Sdmmscasestudyn1 140810130927 Phpapp02 PDF

MARKS AND
SPENCER 5 YEAR
BUSINESS PLAN
ABSTRACT
This report/project comprises of analysing Marks and
Spencer in its current state and strategies as well as
past achievements. The findings was then formulated
into a report as recommendations which showed how
strategically Marks and Spencer can improve. This
also comprised of looking competitor analytics and
their campaigns for Marks and Spencer to be
competitive.
By Aminul Hoque
Strategic Decision Making for Marketers
Aminul Hoque
0006548571
MARK 1147
Hawa Phairor
Contents
Introduction ............................................................................................................................................ 2
Business analysis ..................................................................................................................................... 3
PESTEL Analysis ................................................................................................................................... 3
Industry, Competitors and Consumers ................................................................................................ 8
SWOT analysis ....................................................................................................................................... 12
Current Marketing Strategies ............................................................................................................... 13
Plan A ................................................................................................................................................ 13
Financial analysis................................................................................................................................... 14
Forecasting ........................................................................................................................................ 17
Recommendations ................................................................................................................................ 18
5 - Year Business Plan ........................................................................................................................ 18
Conclusion ............................................................................................................................................. 21
List of References .................................................................................................................................. 22
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Introduction
Marks and Spencers is a major British retailer in the food and general merchandise industry (Spencer,
2013). They have been around for 129 years. They have evolved from the single stall seller to an
international multi-channel retailer, employing almost 82,000 people. A British company trying to
remain as close as they can to their foundations, which was; quality, value, service, innovation and
trust. Through diversification, M&S are reducing their dependencies within the UK economy and
focusing more of their efforts in the international markets.
M&S turnover splits between two categories food (54%) and general merchandise (46%) (Spencer,
2013). They have 766 stores across the UK and as well as a growing e-commerce business. M&S aim
to become the worlds most sustainable retailer through their Plan A program, which focuses on eco
and ethical corporate behaviour.
This report will consist of a 5-year business strategy, which is aimed at addressing stockholder, who
are an integral part of the business, and will insure that their stocks are safe in Marks and Spencer and
will remain competitive in the near future.
In this report, I will also be going through the business environmental analysis in to developing the 5year plan. This will also contain market-forecasting models, also a plan of how my business model will
be implemented.
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Business analysis
PESTEL Analysis
Political and legal:
Many aspects of government policy can affect businesses; in particular, they must also consider the
implications of any forthcoming legislations and adhere to them within their daily operations. In the
context of Marks and Spencer, they will need to comply with trading standards, as well as health and
safety standards within their operations. This is fully in line with their aims of Plan A, (Spencer, 2013)
which aims to tackle such matters like ethical trading and health and safety as well as reduction in
waste. Marks and Spencer also need to take into consideration the UK taxation system within their
daily operations. This is because they may feel the need to lower their efforts in the UK if the tax is
too high. Currently the main rate of corporation tax in the UK is 23% in 2013 and 21% in 2014 (Customs,
2013).
In terms of the legal aspects that Marks and Spencer need to comply with are the FCA (Financial
Conduct Authority) and PRA (Prudential Regulation Authority) FCA, Authority, (2013) as they have
their own M&S banking sector as well. They also need to consider the guidelines of the FSA (Food
Standards Agency) (Agency, 2013) as they provide groceries too.
Economy:
Currently the economic outlook for the UK is getting better, as stated by the BBC UK economy
avoids triple dip recession (BBC, 2013).
Marks and Spencer must also consider the Economic Cycle within the UK as this plays a major role on
how they should plan their daily operations as well as setting their pricing and future marketing.
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Social:
Social and cultural factors play a major role in how any business is shaped. As with the recent recession
within the UK and the UK just coming out of a triple dip recession, unemployment levels are still high.
This has a major effect on any retailing company. In addition, there is the rise of an aging population,
which decides whom the company will be targeting most of their products are aimed at.
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From the table above you can see that there is an aging population as 41% of the UK population are
in the age group of 25 - 54. The table below shows that menswear and womenswear were among the
top popular products purchased in department stores within the UK. This shows that although there
are signs of recession consumers are still buying clothes.
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The socio-economic table below also shows that menswear and womenswear are in very high
demand, by the ABC1 socio-economic groups. However if you look more deeply into the results you
will find that footwear is also rising in trend and according to Mintel, (2013) Footwear saw strong
sales growth as consumers see buying new shoes as an easy way of updating an outfit.
Mintel, (2013) also suggests that there is a demand for frequently updated fashion lines, and in terms
of age demographics, there is a change in age range of which group set the trend. As Mintel, suggests
that the new age group that set the trend are the 25 34 year old demographic. This is because the
15 24 age group are facing more financial pressure and are less likely to be shopping.
Technological:
As for the technological aspects of the environment, steady improvements have been made, such as
e commerce and smartphone application support. As the internet is growing day by day, more and
more people are consuming products and services online and the barrier stopping people from doing
so is diminishing. The graph below derived from Mintel, shows the attitudes to online shopping as well
as its importance for firms like Marks and Spencer.
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Environmental:
As for the environment Marks and Spencer currently have, a plan in place, which is in line with their
corporate strategy this, is Plan A. Plan A is in place to reduce their carbon waste as well as packaging
waste by a significant amount. Marks and Spencer is one of the few companies that is dedicated to
their Fairtrade and organic range (Spencer, 2013).
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Industry, Competitors and Consumers

