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PESTEL and SWOT analysis of Marks and Spencer

For the purpose becoming successful in the current condition of the world, the organizations also should focus on the external environmental factors, along with the considerations are given toward the internal environment by the organizations. Resources and employees are included on the internal factors where external factors consist of political, economical, social, technological, environmental, and legal factors. Through describing these factors, it can be found out about the current conditions of the organization and the positive and negative effect of changes on the organizations.

PEST analysis:

Political factors:

In modern organizations such as: Tesco, and Marks & Spencer, there has the significant affects of the global politics. The activities of global politics for example: the incident of 9/11, Soviet Union collapse, Germany’s reunification, WTO policies, have significant effect on the Tesco, and Marks & Spencer’s business operation and the results of which may impede the development of the organization.

Economic factor:

Tesco, and Marks & Spencer, these three organizations handle the scarce resource allocation which is related with the economic system. The economic progress of the country is done by leaps and bounds as the phase of progress. In the flourishing stage of economy rising level of people’s standard of living may result to grow the business of Tesco, and Marks & Spencer.

Social factor:

Inspiration, outlook and activity are considered as the foundation of the progress of the society in relation to the human affairs. Therefore, customer actions which are related with the approach and activities of them keep contribution on affecting the business of Tesco, and Marks & Spencer. There are some factors for example: level of maturity, vocation type and along with activities of sparing time and these factors are considered as the basis of bringing changes on the attitude and approach of the customer which results the changes of growing the business of Tesco, and Marks & Spencer.

Technological factors:

Tremendous effect is brought by the technological factors in order to the operation of the business development of Tesco, and Marks & Spencer and their status and as well as their program of marketing. These incidences are directed towards the rapid movement of the new trends generation and if the organizations don’t know about these rapid movements of new trends then the growth and development of the business operation of the organization may impede. In Tesco, and Marks & Spencer, world class bid of these organizations, management with cutting edge in order to the program of ethical auditing, a deal is signed by these organizations with the management system of BSI in relation to the entropy software provision.

SWOT analysis:

SWOT ANALYSIS FOR MARKS & SPENCER

STRENGTHS

125 years in service and rich History.

Strong Brand Name and good reputation.

Quality manufacturing and Inovation its unique selling point.

Awarded Carbon Trust Standards

International Online Shopping and delivery Infrastructure

State of art Technology and excellent production team 7.First Retailer to offer exclusive Online personalised Greeting Cards.

Partnership With companies International Companies.

WEAKNESS

High Cost.

Lack of fashion trends and style for the 21st Century

Lacks price competition

Lacks attraction to younger crowds.

Longer time taken to bring changes in business operations.

Need to work on modern women taste but making it cost effective.

OPPORTUNITIES

Target International Market further.

Further Inovation and creativity for Online

shopping

Merger with International Companies would provide a faster global growth.

Increasing trend for online greeting cards

Need to identify its target age group. Changes to overcome the myth among youngsters that Mark & Spencer has more attraction to older generation.

THREAT

Economic downturn

Changing need of Customers (Cheap & Best)

Cheaper rivals

Competitive retail Market.

Rising unemployment

Increase Taxation

Strong competitiors for online shopping eg Asos.

Increasing Customer demands.

Subsitutes like Debenhams, Next, smaller high street shops, furnitures and super markets.

SWOT ANALYSIS FOR Tesco:

Strength:

 TESCO have secured commercial standing within the global market place winning Retailer of the Year 2008 at the “World Retail Awards”. This can be used for marketing campaigns to drive advantage towards the demographic base for future growth and sustainability.

 In an environment where global retail sales are showing decline or level performance on a like for like basis TESCO Group have published sales gain of 13% for UK markets and 26% growth in international markets.

Weaknesses

TESCO Finance profit levels were impacted through bad debt, credit card arrears and household insurance claims.

TESCOs position as a price leader in UK markets can lead to reduced profit margins in order to retain the key price points on must have commercial items.

Opportunities

Statistics suggest TESCO is the third largest global grocer which indicates a level of buying power to ensure mainstream economies of scale.

The acquisition of Homever provides the opportunity to develop the brand through Asia, specifically South Korea and further grow International markets for the group.

Threats

UK and American markets have been affected by economic concerns through the “credit crunch”. Lower available income will impact and strategic focus may need to change to lower priced basic products with less focus on higher priced brands suggesting a switch in price architecture.

Rising raw material costs from both food and non food will impact profit margins overall.

Task 2:

Scenario planning Tesco, and Marks & Spencer:

The short comings experienced in the last 18 months due to recession has provided M&S the insight to anaylise its market position and implement the necessary changes to win the hearts of the customers back on the basis of their ethical and sustainability objectives.In order to putforth their objectives M&S and Tesco has launched a programme under the banner ‘2020-Doing the Right Thing’. Further understanding the downturn of economy and its effect on their customer M&S introduced marketing campaigns and promotional offers like ‘Wise Buys’ ,‘Dine in for Two for £10’ campaign, ‘Dress for Less’ and Quality Worth Every Penny..M&S and Tesco has introduced new trends for their merchandise, implemented their expansion plans, made changes to their property portfolio and with Plan A into action, has gained trust of their customers and stake holders.

