Porter has argued that there are four main routes to gaining competitive advantage which he calls Generic Strategies.

a)Discuss the dimensions / axis of Porter's Generic Strategy framework and placeMarks and Spencer's strategy within the framework explaining the suggested position.

use annual report below

SOURCE: MARKS and SPENCER ANNUAL GENERAL REPORT 2018

OVERVIEW

M&S needs to change and change fast. We have addressed a number of immediate issues and are now embarking on the task of transforming the business to arrest the decline and restart long-term growth. In November, I set out our five-year transformation plan to make M&S special again. We will execute this plan, flexing and adapting as we go, at pace. A few miles into our journey, I can see how much we need to do and I am determined that this time M&S will take the hard steps to make our business a very different one in five years' time. Change comes with short term pain. Group profit was heavily impacted by a large number of charges, most notably those relating to the acceleration of our UK store closure programme. Profit before adjusting items benefited from a substantial improvement in International profit, but this was insufficient to offset the continuing pressures in our UK businesses.

RESTORING THE BASICS IN CLOTHING & HOME AND FOOD

For M&S to become more relevant, more often to more British households, we have to reshape our Clothing & Home and Food businesses. This transformation starts with eliminating silos and creating accountable businesses. To lead this change, we appointed Jill McDonald who has strengthened the team in Clothing & Home, and Stuart Machin who joined us in April this year to transform our Food business. In Clothing & Home, we continued our focuson full-price sales and removedpromotions and the number of clearance sales. Sales declined as a result, but for the first time in five years we grew the number of customers shopping our clothing. Our ambition is to be the UK's essential clothing retailer - famous for quality products that offer contemporary wearable style, at great prices. We will continue to sharpen our ranges, by providing better choices with fewer options and delivering more wardrobe essentials at the right price. In Food, our focus on being 'special and different' saw us perform well at Christmas and Easter but our performance was not good enough throughout the year. We must broaden our appeal - getting our pricing and product ranges right - so that we can retain our core customers and attract busy families who want great tasting, quality food at outstanding value.

BECOMING A DIGITAL FIRST RETAILER

If we are to deliver major cultural change at M&S we have to be a Digital First business. This change in approach was evident in the partnership we announced with TCS during the year and our migration off the old mainframe system. Going forward we will develop new partnerships which aim to put digital innovation at the forefront of our thinking. Our store teams have cut costs and improved customer service through the roll-out of handheld devices in our stores, reducing time spent onstock management and enabling quicker response to customer queries. In our offices we are introducing a Smarter Working approach, reducing the amount of expensive office space required in central London by half and working better and closer together.

IMPROVING OUR CHANNELS TO CUSTOMERS

We accelerated our plan to operate from fewer, larger, more inspirational Clothing & Home stores with 32 stores either closed or proposed for closure out of a planned reduction of over 100. An encouraging number of customers have moved their shopping to nearby stores. As we reposition our Food offer to deliver sustainable growth, we also slowed our Simply Food openings to focus only on the sites with the best returns. Growth at M&S.com was behind the market as we focused on full-price sales in a highly promotional market. We remain behind the market in several key areas: our download speeds, though recently improved, are still slower; we are not yet mobile first; and we have an average search experience. We will deliver one-third of our Clothing & Home sales online within five years to prevent further erosion of our market share and to reflect the way that customers' shopping habits are changing. We delivered a sharp improvement in profits in our International business, completing the planned exit of loss-making markets, on time and under budget, and selling our Hong Kong business to a franchise partner. We are focused on a franchise model and developing our offer to ensure better availability and sharper prices. We were pleased to deliver a return to profitable growth.

SUPPLY CHAIN FIT FOR PURPOSE

In order to be a faster and more commercial business we must improve our supply chain, which is slow, inefficient and expensive. In Clothing & Home, the announcement of our investment in a new distribution centre at Welham Green is a step towards delivering a single-tier network of national distribution centres. This will enable us to reduce stock holding points which make our store deliveries slow and mean we carry many weeks' more stock than our competitors. Our intention to be one-third online means investing in e-commerce fulfilment. In the near term this means improving our operations at Castle Donington so that we serve customers better at busy times. In Food we have a high-cost distribution model which limits availability and increases waste. We are rolling out operational improvements across our stores with the aim of improving stock file accuracy, reducing stock held in the back of our stores and ensuring appropriate deliveries.