Industry:
According to Bloomberg, (2013), Marks and Spencer are in the Retail Discretionary industry, which
then falls ino the sub-indsutry of department stores. Marks and Spencer is major british retailer, which
has been around for 129 years and employing around 82,000 people to date. Markes and Spencer in
2013 managed to secure 10bn in sales as well as 665m in profits (Spencer, 2013). Within the same
industry there are many other department stores such as John Lewis, harrods, Debenhams and Harvey
Nichols. The department store indusrtry is changing heavily, as more and more consumers are
changing the way they shop. As Mintel, (2013) suggests that consumers are shopping in less linear
ways and are using different channels when buying from department stores. As there are many new
retailers launching, there is the issue of trust that is key within business. As Blau, (1964) states that
While trust represents a complex social phenomenon, it has been argued to be the essence of social
exchange. This shows that great emphasis on trust and its reliance in not only business but also social
conducts. The table below derived from Mintel indicates the level of trust from other department
stores as well as M&S.
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Competitors:
By looking at the Porters 5 forces model above, and putting this into context of Marks and Spencer
the main problems that Marks and Spencer now face is the growing number of entrants into the
market as well as the threat of substititues and the degree of rivalry within the industy.
In terms of threat of new entrants, there are a number of competitors within the market. These can
be similar departmenal comapanies like John Lewis, Harrods, Harvey Nichols, Selfridges and
Dedenhams. However, as there are many entrants within that industry Marks and Spencer has the
degree of trust within their brand which can be used to uplift itself.
Moreover, there is also the threat of substitues which need to be tackled by Marks and Spencer.
Hoewever, given the nature of Marks and Spencer as they have a groceries section as well as general
merchandise. They will have twice as many substiture companies in both areas. For example in the
food section there are Sainsburys, Tesco, Asda and Morrisons. And in the clothing section there is
competitors such as Next, Asos, Oasis and even Boohoo.
Furthermore, there is also the degree of rivalry within the industry itself, as Marks and Spencer have
a larger market share than other departmental stores they are in a better position. This is also the
same for their level of trust within the brand.
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The buyer also has some significant part in the business as by looking at the current state of the UK it
has just barely come out of the recession (BBC, 2013). This displays that spending has changed within
the UK and new age structures are forming the trends as shown by Mintel, (2013) the new age
structure is 25-34. Here we can see that the buyer is not only changing the products sold, but also the
type of consumers it wishes to attract. This can also relate to why Marks and Spencer wish to employ
their tactics in countries other than UK as they fall into their age range as well as the overall strategy
as shown by the Guardian, (2011) Marks & Spencer returns to France, with new store on the Champs
Elyses.
Consumers:
The type of consumers that Marks and Spencer are currently targeting is the 45 54 age groups. The
graph below displays the type of people that visit each of these sites which is derived from HeatSync,
a web analytics web based program. The 3 graphs show us which age sector is most interested in
departmental shopping styles. However if you look at John Lewis and Harrods, you will find that they
have a rise in the 25 34 age group. This is crucial insight because Mintel, (2013) also states that the
under 25 age group is being squeezed in terms of finance. Mintel also states that the 25 34 age group
is taking more interest as they have more disposable income.
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SWOT analysis
SWOT analysis:
Strengths
Powerful retail brand
High quality
Good store locations
Own brand items
Online growth
Opportunities
Expansion in other countries
New customer segmentations
Donations to charities
Plan A
Weaknesses
Clothing lack segmentation
Price too high for middle class
people
Need to change their strategic
approach to better-fit
surroundings.
Threats
Competitors have cheaper
suppliers
Too many substitute companies
entering the market e.g. Next,
Oasis.
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Current Marketing Strategies