In order to stabilise the company due to the economic scenario and deteorating sales performance certain measures are implemented to reduce cost like Staff Cost, Distribution and Marketing.

The Retail industry is a fast changing, competitive and sophiscated sector. There’s an immediate need for companies to identify their market environment and monitor the changes in it from time to time. Globalisation has led to cross culture environment. There is s an exchange of ideas, fashion and latest trends. The needs of customers are changing, their taste tends to vary. Now they have more freedom of choices and substitutes. They are less likely to be loyal to a particular brand or shop. Hence retailers have to be more innovative and creative. There is a need to offer customers more interesting features or trends depending on the line of business.

Changes in the environment affect organizations. How well the undertaking plans and organises to meet changes, determines whether it will survive and prosper or fail and disappear. Over time many organizations have transformed themselves to deal with change; some have sought new activities and abandoned the old.

Internal changes that determine how the organization reacts and adapts to the external changes at great speed. The focus of organizations exhibit a view on the idea of an organization as a system attracting subsystems and elements establish under broader system and organizational environments which supply raw materials to the system and which take its output.

Task 2 (b):

Porter’s diamond on Tesco, and Marks & Spencer:

Rivalry:

The extreme competition is faced by the retail market in comparison to the market which is very crowded. Today, the success on the sector of non food is trying to get by the majority of the companies in relation to the competition as further intensified. The percentage of the share of market is 14.9 percent which is contained by Tesco, and Marks & Spencer at the year of 2007, as started increasing since from the year of 2004 as related with the program of restructuring (Annual Report 2007). It is considered as the trend of positivity but still it remains at the behind of market leader and also runway towards them such as: Tesco where covering of considerable distance is shown. At UK there are three chains of big super market and these chains are Tesco, ASDA and Morrison in the sector of retailing. Different competitive advantages are contained by them in comparison with their competitors. The reach towards the large customers can be achieved by the making the stores convenience by Tesco, and Marks & Spencer. The bank of Tesco, and Marks & Spencer faces competition with the societies of bank and buildings where it is not considered as core business of Tesco, and Marks & Spencer.

Barriers for entry:

There are remaining higher barriers of entry in the retail market of food because of the reasons of the numbers of factors. At first: in UK, most sophisticated sector is retail sector as organized where lots of investments are needed and the significant development of brand where some years might be passing for establishment (Doyle 2002). Second: an advanced stage is achieved by retail sector at UK and majority of the western world, through which it is meant that new entrants get little scope to operate their businesses in UK market for Tesco, and Marks & Spencer.

Threat of substitutes:

The retail industry of food such as: Tesco, and Marks & Spencer has contained the low threat of substitute because from the perspective of consumer it is considered as significant thing at developed world and as increasing towards the emerging market. New innovation of converging and assimilation are tried by the retail market in relation to the products of food or the business as alternatives where the customer gets experienced with shopping as extremely pleasurable. It seems to be more difficult to choose substitute by making this. The internal threat of industry is considered as the major substitute threat where one supermarket business led the other supermarket business.

Buyer power:

This industry is contained the high buyer power because of the reason of so many competitors presence through which same products are selling. The main differentiation is existed among the price and the loyalty of consumer and green credentials increasing. In addition, low switching cost is remaining for consumers. As the economy goes further towards recession (O'Doherty 2008) consumers' needs are likely to be given more weight, increasing their power considerably. 

Supplier power:

More complicated power is contained by the supplier which seems to be difficult for categorizing. Huge companies such as: P&G, Unilever, Cadbury etc. which contained appeal of huge brand are maintained the relationship with supplier as mutually dependent which is considered as safe to call. There is the argument that if products are not selling by the super markets loyalties can be shifted by the consumers through which more power can be achieved by the supplier. Therefore, if super markets are not getting the products from the big companies then bad effect can be impacted to the sales volume of them. The situation of the suppliers with big branded faces changes in order to make relationship such as: by achieving the success on the campaign of Gorilla ad, Cadbury dairy milk increases its sales (Wiggins and Urry 2007).

Task 3:

Objective of the Company

Based on its five founding principles Quality, Value, Service, Innovation and trust and thus aiming to provide customers an excellent shopping experience through high quality food, service and environment.

Aim of the Company

- Increase sales of M&S Direct to £500m 2010/2011

- To Incure 15-20 % of group revenue through international markets by 2010/2011

- To make UK and Ireland operations carbon neutral by 2012.

Mission and goals of Tesco:

‘core purpose is to create value for customers to earn their lifetime loyalty’.

Tesco success depends on people: the people who shop with us and the people who work with us. If our customers like what we offer, they are more likely to come back and shop with us again. If the Tesco team find what we do rewarding, they are more likely to go that extra mile to help our customers.

This is expressed as our values:

No-one tries harder for customers:

Understand customers.

Be first to meet their needs.

Act responsibly for our communities.

Treat people as we like to be treated:

Work as a team.

Trust and respect each other.

Listen, support and say thank you.

Share knowledge and experience.

...so we can enjoy our work.

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