Marks and Spencer Group plc (M&S) is one of the famous British retailers in the world and the largest clothing retailer in the UK. Unfortunately, M&S did not change their strategic to adapt to a continuously changing economy, so that it suffered from strategic drift. From 2000, Luc Vandevelde and his management team attempt to turn the business around, with M&S’ unique resource and competence.
This report identifies and analyses strategic capabilities and competitive advantages of M&S by using “threshold and distinctive capabilities” table and value chain model. Following this, there is a ratio analysis from 2000 to 2006, including Return on Capital ...view middle of the document...
Further analysis of the strategic capabilities and competitive advantages is provided in section 3 by looking at the value chain model. The 10-years period financial analysis focuses on five ratios, in order to get a depth look in M&S. Finally, there will be recommendations based on the analysis which provides for M&S future success.
In this section, report examines the resources and competences of M&S on the basis of following table:
Figure 1: Threshold and distinctive capabilities
Source: Johnson, Whittington and Scholes, 2011, p.87
Threshold Resources is defined by Johnson et al. (2008) as “The resources needed to meet customers’ minimum requirements and therefore to continue exist.” According to the M&S annual report (M&S, 2006), it has more than 400 local stores throughout the UK and Republic of Ireland and nearly 200 international stores, in which there are experienced staffs serving different customers in the UK and aboard. M&S has strong leadership in women’s clothing sector and offers outstanding quality of products, which are responsibly sourced from stable suppliers globally. In addition, M&S has sufficient capital to fund its business operation, as it is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.
Similar with the threshold resources, threshold competence is those essential activities and processed needed to stay in the market (Johnson et al., 2008). M&S adjusted its purchasing systems to adapt to the increasingly competition. The Organisation also keep searching and developing potential suppliers around the world, which can provide better source and lower price. Furthermore, organisation implemented the store refurbishment, by grouping stores in light of demographic characteristics and lifestyle pattern, in order to show customers that different styles can work together. Besides retailing business, M&S has also provides domestically and globally financial services.
As Johnson et al. (2008) defined, “Resources that underpin competitive advantage and are difficult for competitors to imitate or obtain.” Based on the case study, the time-honoured brand “St Michael” is the symbol of high quality in most people’s mind in the early years. In other words, M&S has long history and unique brand reputation, especially in the UK. Another distinctive resource is the talented and experienced staffs. Luc Vandevelde (2000-2002, CEO & 2002-2004, Chairman), who has a great eye for business vision and excellent performance in the industry, is a good example. In addition, He head-hunted Roger Holmes to in charge UK retailing segment in 2001. M&S had ‘turned the corner’ in 2002, as the case study said,
If the activities and process can underpin a company’s competitive advantage, it is the core competences (Johnson et al., 2008). M&S...