Plan A
Currently Marks and Spencer are focusing their main marketing efforts in Plan A (Spencer, 2013).
Plan A incorporates helping communities, less waste and more recycling, durable and sustainable
clothing and home products, healthier and sustainable food as well as efficient shops and suppliers.
Although, most of Plan A is mainly focused around CSR (Corporate Social Responsibility) there is great
importance within it. Chomvilailuk & Butcher, (2013) A more socially responsible organisation will
engender enhanced business performance, including product purchase, firm loyalty and favourable
word of mouth. This suggests that firms should take up as much CSR as they can to better their
outlook and performance.
Marks and Spencer have also unveiled their new strategic plans, which is to better the quality and
style in womenswear as well as making store shopping easier (Guardian, 2013). This plan alone has
risen their share price 15.4p to 436p.
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Product
Groceries
Clothing
General household merchandise
Promotion
Celebrity endorsements
In store and online promotions
Hawa Phairor
Marketing Mix
Price
Price more focused around middle and
upper class
Place
In store and online

International stores
Financial analysis
From the tables below you can see the financial activity of Marks and Spencer in the years of 2012 to
2013. Within the cash flow table, you can see that the underlying EBITDA (Earnings before Interest,
taxes, depreciation and amortization) shows that that they made less on 2013 compared to 2012.
However, by looking at the capital expenditure table you can see that more was spent in the year
2013, which could mean why less EBITDA was made. As the capital expenditure shows us that most of
the capital was spent on focuses in the UK and supply chain. As Spencer, (2013) states that 200
million investment by Marks & Spencer into new distribution centre at London Gateway. There is also
the revenues table showing the total revenue for Marks and Spencer within its different categories in
the UK.
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Forecasting
In the case of Marks and Spencer, forecasting is needed to ensure that there is a plan of thought made
to back up the assumptions made in the future. Wensley, (1979) states that Forecasting system can
be defined in terms of encouraging the use of historical information (in the widest sense) to develop
a better understanding. In terms of forecasting, you have two main approaches, which are the
qualitative and quantitative. As qualitative approaches are more subjective and based around
opinions and judgements of consumers. I believe this should be tackled with the use of a quantitative
approach to forecasting. As Tsolacos, (2006) states, Quantitative forecasting plays an important role
since future outcomes are conditional on identifiable drivers and their future trends.
I believe that a time series method is best suited for the nature of this business. This is because the
retail environment can be quite volatile and past data needs to be used effectively in order to present
future opportunities. I have selected the Holt-Winters Method (Kalekar, 2004) which in its simplest
form is, exponential smoothening, but with the predictions of seasonality combined to give a forecast
of the next observation (Statistics, 2008). The prediction is created once there is updated information
and then revisions are made to the existing series.
Time series method best suit the purpose of Marks and Spencer as statistical information provided by
this method is very accurate compared to other time series methods such as moving averages as well
as qualitative based approaches. A study done by Brandon, et al., (1987) shows that it proved
extremely well as a forecasting method and even capturing volatility within markets, as opposed to
random walk and indicator models.
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Recommendations
5 - Year Business Plan
For this plan, I will be using the Ansoff's Matrix (Jobber, 2010). This is because Marks and Spencer
already have an existing business however; they need to further penetrate the market and they need
to further develop some markets. According to Calori & Harvatopoulos, (1988) Diversification may be
defensive or offensive. Defensive reasons may be that to spread the risk of market contraction when
current product or market is not offering further opportunities. There is also the offensive, which
requires taking over new areas of the market. Moreover, Jobber, (2010) satets that although the
Ansoffs Matrix does not prescribe when each strategy shall be employed, it is a useful framework for
thinking about in which ways growth can be achieved. This states that the Ansoffs Matrix will be a
useful tool for Marks and Spencer as it can provide strategies into growth which the aim.
I have decided to use the Ansoffs Matrix instead of the Boston Consultancy Group Matrix (BCG)
because the approach is far too simplistic and does not meet the requirements of Marks and Spencer.
For example, Jobber, (2010) states that the model overlooks other factors within the market, when
measuring market attractiveness. Jobber also states that the model heavily emphasises on market
share, and it is very useful in terms of brand building. However, it may not do so well in terms of
competitive rivalry. Moreover, Slater & Zwirlein, (1992) conducted a study on 129 firms and concluded
that planning with the BCG model gave lower shareholder returns.
The table below derived from Jobber, (2010) shows an adapted version of the Ansoffs Matrix which
has key highlighted areas in which Marks and Spencer may need to work on. From my analysis, I have
found that Marks and Spencer need to develop their markets, as Mintel, (2013) suggests that the 25
34 age group are setting the trends within the market. This shows that if they are to win competitor
customers they may also need to change their product line too.
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Year
Year 1
SMART objectives
Meet all plan A
objectives by year 2
Increase market share
internationally by 5% by
year 2.
Increase clothing line
revenue by 5% in 1 year.
Reason
This is vital as this is part of their current strategic
plan and must be met in order to improve efficiency
as well as the image of the company through
extended CSR.
International market is vital for Marks and Spencer
because they need to expand and not be dependent
on the UK economy, as there is a risk of the country
entering recession as well as expected GDP rising in
other countries.
Increasing their clothing line revenue is vital
because it would mean they are competing against
not only their direct competitors but also indirect
ones too. This will also give them a higher market
share as well as a newfound segment for their
clothing range.
Year 2
Increase non-food
sector market share by
10% by year 5
Year 3
Expand in Indian and

