Brief International Profile
Apparently, Mark & Spencer is a multinational retailer that is based in Westminster City, London, Britain. The business was founded by Michael Mark and Thomas Spencer in the 18th century and has continuously gained differing management experiences. The two entrepreneurs came up with the idea of offering garments, home appliances, as well as nutritional items. Needless to say, its market level especially in the international profile has been gradually growing due to its strong marketing strategy and the ever increasing demands of its products in specific, in the British sector, where the business is headquartered (Benoit & Lenos, 2011).
Motivation to Expand
According to the Company’s CEO Mr. Bolland, after gaining support from food sales in two Paris flagship outlets, the business obtained inspiration to join the French market, contributing to a call for a meeting between the Company and potential franchise partners who had declare interest in expanding the then simple food stores to huge stores across France (Powers, 2007). Moreover, the Company received demands from Parisians who were interested in traditional British delicatessens, which comprised biscuits and jam and Mark & Spencer ready meals salad (Dawson & Andriopoulos, 2014).
In regard to the heightened demand, Mark & Spencer Company have been alleged to be continually scrutinizing potential partners in relation to the opening of more stores. According to the CEO, the opening of 10 new stores is expected to be completed by 2018 with the market being restricted to Western Europe and places where the Company is capable of delivering fresh foods within a day from the Company’ s main distribution in Britain. As such, Cunningham & Harney (2012) affirms that the expansion in France is likely to be successful when this trend continues.
PESTEL Analysis of Marks & Spencer
Apparently, the removal of the Communist bloc and the consent the European Union members has paved way for most European countries to mature their markets and further expand them internationally and across borders. As such, Mark& Spencer Company could utilize this political aspect by setting subsidiaries in other countries as is the case in France.
Moreover, by eliminating trade restrictions, the diplomatic element affects the world economy and thereby facilitates the free exchange of commodities. In this respect, Mark & Spencer is able to transport ready meals from Britain to France’s ongoing new sector (Dietmeyer, 2004).
It has been confirmed that the economic status in Europe and the world over is in a downward trend with commodities such as Oil taking an escalating mode among other issues. As such, Mark & Spencer being known as an expensive product Company might experience a decrease of sales in their new France market. Nevertheless, the Company would still receive sales from some customers who are loyal and those who insist on quality products delivered by Mark &Spencer Co. (McGrath & Macmillan, 2005).
Basically, the social aspect articulates that the world is experiencing a greater mobility as a result of the economic status and the modern working environment. As such, majority of these people do not have adequate time to cook healthy foods. Mark &Spencer Co. have continually ensured that their market has adequate quality meals where customers come in to purchase meals as part of their social life (Murray-Webster & Williams, 2010).
According to Mark & Spencer Co., their target market is people who are aged above the age of 40 who serve as the best market and an opportunity to grow the business as well. Similarly, the modern world is also experiencing changes in fashion trend where people are expected to look younger and fashionable. Nevertheless, Mark & Spencer Co. have continued to experience criticism from its main market in Britain. Basically, customers argue that M&S lines are too conservative and thus are not preferable for modern trends. Thus, the Company should ensure that their products are desirable in the market (Rao, et al. 2008).
It is apparent that the technology aspect is increasingly been used across the world. As such, Britain is currently receiving a third percentage of the total utilization of the internet through online shopping. As a result, the global advertising is at approximately 12 % on internet allowing Mark & Spencer Co. to utilize their marketing strategies especially in France, which is their main target market for now. Importantly, the purpose of using technology is to increase sales and maximize of their profit as was experienced in 2007 when the sales reached £100 through an increase of 60% sale on yearly bases.
In regard to environmental aspect, activist ranging from government, the media and other private entities have continuously emphasized on the preservation of the environment particularly on plastic bag and other waste products that cannot be decompose.
Consequently, Mark &Spencer Co. have been criticized for over packing their products. This criticism has compelled to charge their customers payment percentage to compensate for such packaging. Additionally, it is worth noting that waste management is crucial for any company as it demonstrates a sense of environmental concern (Stelzner, 2011).
The legal aspect articulates that customers across the world have become more aware of their rights and as such companies should avoid situations of legal battles with customers as this could lead to negative publicity. Mark &Spencer Co., is a victim of such legal battles after a customer sued the company on basis of using their pair of shoes, which lead to their fall and subsequent injury (RA, 2011).
Porters Five Forces
It is apparent that competition is extremely high in the retailing sector due to a number of reasons. Nevertheless, in the last few decades, completion has intensified due to the fact that many companies tend to engage in non-core fields, which bring about extra competition. M&S is no difference. In its bit to expand to France, the company will have to face stiff competition since it has expanded its operations from its main line of business, which is food. It has also ventured into dealing with household items. This makes the company to face stiff completion from other companies that already exist in Frances such as Carrerfour Ltd and Wal-Mat.
