Marks and Spencer is a company with a rich heritage and during those years it has experience many ups and downs. At first, the company experienced a great success, but as time goes on, the company’s ability to adapt to the market and to meet expectations were very poor, as a result, it slowly decreased their rate growth overall. However, the company has grown to become a major British multinational retailer with a total of 1,035 stores operating within the UK and an additional 428 international stores operating across Europe, the Middle East and Asia. With the company providing goods and services to about 32 million customers daily, M;S has employed over 81,000 personnel worldwide as of 2018 according to their annual report. They operate in Food, Clothing ; Home and other retail businesses that uses the M;S own-label model. With the Food division being the most profitable for M;S as it generated a revenue of £5.9 billion, which accounted for over half of the company’s revenue of £10.7 billion in 2018.
In 1985, Porter developed an approach that can be applied to products or services in all industries, and to organisation of all sizes. The generic strategy can be divided by three approaches which are “Cost Leadership”, “Differentiation” and “Focus”. However, Porter divided the focus approach down to two parts called “Cost Focus” and Differentiation Focus”. Businesses put these into practice in order to achieve a sustainable competitive advantage over the other competing products and companies in a market. And Mark and Spencer is no exception.
The Grocery market in the UK is currently dominated by the ‘big four’ supermarkets, Tesco, Asda, Morrison’s and Sainsbury’s. The first strategy of cost leadership is one in which the ‘big four’ all strive to achieve which is to obtain the lowest cost within the industry and to offer its products and services to a broad market at the lowest price. However, this strategy will only work based on the company’s ability to control their operating cost which will allow them to price their products competitively and be able to generate high profit margins. But in doing so will only ignite a price war between the ‘big four’. So alternatively supermarkets such as Tesco, have to look at how they can differentiate themselves from one another in order to gain a competitive advantage. So for example, prepared foods are now being offered in every single shop and so to differentiate from one another. Tesco can advertise their products by adding a unique view, such as a special ingredient or by offers, for example two for £4, or when buying one the second one will be free. Another way that Tesco differentiated itself from its competitors is their Tesco Clubcard. This gave Tesco raw data on what people were buying and in turn gave them profitable information. In addition, it allows them to give personalised discounts and rewards to its loyal customers.
The risk some organisation face is that they try to put to practice all of the approaches and ultimately become what is known as stuck in the middle. But overall, Tesco pursues a strategy of cost leadership or differentiation either in a specific market or with specific products. And so, this is not appropriate to Tesco as they have a clear business strategy.
On the other hand, M;S took the strategy of differentiation focus