Requirement 1
Marks and Spencer (M&S) sells mid-priced clothing, food and household items primarily in UK. In fact, it is one of the largest UK clothing companies and had sold most of its international stores just to prevent its UK stake for dilution. Since firms cannot directly control its general environment unlike industry or competitor settings, understanding the effects to firm’s strategies of the turbulent, complex and global scenarios forecasted or actually happening is crucial. This will provide the firm readiness and flexibility when its environment poses strategic possibilities (opportunities) and strategic constraints (threats) that can enhance/ hinder the attainment of strategic competitiveness.
The advances in technology and its automation capability minimize store personnel difficulties and possible irritability in the old system that can affect its actual responsibility to provide customer service. They can entertain and communicate optimal number of customers and confronts the system during product download and payment with efficiency. Customers, in return, receive more attention and fast transactions making the shopping experience time-friendly. With less time dedicated to complete the store transactions because the new technology can do the processing on its own and silently, store personnel can effectively augment the store outlook, which is intended to attract people, giving the management less worry if wholly managed retail stores are effective medium of marketing. This idea maximizes the utility of store personnel which can divert marketing investments to promote automation in the store or provide more attractive compensation to store personnel.
Since M&S market presence is superior in European countries, these segments are deemed crucial to the continued success of the firm. The United Kingdom Government Modernization Agenda to improve older people services supported by Department of Health’s announcement of the new health care system aimed in increasing the quality and decrease variations in health services. The program will set a framework in which public and private institutions alike will adhere to the health requirements of the growing population of older people. As a result, this agenda brought a message to industries to provide a platform wherein age structure of their markets are given priority which call for a shift in inefficient and inconsistent delivery and funding of products/ services to a streamline, accurate and reliable one. With this there is a need to have Gateway that information system of M&S is in line of political agenda.
Both young and old people can have access, in which at least 50% of the country’s households are internet connected, to firm’s product developments and new services. They will prevent ordering an item at zero stock deepening inconvenience and inferior service quality detrimental to the new policy and customer satisfaction alike. Older people will feel accepted by the society. As a result, self-actualization can be relived providing possible market segmentation on the part of the firm to exploit the opportunity of catering the clothing-stylish need of the older age bracket. The new policy ignited the restructuring of the firm’s resources to better meet the needs of customers. In effect, marketing programs are not merely advertisement-based rather intensifying product value through excellent customer relationship derives at convenience and ease of transaction.
However, the new policy would also require M&S competitors to upgrade their electronic platforms. As a result, a clear competition in continuous improvement in the electronic presentation and database will be apparent that can signal shift of firm investment from different media advertisement into technological and service improvement. Being an official member of working committee building the policy strategies, however, chosen companies have the upper hand and first mover advantage in this area against rivals. With the necessary knowledge to adapt its gateway in the present needs of customers across age structures and its relative competitive stance from others, marketing decision are made within a direction and objectivity.
Human development Index is high as well as GDP per capita making standard of living and income levels in the same proportion. Household income is also supported by lack of manpower pushing wage rates in positive direction to attract labor supply. As a result, purchasing power of individuals can suffice the price of M&S products which is basically marketed for the high-end sector. Textile industry is both an export and import industry in UK. In addition, the country is known to be the poets and thinkers providing the basis for the population to be sophisticated and maximize their utility over a range of product and services. As a result, the stylish and trendy products of the firm blended with the local culture and unique emphasis. Of course, a sophisticated mind could be argued to express itself in its dress or accessories for acquaintances. It can denote prestige, status and social order enabling people to communicate through what they wear with less talk.
Requirement 2
Market capitalization is the core indication that a company has a strong footing to continue business under a specific management and ownership. Low market cap makes companies vulnerable to acquisition while high market cap transform them into formidable acquirers. High growth in market cap is attained from combination of rapid earnings and increase in returns from book equity. On the other hand, net asset value is defined as assets minus all liabilities including long-term debt and preferred stock. In effect, buying stocks below NAVE makes the transaction a bargain because the firm is not getting the maximum face value amount. As a result, the assumption that high growth in market cap is attained book equity surpluses is confirmed. However, continued earnings and bottom-line performance can positively affect market impression about the equity issues of the company, thus, a pre-condition to gain returns from book equity. When NAVE on the book is closer to market value, market cap will not grow.
Market cap is equal to current stock price multiplied by the number of outstanding shares. In effect, the implication is clearer that market-to-book ratios are related more directly to returns on book equity rather than earnings growth. As stated earlier, earnings growth can provide the platform to affect market cap but requires more market sentiment. However, with the presence of high earnings growth and high returns on equity, market cap can propel up in the market charts. For example, the turnover of M&S continued to be stable from its 2000 performance to the present. However, its earnings per share (EPS) continued to increase from the same time horizon. In effect, market cap is expected to be full-blown and benefit the financing capability of the firm despite stability of earnings. The EPS performance can distort the NAVE of M&S.
From the relationship of market cap and NAVE, four scenarios are available for M&S. First is vulnerable which is defined as using fairly small amount of capital to generate small amount of returns. These structures often characterize a firm that is competing in mature industries and domestic markets. As M&S is mirroring this stance, it must guard its strategy to avoid negative implication of being a vulnerable company. Second is the complete control company that generates high returns from a large on capital base. As these companies shape the industry rather than reacts, M&S should be able to expand its capital sources to compete to them. This is partial control through performance which necessitates high returns from small amount of capital. There is efficient allocation of resources that result to positive performance which M&S should emulate to prevent pressure from capital sourcing. Lastly, partial control through size has firms that possess large scale but also provide less return of capital. This is far from the position of M&A because it has provided substantial EPS through the years.  
Credit:ivythesis.typepad.com
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