Threat of New Entrants
Since M&S is the one entering the French market, it means that it will be considered as a new entrant to the market. Therefore, it can be argued that it will be considered as a rival by the French companies, which have dominated the market. Nevertheless, M&S stands a chance of taking over the market especially because many customers in Paris have snapped up the British biscuits and ready meals. The company is also advantaged as a new entrant because other franchises have expressed their interest in opening stores in Paris. In another dimension, M&S is also advantaged in its bid to enter the French market because venturing into food industry requires enormous capital investment. Therefore, few entrants are reported and this puts M&S at an advantaged position. However, M&S has to work extra hard when venturing the French market because incumbents tend to firmly hold their market share in order to counter new entrants. This poses as a challenge to M&S, and which it must establish strategies to overcome (Magretta, 2012). In addition, strategic plans will be required to be applied because the French market is already mature thus would require new entrants to offer radically new products, something that could be termed as difficult especially given that little can be done in regard to foods.
Threat to Substitutes
In essence, it is arguable that there is no substitute to food and clothes. Therefore, M&S would not have much to worry about in this regard. However, since M&S is venturing into a foreign market, the company has to ensure that the highly regarded British food products are of top quality. In light of this, the company has to carryout thorough French market to identify customer needs and also evaluate the weaknesses of its rivals so that it can counter them by offering a more devised version of its products (Magretta, 2012).
Bargaining Power of Buyers
Concentration of buyers can dictate on the tastes and other market rules. With the existence of other players in the French market, customers have a variety of alternatives dictated by the switch of tastes and cost of the products offered in the market. Therefore, M&S has to focus on customer needs and articulate on what is lacking from the existing companies (Magretta, 2012). However, M&S is advantaged in that British biscuits and ready meals are in high demand in the French market.
Bargaining Power of Suppliers
M&S is better placed when entering the French market because unlike other stores that rely on the suppliers, M&S sells its own branded products. This is indispensable when it comes to quality and wining over customers. Suppliers tend to dictate on the quality of the raw materials and delivery time, which is very critical in the food industry. In light of this, M&S can have less issues emanating from suppliers and which act as challenges.
M&S has been viewed as strong brand, which is denoted by value for money. This is a good appeal to many people. M&S has also been experiencing increasing profits since 2001. SE Mirwoba (2010) argued that proficient employees play a vital role in developing an organization. With regard to M&S, the company has experienced growth since the coming of CEO Stuart Rose and who revived the company in the early 2000s.
M&S has been having some challenges time to time. For instance, in 2007, the company’s performance slipped over the Christmas period. Such a weakness made the company to try and be all things to all people thus losing focus on its line of business. This is very critical especially when the company is planning to enter the French market.
The company has a good opportunity of developing and maintaining competitive advantage in the French market due to high demand of British biscuits and ready meals. Online sales can help the company attract more customer and this would help it in increasing the volume of sales thus growth in the French market.
In regard to other household goods, it is arguable that M&S’s main target group is older people. This can be termed as risk especially when entering a new market. Many young people would want to feel young and remain trendy.
Conclusion and Recommendations
M&S received motivation to venture into the France market after it received encouragement from food sales in two Paris flagship shops. However, competition is extremely high in the retailing sector thus M&S will have to face stiff competition since it has expanded its operations from its main line of business.
M&S has to ensure that it has carried out enough market research in order to familiarise itself with the French market. This is instrumental in that it will help in devising appropriate strategies to take over the market.
The company has to first concentrate on one line of business in the French market in order to concentrate fully with the intent of providing high quality before diversifying its market in the other line of businesses.
- Benoit, R. & Lenos, T. (2011).Competitive Strategy: Options and Games. Massachusetts: MIT Press.
- Cunningham, J. & Harney, B. (2012).Strategy & strategists. Oxford : Oxford University Press.
- Dawson, P. & Andriopoulos, C. (2014).Managing Change, Creativity and Innovation. New York, NY: SAGE Publications,.
- Dietmeyer, B. (2004).Strategic Negotiation: A Breakthrough Four-Step Process for Effective Business Negotiation. New York City, NY: Kaplan Publishing.
- Magretta, J. (2012). Understanding Michael Porter: The Essential Guide to Competition and Strategy. Boston, MA: Harvard Business Press.
- McGrath, R.G. & Macmillan, I.S. (2005).Market busters: 40 Strategic Moves That Drive Exceptional Business Growth. Boston, MA: Harvard Business Press.
- M&S website (2014). Retrieved on 31st Oct 2014 from: http://www.marksandspencer.com/
- Rao, C. A. et al. (2008).Strategic management and business policy: texts and cases. New Delhi, India: Excel.
- Stelzner, M. (2011).Launch: How to Quickly Propel Your Business Beyond the Competition. Hoboken, NJ: John Wiley & Sons.
- Murray-Webster, R., & Williams, G. (2010). Management of risk: Guidance for practitioners. Norwich, England: The Stationery Office.
- Powers, M. R. (2007). Focus on emerging markets. Bradford, England: Emerald.
- RA Olowe. (2011). Exchange Rate Volatility, Global Financial Crisis and the Day-of-the-Week Effect. ( Journal of Business Management; Vol 3, No 3 (2011); 138-149.)
- SE Mirwoba. (2010). Rethinking ethical issues in global business environment. Journal of Business Management; Vol 2, No 2 (2009).