MARKS AND SPENCER - SWOT ANALYSIS PEST ANALYSIS

Marks and spencer - SWOT analysis PEST analysis, Porter's 5 Forces



Marks and spencer - SWOT analysis PEST analysis, Porter's 5

Forces

The following are the analysis of Marks and Spencer:

PEST Analsysis

PEST is a mnemonic for political, economic, social and technological factors. It is the most frequently used tool to analyse the impact of the general enviroment upon an organisation.

Political

British political system offers stability and encourages capitalism. Current legislation and market regulations favour M&S´ operations. (Bevan J., 2002, Pp. 46)

Economic

The consumption of most goods is likely to increase when the economy is booming and it tends to decline during recessionary periods. After the recession of the early 1990s, the UK and many other countries entered a period of sustained economic growth and high levels of consumer expenditure.

Social

The requirements of consumers are changeable. For example, the clothing market is particularly sensitive to fashion trends. Lifestyle can also have a significant influence on our eating habbits (i.e. Organic food, ready-to-cook meals...etc.). Understanding these requirements is crucial, if M&S wants to remain competitive and increase its market share.

Technological

A substantial investment in technology is necessary to operate efficiently in a competitive market. Modern IT systems can improve productivity and lower the costs (e.g. the use of computer systems has unabled firms to automate and accelerate their buying procedures and reduce the supply cycle for all merchandise) Furthermore, customers are increasingly making use of the Internet and firms have to be prepared to offer online services for their home shopping.

Porters Five Forces Model

This model was developed by Michael E. Porter in 1980. He identified 5 forces that shape every industry and determine its attractiveness and potential profitability. These forces as described as follows:

The Porters 5 Forces analysis for M&S is given below:

Bargaining Power of Buyers

In general, bargaining power of buyers is high. It very much depends on the segment we target. Buyers´ power is lower in the exclusive segment (i.e. cloths from luxury designer firms) and higher in other segments, as they can usually choose from a variety of companies.

M&S gained customer loyalty from high quality products that were priced competitively. One of M&S´ current problems is that people demand either brand names or discounted products. M&S is therefore stuck in the middle. M&S´ product-orientated strategy in the late 1990s has become ineffective. The bargaining power from buyers is increasing and therefore, a more consumer-orientated strategy is needed.

The Bargaining Power of Suppliers

M&S´ success has a lot to do with its long-term relationships with its suppliers. Some of them had supplied M&S for over a hundred years (i.e. Dewhirsts). M&S bought directly from a few UK suppliers, without the use of an intermediary, like most of its competitors. This created a heavy reliance of those suppliers on the company. M&S could then try to lower its costs by putting pressure on suppliers (e.g. rappels from large purchases).

The bargaining power of suppliers is generally quite low in this industry. M&S value chain has made it even ...