LOWER COST RETAILING

During the year, we have undertaken a forensic review of our cost base, with the ambition to reduce it by at least 350m in the medium term. Our initiatives in our stores and our supply chain will deliver a significant proportion of these reductions. The change in our culture and ways of working is also delivering benefits in our offices and our cost of goods through fewer central London offices, changes to our packaging specifications and the way we work with our suppliers. This is enabling us to improve our value proposition in Food and to reduce costs for the business as whole.

FOOD PERFORMANCE REVIEW FACING FACTS

It has been a tough year in Food with underperformance against the market. The origins of this poor performance however are not recent. Our food remains unique and customers still rate us as their favourite supermarket. But over some years, the range has gradually drifted towards becoming more premium and we have lost some of our appeal to broader family-age shoppers. This problem has been compounded by the rising intensity of competition from the discounters at one end and supermarkets at the other, both seeking to emulate our success by copying our fresh product ranges and innovation. This problem is further compounded by high operating costs, high waste and markdowns, and below industry average availability. This, together with rising rent and wage costs, has eroded profit so that urgent action is now needed.

WHAT'S HAPPENING

We have already taken initial steps to arrest the decline and restore like-for-like growth. The rapid roll out of new owned space has now been substantially slowed. We have made selected investment in prices to restore value for money. For instance, we reduced prices on eggs by 18% and saw sales rise by 43%. We have started to rationalise our promotions so as to avoid losing money and obliging customers to spend more to obtain good value. With the arrival of a new marketing team, we are starting to communicate better our unique product credentials in freshness and traceability. Our food innovation pipeline has been re-orientated towards more mainstream, popular family products. A project team, with outside help, has been set up to address the problems in our supply chain. We believe that significant improvement in availability and waste can be achieved without restructuring the outdated network of distribution centres and initial results are encouraging.

WHAT'S NEXT

With the arrival of Stuart Machin as Managing Director and the re-organisation of brand marketing, we are establishing a stronger, faster moving management teamcommitted to restoring the business to like-for-like sales growth. This firstly means re-establishing our value for money credentials. M&S food should always be great value for quality, freshness, taste and ingredients. Where it does cost a little more, it still saves customers' time and money in the form of less waste or surplus ingredients. Where we run promotions, they should be with a reason, helpful to customers and profitable for our suppliers. Trust in product and value is central to our brand. M&S has always been famous for our innovation, and our food sourcing and technical skills are industry leading. Our intention is to accelerate the innovation pipeline but focus more strongly on high volume, popular family product. Gourmet and treats will always have a role in our range, but they should not be the range. Even today, our food freshness and authenticity is under-communicated, and our marketing needs to express the extraordinary lengths to which we go to source the best product. Finally, we are now embarking on a programme to look again at our formats. Much of our profit is made in the larger stores,which carry the full M&S range.

SIMPLY FOOD STORES UK FOOD MARKETPLACE INSIGHT

Customers told us they want a deeper, more nourishing pizza without skimping on the fillings, in larger pack sizes that can feed a family.

RESPONSE

In September, we launched six new Deep & Loaded Pizzas inspired by the famous pizzas of Detroit. From the Whole Hog, with smoky sausage, spicy pulled pork and barbecued burnt ends, to the Meatball Marinara, topped with mini meatballs and sauted onions, these deep pizzas priced at 6 are perfect for families to share - we sold 1.2m Detroit inspired pizzas in the year. The UK food market is undergoing an extraordinary period of change. Although there have been some signs of growth, most of this has been driven by inflation. The discount sector will inevitably continue to grow, probably to 15% or more of the market. Home delivery and online, where we have little presence, are also growing at about 1% of the market a year by 2022. And in an effort to support margin, the mainstream players are seeking to match M&S in the quality end of the market. Therefore, the competitive pressures on our business remain intense and we do not expect this to change in the year ahead. Consumer budgets remain tight and the business, with our fresh emphasis, could also face complications from Brexit and any border friction for food products.

