The existence of a business requires facing the difficulties an enterprise encounter in a manner that guarantees that people will have pleasure in the future as it is today with the kind of business model put in place. Business survival, therefore, involves creating long-term strategies of managing the “political, economic, social, technological, environmental and legal” PESTEL aspects of a business. The essay seeks to expound on ethical and sustainability factors that can cause difficulties to Marks and Spencer organization that is a well-known brand. The firm operates on a global scale.
The company is ranked as one of the best retailers, and it has come up with a plan which gives attention to the customer’s needs with minimal or no negative implications to the environment. The firm aims at enhancing waste reduction, conservation of natural resources, control of climate changes and fair trade. The study will also take into account the PESTEL model, SWOT analysis, SMART objectives and marketing mix for Marks and Spencer and how this plan will assist the company to fix the challenges of the future.
PESTEL Analysis for Mark and Spencer
Bertozzi, Ali and Gulf stipulate that PESTEL is a model used to identify the external factors that affect an organization (2016). The PESTEL issues affect every business organization. Firms have no control over these external factors, but instead, come up with ways of fitting in these elements for survival. According to Vignali and Vignali, an organization is capable of identifying forces and provide a method of reducing the impact in future (2009). The PESTEL analysis is vital as it would allow Mark and Spencer to adapt to the prevailing business environments and prepare for future uncertainties.
Figure 1: PESTEL Analysis
Political factors
A nation’s political stability gives businesses safe environments of operating without disturbances, and therefore many enterprises will start transacting due to the prevailing peace. Political instability causes firms to close due to the insecurity of both the investments and the workers. A company should prepare on how to handle such situations to avoid losses and to maintain the business. Nations that have witnessed political instability have had many companies closing down operations as the stocks get stolen or destroyed and sometimes workers being killed. Good governance has enabled Mark and Spencer to carry out the business smoothly and sell the product worldwide because the marketing team carries out comprehensive marketing research to identify risk exposure as a result of political instability before venturing.
Economic factors
The economic outlook is so uncertain, and thus, organisations should provide a means in which the uncertainties do not adversely affect the business rather than waiting for these uncertainties to happen with no way of dealing with them (Makos N.d.). Consumers suffer a scarcity of resources and concentrate on meeting their basic needs first before engaging in the purchase of luxurious goods. Inflation of the currency is another threat to organisations where they close the businesses as the value of the money lowers yet the running expenses remain constant. The economic cycle has seen business flourishing during the boom, and at this point, they are required to save a lot to cater for the costs during the seasons of recession.
Social factors
The tastes and preferences of customers are dynamic, and every organization has to go by what the customer wants so that they satisfy them. Different people have their cultures and lifestyles, and this calls for businesses to produce what fits a particular social group. Guardian highlights that society has changed in the last few years, and people are moving to a lifestyle that is fashionable to them (2006). Mark and Spencer is not an exemption, and it has to adjust and suit the changing needs of their customers. For instance, since people are moving away from junk food to organic foods due to the health risks associated with junks, it should take this as an opportunity and start supplying foods with low health hazards. Different cultural groups have their purchasing trends and what they prefer should be provided to create convenience for them.
Technological factors
The technology has replaced the traditional methods of conducting business where new and innovative processes have emerged. Advancements in technology have seen Mark and Spencer flourishing due to how it does its advertisement to promote the brand. Through the online promotion of this brand, Mark and Spencer has reached many of its customers and has seen positive feedback through more sales. Appealing aesthetics on the organisations' website and timely advertisements with appropriate pictorials have enabled Mark and Spencer capture new, and existing customers who have shown interest in the brand. Using an updated method of production will result in quality products to the customers, and they will, in turn, remain loyal to the business, increase their purchasing quantities and come with other buyers.
Environmental factors
It is the concern of every business to ensure that the surrounding is clean for the survival of human beings, plants and animals. The various activities conducted by organisations should ensure that the environment remains neat and healthy. Many companies have been advised to stop using inputs that can destroy the atmosphere during the production process and embrace materials that are environmentally friendly and also adopt safe disposal techniques of their wastes. Mark and Spencer have succeeded in maintaining environmental safety by adhering to the ‘green policy’ strategies that ensure that the areas of operations retain the natural form. It is a requirement by the environment faculty of the UK that Mark and Spencer together with other businesses to neutralise their waste products to avoid polluting the environment (BBC News 2007).
