer power is high because of the
variety of options and increased expectations in quality goods.
Because of the strong competition represented by other international supermarkets, a gap in the market should be found in order to support
the strategy and increase the chances of being successful. So the gap in the market is the fact that compering to the other supermarkets
that are offering general Western food, M&S is offering specific English food with many own branded products , as the brand itself calls it on
their official website : Best of British. In terms of the national competitive advantage of the brand opening in China is represented by the
fact that the labor costs there are lower than in UK. Furthmore, China has a comparative advantage being also the fact that their labor cost
is lower and the fact that is a country in development, in an urbanization process.
In terms of CSR, was found that between 2004 and 2008 the number of CSR reports made by Chinese company increased from 4 to 130
(Syntao:2007,2008). But still, this is far from the level of importance that CSR has in developed countries, according to an article by Sarkis
et al (2011) for Ivey Business Journal, so it can be said that a Plan A in China might not work, but still the brand should promote and make
the Chinese population aware of it but not focus in the same way as in UK. Taking into consideration the existing products that M&S will
export to a new market as a growth strategy, according to Ansoff matrix, the strategy used is the Market development one.
In conclusion, M&S has enough resources to expand abroad and in its current position is capable to do that because the strategy is
feasible, having enough resources and also including training to the Chinese employees. Also the brand improved along time its
weaknesses and analyzing the market in this growth strategy is a key point, as well as choosing a country that offers the expected ROCE,
having the fastest growing economy. If the strategy is also controlled in a timely, constructive actionable and communicated way, using the
KPR it has prospects of being successful.

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Appendix 1: PESTLE UK



International trade policy

Labor law (potential changes)

EU laws(potential changes)


Government policies in terms of environment

increasing use of internet sales and internet advertising (ecommerce)

the growth in using applications on mobile phones




global weather changes ( different demands for clothing)

currency fluctuation

viruses/bacteria ( that can affect the meat)





globalization (more competitors)



changes in customers tastes and lifestyle

employment laws

changes in demographics

business and contract

consumer protection)

changings in the trend of stores

competition law(can have an influence on acquisitions and


environment and shopping environment( the way the stores are


changes in customers shopping habits ( the focus on either brand

image or price because of the recession )

cultural trends

eating habits


customers image of the brand

the increasing power of customers ( more options available, price










Appendix 2: SWOT



High quality(premium products)

The clothing style is not focusing on young audience


Slow to adapt to changing in customers tastes

Customer service

Lack of bringing something new

Nice Shopping environment

Fail to expend in some countries( France, USA)

Expending marketing

The prices are higher comparing to competitors

Online growth

Poor management in terms of stoking

Strong brand image

Economies of scales

Loyal customer base

Use of celebrities to attract the target

Social responsible brand


Target younger audience

Define more clear their clothing target market

Better CRM to stay updated to the market change

Redecorate the stores

Try again to expend in the countries where their expansion first


Improve the website


Competition (stores with more fashionable clothes to lower


External environmental changes ( customer behavior and tastes,

governmental, legal)

New competitors in food market

Decline in the market share

Failure in relationship with suppliers ( due to lower demand in

volume, Annual Report:2012)

Offering better value in terms of clothing

Increased supplying costs

Reinforce brand image in an advertising campaign

Might lose the young audience while focusing too much on the
older one

Differentiate from other brands in terms of the focus on social

responsibility (Plan A)

Supermarkets such as Asda, Tesco and Sainsburys started

focusing on social responsibility at well.

Recession (price over brand image)

The recession on the other hand can represent an opportunity

for the brand because people tend to eat out less and cook
home more.

Appendix 3: Porter`s Five forces UK

PESTLE (China)

Firm Infrastructure:

investments in IT, logistics and supply chains as part as the Plan A objectives;

Improved management efficiency with the changings in CEO`S and due to the acceptance of people outside the family and the company
without being long time employees.