CLOTHING & HOME PERFORMANCE REVIEW FACING FACTS

Clothing & Home revenues were down although the business successfully recovered margin by improving the percentage of full-price sales and continuing to drive its successful direct sourcing programme. Over many years, M&S has lost position in the market, as, despite our strong, latent brand credentials, our reputation for fashionand style has been eroded. New global competitors have grown market share and far outweigh M&S in sourcing scale. Our online business is well behind market leaders accounting for only 18.5% share of sales. The growth of new 'pure play' online competitors such as Amazon and ASOS has highlighted the marked weakness in our online capability. In platform technology we are hampered by the lack of a 'mobile first' format, a search experience that's average, and slow download speeds. The inadequacy of our logistics means we are unable to fulfil our delivery promises to customers at peak times. And, in our traditional 'store' channel, M&S has not closed and upgraded store locations in line with a changing high street. As a result, although we retain a loyal customer base and very strong positions in some markets, our customer base has narrowed. Against this context, the infrastructure supporting the Clothing & Home business needs substantial improvement. We operate an outdated 'factory to customer' supply chain which means we are slow to market, carry too much stock and cannot replenish fast moving lines. The very wide ranges result in slow moving stock that has to be transported and filled as singles, creating extra handling costs. The historic M&S bias towards high volume popular lines and great value has diminished as successive generations of buyers have bought 'flat' instead of backing winners. Nevertheless, the clothing business retains great technical skills and customer understanding; a strong modern global sourcing operation and 'affection' for the brand remains strong. There is much on which to build.

WHAT'S HAPPENING

Jill McDonald joined as our new Managing Director of Clothing & Home in October. She has already announced a new leadership team including heads of Womenswear, Menswear and Home, alongside a new Supply Chain Director, Marketing Director, Online Director and other important changes. Under this new team the business has begun to face into the challenges. Already, new range direction has been set to broaden our appeal to family-age customers. Initial steps have been taken to sharpen our value credentials with further reduction in promotions and investment in lower 'first price'. Marketing tone of voice has shifted with the new 'Love it for Less' campaign. For instance, highlighting our pure cotton tapered chinos priced at 19.50, available in a choice of ten colours. Good progress is being made in the closure of ageing stores and a comprehensive programme has been put in hand to improve the basic performance of our online website, search and checkout capability. On supply chain, an 'end to end' programme taskforce is now in step towards a 'single-tier' distribution network so that we no longer carry warehouse space whose main role is just to store stock. We are also closing centres at Hardwick and Neasden. At our Castle Donington online fulfilment centre we are investing to 'debottleneck' the facility to increase peak capacity.

WHAT'S NEXT

At heart, our recovery in Clothing & Home depends on the restoration of our style credentials and broadening our appeal to a younger family-age customer. Of course, this means creating a top buying and design team making great product decisions. Doing so will require important changes to the buying process and structure of the range. M&S retains market-leading positions in core categories such as lingerie, denim, business shirts, suits and Back to School. These already appeal to a broader, often younger customer base. Our intention is to build on these positions. The strength of our brand should be providing great value choices for stylish wardrobe essentials, the simple wearable classics that everyone needs to have. Our strength is to provide great value for people at a stage in life where they are prepared to pay a bit more for style and quality and move beyond the 'throwaway' culture. To do this, we will embark on a restructure of our ranges to buy deeper with fewer slow moving lines, including a further reduction of over 10% in the year ahead. We will use our global sourcing strength to restore more strongly our value credentials and we will review the role of our sub-brands, such as Per Una, some of which have lost their identity in recent years. As our supply chain reforms start to impact, our ambition is to substantially reduce working capital and stock levels, reducing store labour costs and accelerating speed to market. In time, we expect to be able to replenish in season our fastest moving lines, improving availability and reducing markdown. We have set a target of achieving one-third of our sales online, which means growing double digits each year. Once we have fixed the basic issues in fulfilment and website performance, there is enormous scope for developing the M&S brand and product experience online in the UK and potentially abroad.The clothing market declined by 1.5%(Kantar Worldpanel)with a more challenging trend in the second half of the year. The Clothing & Home markets were impacted by three long-term trends,which are likely to continue for at least the next two to three years. Firstly, the migration to online; the UK clothing market is about 25% online today and we expect it to grow to about 40% online. Secondly, the development of price-led discounters with the continued growth of Primark, but also the major grocers in clothing. And thirdly, the strength of global scale competitors such as Inditex, H&M and Uniqlo.

CHANNELS TO THE CUSTOMER PERFORMANCE REVIEW INTERNATIONAL FACING FACTS

Our international business saw a year of successful reshaping as we closed lossmaking outlets and changed our business model. As a result, profits more than doubled and we now have a much more defined platform for growth. However, much work remains to improve competitiveness and the supply chain to our franchise partners to enable them to compete with our major fashion retail competitors. Our ranges and supply chain arrangements are not yet flexible enough and our pricing is often high relative to local competitors. And our model for food supply continues torely on high cost UK exports which limits the potential for an international food business.