Legal factors
Government establish Legal guidelines in the form of rules and regulations that business firms should observe to be allowed to operate in a given country or territory. Some of the policies require that firms should install adequate security systems, acquire and update legal licenses and trading documents, provide social schemes to employees, enhance proper pricing of products, and deal with products meet the set standards. A firm that fails to comply with the set rules is subject to closure, and sometimes prosecution depending on the magnitude of the violation. For example, the UK laws require that an employee injured due to negligence is entitled to compensation. The success of Mark and Spencer is marked by strict adherence to the legal framework of the various countries of operations. The government also requires organisations to commit to corporate social responsibilities and give back to the community (Burt 2012).
PESTEL analysis helps a business deal with threats that are inevitable including competition, lack of resources, many expenses among others. PESTEL analysis will help Mark and Spencer focus on areas which will maximise the profits as well as minimising the losses. According to Steger, understanding and implementing PESTEL sets a firm above its competitors and create ways which will increase sales (2004). The merits acquired through PESTEL analysis involves a better understanding of the undertakings, managing costs of operations, successful handling of threats and coming up with ways of grabbing opportunities for the growth of the business.
SWOT of Mark and Spencer
Understanding and the SWOT analysis has seen Mark and Spencer stand ahead of its competitors by creating a unique brand and applying the appropriate marketing strategies to promote the reputation of the firm’s products in the eyes of the customers. Agarwal, Grassl and Pahl explain that the acronym 'SWOT' stands for strength, weakness, opportunity and threats (2012). Every business should maintain a SWOT strategy to enable survival in the competitive world and outperform the competitors.
Strengths
Political stability in the UK has enabled Mark and Spencer to market their products and distributed them anywhere in the nation due to the surety of security. This security is one of the strengths the firm has identified of remaining bold and taking advantage of the favourable situation in the country. The legal framework of the UK keeps changing, and the firm keeps up to date with the changes to ensure good relations with the rules. Compliance with the laws has enabled Mark and Spencer to carry out the business with minimal government interference due to the firm’s record of legal compliance.
Mark and Spencer have established a good name through the provision of quality products to its customers thereby promoting sales. According to Yoo, Donthu and Lee, a company known for its quality products will make customers buy and come again for the product (2000). It is the quality in a product that gives a customer trust and develops confidence in the firm even without considering the price (Colgate " Alexander 1998). Maintaining the corporate social responsibility and giving back to the community has helped Mark and Spencer avoid collision with the state and also attract support from the surrounding communities. The activities of CSR include keeping the surrounding tidy, offering job opportunities to the locals, donating to the poor and producing things that do not harm the social set up of community around. The firm has an effective supply chain network which has enabled it to reach many customers across the nation. Johnson, Scholes and Whittington observe that a good supply chain network allows a business reach even those customers who are not price-sensitive and hence make more sales (2008).
Weaknesses
Mark and Spencer have on some occasions failed to adhere to the regulations set by the government attracting hefty fines. Some of the policies the firm has neglected in the past include employee safety guidelines which have resulted in employee injury in the line of duty for example by a loosely fitted door. British standards require that all businesses create a safety system that covers employees from accidents. Inappropriate usage of technological methods in operations makes a company fail (Rodrigo 2012). The firm has been unable to adjust to climatic changes in the products they deal with and hence exposing itself to stiff competition. Mark and Spencer face stiff competition from firms who sell clothes cheaply along the streets and even in the supermarkets. A consumer will prefer to purchase clothes where they are cheap than buying from Mark and Spencer. Competition leaves the firm with an option of finding out the tactics used by the competitors and apply them immediately to provide for survival. A healthy competition involves being unique in your way and impressing your customers with quality products at an affordable price and interacting with them nicely, and this will make them trust in you and build a good relationship for tomorrow’s transactions.
Opportunities
There are opportunities that Mark and Spencer focus on to make it a better retailing shop and compete effectively. Expanding the product to many and diverse places will enable the firm to reach different markets as compared to the competitors. Introducing the product to new customers at various locations ensures that the firm attains a pool of customers who in the long-run become loyal to the business. Mark and Spencer should focus on using the best technology in the distribution of their products so that they reach the customers on time and with the best value as expected by the customers. Many businesses in the contemporary world have adopted E-commerce. Mark and Spencer should use innovative technology which would aid in the reduction of the costs of production and consequently the price of products. The firm should start the E-business by selling the products online and carrying out promotional methods in selling the products to ensure competitiveness. According to Salmon and Tordjman, segmenting the market gives a business a chance to grow and expand its areas of reaching people (2002). The Mark and Spencer can split the customers into different groups that require the same products, for instance, selling clothes to the youth as one group and supplying clothes for the elderly differently through market segmentation (Jones, Clark-hill " Comfort et al. 2008).
