Business strategy is the means by which firm’s plans to achieve its goals and objectives. It can also be termed as organization long-term planning. The strategy covers periods between 3-5 years and sometimes longer. Businesses use two major types of strategy, general or generic and competitive strategies. The overall strategy involves strategies of growth, globalization and retrenchment. The competitive advantage includes low pricing, product and customer differentiation. We will look at the business strategy used by Marks and Spenser (Cole, 1997). The company is a British multinational located at Westminster London and specializes in clothes and luxurious food products. The alternative strategies relating to substantive growth, limited growth or retrenchment for marks and Spenser. Substantive growth Marks and Spenser alternative for the substantive growth can take the following strategies, horizontal integration, related diversification, vertical integration and unrelated diversification. Horizontal and vertical integration In the horizontal integration, the company product range is from a wide clientele. That is they sell product either clothing or luxurious foods from different manufacturers. These give them the edge since the products they offer a variety for the customers to choose from, and hence they can shop less than one roof (Cole, 1997). In the vertical integration strategy, the firm will deal substantial with products from a single supplier and M&S gets the exclusive rights to deal with the product and its supply to the market. This is necessary when the company aim is to serve an identified target market which is exclusive and has the potential to sustain and grow the company substantively. These employ a tar... ... middle of paper ... ... strategy of cutting cost is planned in the next one or two years by 2016. The target for online shopping that the company estimates to increase by 8 million people is to be achieved by 2020. Product development The product development phase is characterized by innovation. The M&S employs four strategies; New products which are new radically or extend to the next product life cycle Innovation in process which leads to reduced cost and is achieved through learning and experience Differentiation through marketing strategies, this is a form of innovation driven by the need to create a superior brand (Sadler, 2003). Organizational changes that reduce cost. The M&S reduced its management levels to reduce the cost. Retrenchment Retrenchment is remedial actions and is taken at phases of strong competition, inefficiency and economic recession.
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Vertical Mergers: A vertical merger is a merger in which one firm supplies its products to the other. A vertical merger results in the consolidation of firms that have actual or potential buyer-seller relationships. The firms in vertical mergers operate at different stages of production process where buyer-seller relation or manufacturing at different stages of the same product is possible (Gaughan, 2007). There are two types of vertical mergers.
Porter (1997) suggests in order to gain competitive advantages in the changing business environment, it is essential to design a generic strategy for the business: product differentiation or cost leadership. The competitive strategy is determined at round 2, when recognised our rivals held whole product profile which was the product differentiation strategy. To differentiate our strategy from rivals for competitive advantages, Digby designed to imply the cost
To formulate a strategy, one must understand what a corporate strategy is. According to Hitt, Ireland, & Hoskisson (2013, p.164) “a corporate strategy is a specific action a firm takes to gain a competitive advantage. Corporate level strategies help companies to select new strategy positions”.
There are four strategies businesses choose from. The first is corporate level strategy which assist companies in selecting new business strategies that is anticipated to increase its worth. Second, is merger and acquisition strategy where two companies assimilate or one company buys out another business. Thirdly, international Strategy concentrated on selling products and services outside of the national market. Finally, cooperative strategy affords companies the opportunity to join forces to achieve a common goal. (Hitt, Reland, Hoskinsson,
In UK, the unseasonal weather in 2014 and 2015 has significantly reduced customers’ cloth purchasing. In such increasingly competitive and overcrowded UK clothing market, UK clothing retailers have utilized promotions to grab market share and shift stock, which eventually result in acceleration in deflation rates (Academic.mintel.com, 2015). In such market background, Marks & Spencer, the biggest UK clothing retailer, recorded a 1.5% drop in their clothing sales, and the market share of M&S continued the decreasing trend from 2006. As shown in figure 1, from 2006 to 2014, M&S’s UK clothing market share dropped 2.2%.
At the Marks & Spencer AGM, on the 11th July 2001, Luc Vandevelde, the Chairman and Chief Executive of Marks & Spencer, gave a key speech regarding the managements recovery plan for the company, which was launched earlier in the year. The speech and extracts from Marks & Spencer Press Releases, presented below, provide a valuable insight into the nature of strategic planning within large organisations, and the role of the Chairman and Chief Executive in this process.
