Five Forces Analysis & Value Chain Of Marks And Spencer Marketing - Porters Five Forces Analysis Model Value Chain Of Marks And Spencer Marketing

Five Forces Analysis & Value Chain Of Marks And Spencer Marketing

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Porter’s Five Forces Analysis Model & Value Chain Of Marks And Spencer MarketingALI SOOFINAJAFIGP02698Individual Task #2
Company OverviewM&S was founded by Michael Marks and Thomas Spencer in Leeds in 1894 (Marks and Spencer, 2008). It went on to become one of the UK’s leading department stores and enduring brands. Through good times and economic turbulence, it remained a traditionally English brand with a focus on quality, value-for-money and practicality. M&S specialises in selling food and drink, apparel and household items, but it has also recently diversified into financial products such as credit cards and insurance. The company was in a difficult financial position in the early 2000s due to problems with its supply chain and poor product offerings. The most difficult was perhaps the year ending March 31, 2001 when net profit was as low as £2.8m on revenue of more than £8bn (M&S, 2008). However, following the appointment of Sir Stuart Rose as the CEO in 2004, the retailer managed to turn its fortunes and has since achieved a remarkable growth in profits due to rigorous cost cutting, extensive store refurbishment and aggressive marketing campaigns. Thus, profit before tax (£937m) and net profit (£660m) for the year ending March 31, 2007 were at their highest since 1998 (M&S, 2007). However, due to the credit crunch in the US and difficult trading conditions in the UK over the 2007 Christmas period, the company’s sales growth saw a marked slow-down and its shares plummeted almost overnight (Economist, 2008). M&S is traditionally called a ‘bell-weather’ of the UK retailing industry, which means that if M&S is struggling, hard times are ahead for the whole sector. To this end, the PESTEL analysis below looks at the macro-environment in which M&S is operating and tries to identify forces having the greatest impact on the company and its performance.
Porter’s Five Forces
Level of competitionCompetition in the retailing sector is extremely fierce. The problem is exacerbated by the fact that companies are trying to diversify into non-core fields thus creating additional competition.

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