LSBM103 Business Environment | Marks and Spencer

PART B

1.Description of Value chain model proposed by Porter 1985

Value chain can be described as that activity which can be used by business in order to provide valuable goods and services to consumers. In this process firms are involved in transforming inputs into outputs. There are various activities which is being involved in value chain analysis of firm like for example development in technology, human resource management, marketing and sales all are forming the most important part as the support activities. These primary and support activities can help business or organization in gaining competitive advantage and also it can assist their growth aspects. Primary activities include the following:

Inbound logistics: This type of activity involves how firm maintains their relationship with suppliers and includes all task which are being related to maintain stores and various other things (Stead and Stead, 2019).

Operations: In this activity the organization is being involved in converting inputs into outputs to provide quality of goods and services. It also includes the major operations of business that helps organization in their growth.

Outbound Logistics: In this activity which is being related to distribution is being includes. Organization have to maintain good relationship with the distributors like wholesalers and retailers.

Marketing and Sales: These are being used to promote goods and services, so that organization sales increases which ultimately increases the profitability.

Secondary activities also consist of the most important part in working of business. These includes the following:

Procurement: In this, how much resources are being acquired by organization are being analysed by firm.

Human resource management: In this activities such as recruiting, hiring and selection are being involved. It also includes management of human resources to increase efficiency of organization.

Technological development: In this organization are being required to make use of updated technology in order to attract consumers and providing them with value. Updating of technology can attract more customers and can also create customer loyalty in organization.

Infrastructure: In this type of activity organization is being engaged in making the infrastructure more creative and attractive so that their goodwill increases. It also consists of various departments in it like finance, legal, public affairs and government.

At industry level value chain analysis means that converting raw materials into finished products, goods and services. With the help of global value chain there has been an increase in interconnectedness as MNEs play an increasingly larger role in the internationalisation of business. Government is also being involved in cutting down the corporate income tax rate so that the business is being able to grow properly and also gain competitive edge. Value chain analysis has been implemented to whole supply and distribution networks (Simatupang,  Piboonrungroj and Williams, 2017).

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2.Business which is operating in United Kingdom

Marks and Spencer is a major British multinational retailer which has been headquartered in Westminster, London. It has been analysed that firm is being listed in London Stock exchange. Organization has been founded in the year 1884 by Michael Marks. It has been analysed that presently firm has 959 stores and also 615 outlets which only sell products related to food and beverage. Company has keen emphasise on providing quality goods to its consumers and have an uncompromising attitude towards customers that has supported them in gaining competitive advantage. It was also analysed to serve consumers better, smoking was also being ban from all stores of Marks and Spencer. Training was also given to workers in order to enhance their efficiency so that they can deal with workers better. Firm also have extended their market in international market. In 1973 they have expanded their market in Canada. In the year 1977, expansion was also done to France, they have open shops in Paris. In the year 1980 the shops were open in Belgium and Western Europe. These expansion has also supported Marks and Spencer in increasing their profitability and gaining competitive edge.  In year 1999 32 shops in Canada was being closed due to not having control over their competitors. Corporation was involved in selling out products like quality clothes for men and women and even for children. They have been known as the most branded and iconic retailers of 20^th century. They have the reputation to offer value for money.

Organization was also involved in taking feedback from their customers about the goods and services in which they are dealing, this has supported them in gaining competitive edge. Marks and Spencer has been started seeing the financial decline from the year 1998, the major reason for this was burden of suppliers and the cost that was being included in importing and exporting of goods and services. Organization price related to shares also decreased in this year. So organization has faced a huge loss in this year. In order to overcome this the owner of organization came up with new idea in which they started accepting credit cards and updated their technology to deal with business in order to support their growth aspect. In the year 2017-2018 it was being analysed that several stores were being identified for closure as nor profit was being made by them. Also a recent report has published that by the year 2022, Marks and Spencer is going to close down about 100 stores. Company is hoping that this step will support them in reviving profit (Jaligot and et.al., 2016).