Threats
Marks and Spencer faces a threat from new firms that are gaining entry into the industry with new and modern technological methods of carrying out business. Competing with such firms give Mark and Spencer a struggle due to the costs involved to buy and install new machinery as well as training on the latest technology to the employees. The uncertainty of economic cycles threatens Marks and Spencer since the customers have little to spend on their luxurious life. The customers will purchase less and leave Marks and Spencer at a point of almost quitting due to fewer sales while the running expenses remain constant. The customers change their way of life, and this will directly affect Mark and Spencer since the customers will stick to what their cultural and sociological aspects dictate. There are costs incurred in advertising and promotional practices, and the firm may fail to earn any profits by spending more money on trying to reach the customers. Proper advertisements should be done to ensure fewer costs are incurred and that the business remains competitive ahead of its competitors.
The risk of non-compliance to the rules poses a threat to Marks and Spencer which can lead to the imposition of hefty fines, prosecution and the extreme of trading license revoked. The company should comply with the rules every time to avoid the associated costs. SWOT analysis is a valuable tool that will make Marks and Spencer know the stand of the business and help it to develop. Understanding the review will give the company the opportunity to avoid threats, maximise on strength, capitalise on all opportunities and minimise all weakness to stand ahead of the competitors.
'SMART' Objectives and Rationale
Cross and Lynch state that to enable a business to develop long-term goals, it should consider a 'SMART' objective plan which will guide in developing future expectations (1988). The acronym stands for objectives which are specific, measurable, achievable, realistic and timely. According to Oliver, when new products are introduced into the market, new services are introduced too (2001). Marks and Spencer firm is currently offering clothes and food products to its customers, and it has successfully provided products that suit all ages and gender.
Mark and Spencer should resolve on which market to target and which brand needs to be known by the targeted market and the time this awareness should reach the market. This strategy requires a well-developed marketing procedure to enhance that the target market is wholly covered. Market research is essential to establish the tastes and preferences of different customers which in turn helps in determining which group requires which brand and at what quantities (Lee-Kelley " Blackman 2005). According to Stone, growth objectives enable the business to identify the size of the market it wants to cover and the requirements for attaining it (1996). Since the competitors are busy marketing their products, a company should develop ways of marketing that are unique from the ones used by the competitors (Gelder " Woodcock 2003). Since the target market is already identified, how to reach the market and at what time should be on focus and the methods used to enter the defined market.
Marketing Mix Outline and Rationale
Marketing mix refers to activities that a company carries to elevate its brand and product in the market. Four aspects that make marketing mix a success includes the price, product, promotion and place all termed as 4Ps. The discussion below expounds on how Marks and Spencer apply the 4Ps.
Price Mix
Marks and Spencer face stiff competition from its competitors. Pricing of the products should be in line with the price the fellow competitors are offering. When a company lowers the products prices, it forces other companies to follow suit to avoid losing the customers due to high amounts. Caution is taken when adjusting the prices to prevent too much reduction which can consequently lead to huge losses to a firm. Since Marks and Spencer deals with clothing and foodstuff, pricing should be friendly to the customers to make them loyal, and also ensure that the firm does not run at a zero profit. The company provides for discounts to those buying in bulk and the price is determined by the value and the quality of the product. Goi highlights that the cost of a commodity depends on the ‘say’ of the competitors as well as the demand from the customers (2009).
Product Mix
The firm has availed a variety of products to its customers across and outside the country under the original brand. Offering a large pool of products attracts many customers as they can shop just once in your shop for a variety of products. Marks and Spencer offer clothes for different ages and gender, foodstuff including fresh farm produce and dry cereals. The company has become popular and it is felt by millions of buyers.
Promotion Mix
Promotion strategy ensures that a company is known by many people and Marks and Spencer has concentrated on promoting the product due to the stiff competition from the competitors. Narayanan, Desiraju and Chintagunta observe that product promotion method should appeal and entertain the target market (2004). The firm uses models and celebrities when promoting products targeting the youth and use old and mature things when advertising to families (Hurford 2009). Marks and Spencer invest heavily in advertising through the internet and other electronic means to reach many people.
Place Mix
Successful distribution of products depends on the distribution channel in place, and it should reach the target market effectively, and the product should retain its quality. Marks and Spencer distributes its products all over the world where its customers are, and it has managed since its products are of good quality. Products are availed to the customer according to the demand from the customers although there are huge costs involved in the distribution of products (Meenaghan 1992).
Conclusion
Marks and Spencer have portrayed as a successful business which is recognised globally for its quality brand and the well-developed distribution network. Due to the competition, the firm should focus on minimising costs attributed to non-compliance with the law. Business threats are usual to every business, and this business would be better if proper strategies are incorporated so that the firm can focus on profit maximisation and lead in the industry. The knowledge of PESTEL should take the firm to the next advantaged level. SWOT analysis will help the firm maximise on the strengths, rectify the weakness, capitalise on the opportunities and minimise the threats.
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