‘Horizontal Merger’ is when two companies with similar products join together. ‘Vertical Merger’ is two companies at different stages in the production process. ‘Conglomerate Merger’ is when two different types of companies join together. ‘Market extension merger’ is between two companies who produce the same product but sell in different markets. ‘Product Extension merger’ is between companies with related production but they do not compe...
Downsizing has become an extremely popular strategy in today’s business environment. Companies began downsizing in the late 1970’s to cut costs and improve the bottom line (Mishra et al., 1998). The term “downsizing” was coined to describe the action of dismissing a large portion of a company’s workforce in a very short period of time. According to online encyclopedia http://en.wikipedia.org downsizing refers to “layoffs initiated by a company in order to cut labor costs by reducing the size of the company.” Downsizing became a familiar management mantra in the late 1980’s and early 1990’s. In fact, three million jobs were lost between 1989 and 1998 (Mishra et al., 1998). More than 350,000 jobs were lost in 2001 (DeSouza & Donaldson, 2002). Downsizing has become almost a way of life for U.S. companies. Typically, the first round of job cuts are followed by a second round of cuts a short time later. Not everyone agrees with the reasoning behind downsizing. According to an article in the Journal of Banking and Financial Services, downsizing is merely “a short-sighted business strategy motivated by arrogant CEO’s eager to appease shareholders (Unkles, 2001). Others feel downsizing is a necessary tool to ensure business survival in the face of a changing economy. Regardless, the costs of downsizing are high, and the payoffs of downsizing are mixed at best. This paper doesn’t serve as an approach to downsizing, rather, it explores the many aspects of downsizing, from when it’s time to downsize to what steps that can be taken to avoid the process altogether.
The term product differentiation refers to the process of distinguishing a product or service from the competitor’s product, to make it more attractive to a particular target market. A firm uses marketing to differentiate its product, which refers to all necessary activities for a firm to sell a product to a consumer. A firm uses brand management to build a brand and unique identity of a product for the long run; this helps the firm to have an independent identity and to differentiate its products from the competitor’s product. So its uses brand management to maintain product differentiation over time. Firms use advertising as a tool to try to shift the demand curve to the right and make consumer demand for their product inelastic. This creates consumer loyalty of brand loyalty for the product. Since my movie theater doesn’t have IMAX screens, one way to advertise it could be by advertising it as affordable neighborhood theater. This way it would create brand recognition of a comfortable, homey and affordable theater for families and teens to be entertained on a budget. Product differentiation helps firms to create a unique identity of their product, which helps people become more attracted and loyal to the product even though substitutes are available, making the demand more
b. Divestment- If it is believed that one or more of the firm’s business units may function more effectively as part of another firm, a divestment strategy may be pursued. Divestment may be necessary when the industry is in decline or when a business unit drains the resources from more profitable units, is not performing well, or is not synergistic with other corporate
Through innovation, they are striving to create a customer-centric experience that seamlessly integrates digital and physical shopping. The company’s strategy is to lead on price, invest to differentiate on access, be competitive on assortment and deliver a great experience. Leading on price is designed to earn the trust of their customers every day by providing a broad assortment of quality merchandise and services at the promised everyday low prices, while fostering a culture that rewards and embraces mutual respect, integrity and diversity. Every day low prices is the company’s pricing philosophy under which they price items at a low price every day so that their customers trust that their prices will not change under frequent promotional activities. The everyday low price is the company’s commitment to control expenses so those cost savings can be passed along to the customers. The company also strive to give customers and members a great digital and physical shopping experience through its three reportable segments; Walmart U.S., Walmart International and Sam’s Club, (Walmart 10-K annual report, pg.
First, companies identify interrelationships among already existing business units in order to seek for any opportunities to transfer skills or share activities. Second, companies select the core businesses that will be the foundation of the corporate strategy by determining the attractive industry and sustainable competitive advantages. Third, companies create horizontal organizational mechanisms to facilitate interrelationships among the core business units by strong corporate identity, mission statement emphasizes integration, and incentives for business-wide success. Fourth, companies pursue diversification opportunities that allow shared activities. Fifth, companies pursue diversification through the transfer of skills if opportunities for sharing activities are limited or exhausted. In other word, it is the stepping stone for sharing activities in the future. Sixth, companies pursue a strategy of restructuring if this fits the skills of management or no good opportunities exist for forging corporate interrelationships. At last, companies pay dividends so the shareholders can be the portfolio