3.Internal environment of Marks and Spencer

Figure 1 Value chain analysis

(Source: Value chain analysis of Marks and Spencer, 2016)

Marks and Spencer is making use of value chain analysis that has supported them in realising that all activities that exist in organization do not require the same importance. Porter Value chain model will also support them in knowing about the importance of activities and too according to their roles and services. It includes the following:

Primary activities: Marks and Spencer in this primary activity makes sure that the goods and services are produced effectively and reach out ultimate consumers. These activities include the following:

Inbound Logistic: It is very important for organization to maintain some firm relationship suppliers, if it is not done by Marks and Spencer then company can face various challenges. It has been analysed that enterprise has full control over the activities related to storing raw materials, they have also won the GBS supply chain award because of their better relationship with suppliers (Howieson, Lawley and Hastings, 2016).

Operations: It has been analysed that Marks and Spencer is engaged in enhancing consumer experience and according to annual report of 2016 firm will also be working towards bringing out more sustainable programs. It has also been analysed that company is involved in updating their information technology systems so in order to provide better supply chain management. They are also making sure that best system is being used by company so that no data linked with consumers are leaked and company have an appropriate control.

Outbound Logistics: Consumer who wants to purchase products from Marks and Spencer can shop by making use of their home catalogue, online mode and also can make use of click and collect options. Company is making sure that they have a better relationship with their distributors so that M&S can reach out large range of consumers. Organization is continuously investing in their warehouses so that goods and services can be stored properly. Maintaining warehouses is very necessary to make sure that quality of goods do not get hampered.

Marketing and Sales: Marks and Spencer is making use of various modes of marketing like for example company is promoting their channels on social media. Marks and Spencer also have their digital venture lab who are involved in working with most advanced start-up that are making use of upgraded technology in order to enhance consumer experience. They also provide consumer to shop through mobile or their home catalogues. This has also supported organization in increasing the consumer engagement. This has also supported them in creating consumer loyalty and increasing profitability (Horng, Chang and Chen, 2016).

Service: In this all those activities are included that would enhance the value of product. In order to enhance experience of consumers Marks and Spencer is also involved in providing free delivery of services to customers who have made order above £50. They are also engaged in providing high quality of food services and increasing are of food halls. Firm makes sure that all the problems of customers are being solved by them.

4.Reflection on the usefulness of value chain models

I have analysed that making use of value chain model is of utmost important for the organization. As value chain management is all about making information better available to employees and converting input into output. I recognised that this model is basically bene used by Marks and Spencer, so that they can give value to consumers for the amount they have paid. I also identified that these model have various activities engaged in it like primary, secondary and supporting activities. Firstly, I had no knowledge about it but after doing keen research I was able to collect useful information related to value chain analysis and its importance to organization. I have analysed that enterprise who are involved in making use of value chain management comes across with the improved flow of material and products. It supports firm in reaching out faster to end consumers, as the flow of goods and services are more efficient. This model also makes forecasting of sales and demand more prominent.

 I have identified by making use of value chain management Marks and Spencer has minimised the delay in supply of goods and services, which has assisted them in creating consumer loyalty. This model has also supported seamless flow of information, and also the information which is being given to consumers is of quality, data provided to end consumers is also not being interrupted in this process. I have also realised that by making use of value chain management, organizations are better able to utilise the information being provided to them and also they are able to figure out solution to problems with any hampering. When flow of information is seamless, firm can also make better relationship with consumers and suppliers and also predict the risk that can be faced by them in future.  

This can increase operational efficiency of organization and also objectives of business can be achieved with the help of this. The gaps which are being identified by enterprise are also being filled by effective utilization of this model. I identified that Marks and Spencer by making use of this value chain analysis has also came across with various new opportunities that has assisted their growth aspects and also increase their profitability. They can also make use of enhanced methods or techniques to analyse new market and gain competitive advantage.

CONCLUSION

From the above study, it has been summarized that organization has been affected and impacted by its internal environment. There have been various factors such as competitors, suppliers, employees who has affected working of organization. Firm has been involved in providing high quality of goods and services to consumers that has supported them in creating customer loyalty. They have also been known as the most iconic retailer. Quality of clothes has assisted organization in gaining competitive edge. It has also been analyzed in report that organization is being involved in providing training to workers to improve their efficiency and skills.

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