china market.
Year 4
Year 5
Contingency Plan
Change target market
Revert to original plan
that bought in the 1bn
sales
Focus more on food
sector
More emphasis needs to be placed in the non-food

section of Marks and Spencer as they are currently
losing market share to competitors direct and
indirect.
This falls in directly with Marks and Spencer
corporate plans to expand in international markets.
If you look at the predicted GDP rates for 2017, the
countries mentioned are among the top to get high
GDP stats (Dun & Bradstreet, 2013).
As Mintel, (2013) suggests that there is a new age
group making the trends as they have more
disposable income. This is the 25-34 age group. This
will help the sales of the non-food section of Marks
and Spencer.
If the plans in years 1 3 are somewhat failing then
go by the plans which Marks and Spencer had the
most confidence in which brought in their best sales
(1bn). This not only had the most sales but also
had the highest confidence levels within the
shareholders.
If the previous year plans fail, then I believe Marks
and Spencer should focus more on food and less on
the clothing side to increase its market share in one
sector. This will not only provide strong sales as
proven in past fiscal years but also give investors
strong confidence to remain within the business.
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Conclusion
In conclusion, I have found that Marks and Spencer need to address a few problems before opening
chains in international grounds. They need to fully address Plan A in order to achieve maximum
efficiency within the UK. In addition, Mintel, (2013) suggests that there is a new age sector emering
within the market. This age group will be the sector to be setting trends as the under 25 age group is
squeezed on finance. Within the report I have also combined the 5 year plan and contingency together
as that will make it more feasible as 3 years is long enough to revise again. And to gain back investor
trust classical methods can be employed to get back lost share price.
Moreover, Marks and Spencer need to use Ansoffs Matrix to their advantage so they can see what
areas need improving. After careful analysis, the report has found that there is a need for market
development as well as product development as new age segmentations are found. Furthermore,
Investors, (2013) states that we need to see clear progress in clothing, store layouts and customer
service before we upgrade our recommendation. This implies that major work needs to be done
within the non-food section of Marks and Spencer as well as customer service section.
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List of References
Agency, F. S., 2013. Food Standards Agency. [Online]
Available at: http://www.food.gov.uk/
[Accessed 25 December 2013].
Authority, P. R., 2013. Bank of England. [Online]
Available at: http://www.bankofengland.co.uk/pra/Pages/default.aspx
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Available at: http://www.bbc.co.uk/news/business-22290407
Blau, P. M., 1964. Exchange and Power in Social Life. 1 ed. New York, NY: John Wiley.
Bloomberg, 2013. Markets. [Online]
Available at: http://www.bloomberg.com/quote/MKS:LN
[Accessed 1 January 2014].
Brandon, C., Jarrett, J. E. & Khumawala, S. B., 1987. A Comparative Study of the Forecasting Accuracy
of Holt-Winters and Economic Indicator Models of Earnings Per Share For Financial Decision Making.
Managerial Finance, 13(2), pp. 10-15.
Calori, R. & Harvatopoulos, Y., 1988. Diversification: Les regles de conduite. 1 ed. Spring: HarvarL'expansion.
Chomvilailuk, R. & Butcher, K., 2013. The effect of CSR knowledge on customer liking, across