In terms of culture the brand have always had the same values : quality and value

Human Resource Management: up to down

more efficient management compering to the back times

changings in the recruitment comparing to before

training offered for the new staff

Technology Development:

focus on increasing innovation

the website was improved in terms of functionality

WI FI in ten stores (access information about products by scanning the QR code)

international website launched (in euros)

first retailer to create an app for the Samsung internet- connected TV`s


raw materials in some cases because of the own branded products

many suppliers from developing countries



cheaper costs due to

the change of suppliers
-better distribution
they improved the stock
control as before they
sometimes used to run
out of stock for popular
products both online and
in shops

-because the majority

of the products are
brand owned they use
raw materials for the
final product in some


-high quality services

-home delivery only

if spent more than


home delivery is
subject to availability

-more customer focused

-free delivery
furniture and



-offers (3for 2)
comparing to before
when they were product
-strong focus on online
and mobile phone sales

-investment process in IT
and logistic as objectives

-better defined areas for

the sub brands in the
improved look stores

-35 days returning policy

for clothing and home
accordance with the
-training offered


delivery deadlines for
ordering online

-use of social networks:


-increased check out tills

to reduce the queues

Gary Barlow)

changing the layout of

process( finish until mid2013)

-friendly staff

scanning to the till points
-better management of
availability of products

Primary Activities

Appendix 5: Pestle Analysis China



Communist country

Growing technology, but not very advanced at the moment

Bilateral trade agreement between UK and China in terms of

trade between the 2 countries

Innovation capability

Future tax cut for foreign companies in order to encourage

more overseas

Restriction to access some web pages by the Government

(Facebook, BBC news, Google search engine)

the biggest number in internet and broadband users

investment (up to 50% cut taxes from the profit took outside China by
foreign companies)


technology is becoming cheaper

not all areas in China have access to latest technology because

is a developing country


A rapid growth in a new layer of China society-the urban rich

with taste for western goods

Air Pollution( the carbon dioxide emission are among the highest
in the world)

The world`s biggest market for grocery shopping

Water pollution

A growth in the middle class

Areas with water shortage

A move to more expensive foods

Overpopulated country

China has the world`s fastest moving economy

Acid rains

Cheaper labor

Rising unemployment

High level of consumption in big cities

China is the 2nd largest importer in the world

Increased consumption taxes in order to lower income

taxes(Shaun Rein,Forbes:2012)


Time zone (single uniform time- China Standard Time

(CST; Greenwich Time plus eight hours), using
Beijing as the base; does not employ a daylight
savings time system.


The eating habits of Chinese people are healthy

Chinese population started to be open to western goods

Different culture

Big number of population

Chinese eating habits are imitating the western ones

In terms of clothing there is a wide range of diversity

Trend of urbanization

Controlled information, more exactly, the ban in terms of

accessing different websites

The government controls the business direct and indirect

Appendix 6: Porter`s Diamond

Related and supported industries

-Shanghai technology level is higher than other areas as is one of the
most developed cities in China
-high tech manufacturing industry
-Developed information technology
-developed textiles and apparel industry
-major industry in cotton and other fibers
-increasing development in science and education

Porter`s five forces China

Cage matrix

Appendix 7: Cage matrix

Cultural Distance



-different languages
(Christianity and Buddhism )


a differentiation between each

countries` values, norms and ethics
-different ways of acting in random
of approaching a problem)




-transportation -labor
( higher in UK
-time zone
than in China)



-different policies
-corruption ( the level of
corruption is higher in
China than in UK)

-physical distance
(around 5000 miles)


-differences in the social

economic level ( UK is a
developed country with

-lack of membership

developed economy while

China is in a developing
process, still growing.

good political relations


-human resources

-supply chains

Appendix 8: Porter`s Five Forces China

Supplier Power
There is a low supplier power
-competition between suppliers
-low cost of changing suppliers

Buyer Power
Because there are couple other
international supermarkets in Shanghai
such as Carrefour, Wall-mart, Auchan
and also local supermarkets, the buyer
power is high.

Supplier Power
There is a low supplier power
-competition between suppliers
-low cost of changing suppliers

Substitution (
more Chinese make prefer
making their shopping in
supermarkets, meaning more
money spent there)
Local brands that offer
traditional food and clothing.

-the demand of the customer is high for

western goods and they started to prefer
quality over price, acquiring premium