cultures. International Journal of Bank Marketing, 31(2), pp. 98 - 114.
Customs, H. R. a., 2013. Corporation Tax Rates. [Online]
Available at: http://www.hmrc.gov.uk/rates/corp.htm
Dun & Bradstreet, 2013. D&B's Global Economic Outlook - 2013 to 2017. [Online]
Available at: http://www.dnb.com/lc/credit-education/global-economic-outlook-2013-to2017.html#.UstUjPRdVp6
FCA, 2013. Financial Conduct Authority. [Online]
Available at: http://www.fca.org.uk/
Group, T. D. B., 2013. Top 20 Destroyers of Business Value Tip #18 - Not Understanding Business and
Economic Cycles. [Online]
Available at: http://thedantoburksgroup.com/2013/02/25/top-20-destroyers-of-business-value-tip18-not-understanding-business-and-economic-cycles/
Guardian, T., 2011. Marks & Spencer returns to France, with new store on the Champs Elyses.
[Online]
Available at: http://www.theguardian.com/business/2011/apr/01/marks-spencer-france-paris-euro
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Guardian, T., 2013. Marks & Spencer moves higher after unveiling new strategy as FTSE 100's run
continues. [Online]
Available at: http://www.theguardian.com/business/marketforceslive/2013/may/15/marks-spenceranalysts-positive-ftse-higher
HeatSync, 2014. Harrords. [Online]
Available at: http://www.heatsync.com/
HeatSync, 2014. John Lewis. [Online]
HeatSync, 2014. Marks and Spencer. [Online]
Investors, C., 2013. M&S fails to impress. [Online]
Available at: http://www.investorschronicle.co.uk/2013/11/05/shares/news-and-analysis/m-s-failsto-impressyrFcT2mQjtMEudBC2tCURK/article.html;jsessionid=444F5C0B115C67DC8870A29ACE9F330E.mpsapr-02-8109
Jobber, D., 2010. Principles And Practice Of Marketing. 6 ed. New York, NY: McGraw-Hill Higher
Education.
Kalekar, P. S., 2004. Time series Forecasting using Holt-Winters Exponential Smoothing. School of
Information Technology.
Mintel, 2013. Department Store Reatiling - UK - May 2013. [Online]
Available at: http://academic.mintel.com/display/666941/
Mintel, 2013. E-Commerce - UK - July 2013. [Online]
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Mundi, I., 2013. United Kingdom Demographics Profile 2013. [Online]
Available at: http://www.indexmundi.com/united_kingdom/demographics_profile.html
Slater, S. F. & Zwirlein, T. J., 1992. Shareholder Value and Investment Strategy Using the General
Portfolio Model. Journal of management, 18(4), pp. 717-732.
Spencer, M. a., 2013. Annual Report 2013. [Online]
Available at: http://annualreport.marksandspencer.com/
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Spencer, M. a., 2013. Company Overview. [Online]

Available at: http://corporate.marksandspencer.com/aboutus/company_overview
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Available at: http://www.ons.gov.uk/ons/guide-method/ukcemga/ukcemgapublications/publications/archive/index.html
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Available at: http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/december-2013/styemployment.html
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Available at: http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q32013/stb-gdp-preliminary-estimate--q3-2013.html
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econometric. Journal of Property Investment & Finance, 24(5), pp. 386-399.
Wensley, R., 1979. Principles of Useful Market Forecasting. Management Decision, 17(4), pp. 295302.
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MARKS AND

Industry, Competitors and Consumers

Current Marketing Strategies

In store and online

Expand in Indian and

More emphasis needs to be placed in the non-food

Spencer, M. a., 2013. Company Overview. [Online]

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