WHAT'S HAPPENING

Our model for International is to focus on large territories where we can build a significant market presence and to operate through a limited number of strong, aligned franchise or joint venture partners. Accordingly, we have completed our store closure programme with exit costs under budget. In total we closed 53 owned stores in ten markets. In December, we sold our Hong Kong business to Al-Futtaim, our Middle East and Asia franchise partner, to build our alliance further. Now the rationalisation is nearly complete, we are setting up an improved franchise partner support team, as there is huge scope to improve the way we work with and support our partners. Already we have improved Clothing & Home fulfilment by 7% and modernised 58 international stores.

WHAT'S NEXT

In the year ahead we intend to continue the programme to greatly improve our fulfilment and supply chain arrangements with our major partners. We will modernise and open over 100 new stores in growth markets such as India and further adapt our ranges to move away from our current UK-centric model. We will also roll out lower pricing across our markets following a successful trial in Indonesia and Cyprus which saw average order volumes increase by 32% on an average price reduction of 18%. We will also provide effective online support for our franchise partners by providing a 'pay and play' local website and ordering models as piloted in the UAE this year. We are still at the early stages of developing our online strategy for territories not covered by franchise partners.

STORES FACING FACTS

M&S operates an ageing store estate reflecting the fact that it has been reluctant to close marginally contributing stores over many years. As a result, we carry a long tail of stores, some over 75 years old, which drag down the like-for-like sales performance and are brand damaging in their configuration. Even though some of these stores trade profitably, they will not warrant new investment, not least because the high street and shopping centres are changing fast. In particular, our smaller high street stores lack range authority and some of our larger stores carry too much space. As the market shifts and moves online these problems will become worse unless we move fast.

WHAT'S HAPPENING

We are accelerating our store closure programme,which will result in the closure of around a quarter of our 2016 Clothing & Home space. 32 stores have already beenclosed or been proposed for closure, out of a reduction of over 100. Some of the larger remaining stores are being downsized so we will converge on a more cohesive portfolio. The closure programme is producing good results with significant sales transfer to nearby, more profitable sites. There will be a limited number of new openings of mid-size stores in high potential sites. In Food, we cut back on the opening programme, focusing now only on the largest trading opportunities in sites capable of good volume growth.

WHAT'S NEXT

Once the reshaping of our core store portfolio is well underway, we will need to relook at our formats to adapt them to a rapidly changing shopping environment. Already, we can see relatively low cost opportunities to modernise our stores to drive sales and improve customer experience. For instance, through our Shop Your Way service, 64% of our online sales are picked up in-store yet many of our collection points are inconveniently situated. Our payment and checkout facilities need more modernising and rationalising and a number of services will be brought together. And many of our larger stores have blocked sight lines and are hard for time-pressed customers to navigate. In the year ahead we will explore 'capital lite' options to refresh our existing estate and develop formats for the future.

M&S.COM FACING FACTS

Our digital capability is behind the best in the market and the state of the art is moving rapidly. Although we have the second largest online Clothing & Home market share in the UK, we are losing share and are behind the best of our competitors. Our download speeds are slower than the best, our search facility is average and our mobile application needs improvement. Castle Donington was built at great expense but is never likely to achieve planned capacity, lacks resilience and cannot currently meet peak demand.

WHAT'S HAPPENING

We have an urgent programme in hand to fix our base platform capability which should see improvements this year in speed and responsiveness. Already, the majority of our orders are collected in-store and we are investing to make this process faster and more convenient, an advantage over our online only competition. Steps are being taken to 'debottleneck' Castle Donington so that it can meet expected peak demand this year and next. And we are extending the cut off time (10.00 pm) for next-day deliveries. Given the need to broaden our appeal to family-age customers, we are extending our presence and reach in social media. In March, we were one of the first to launch on Instagram Shoppable.

WHAT'S NEXT

Given the 8% growth online in the fourth quarter, we believe that if we implement these basic changes and the improvements we plan in range and product, we will see acceleration of growth towards our one-third target. Combined with store closures this will deliver a more profitable and sustainable business. Our ambition is also to become a truly digital business, not only competitive online but adept at using artificial intelligence to better interact with customers and develop a more personalised relationship. Given M&S's skills in style and fit and our expertise in fabric we hope to develop innovative ways of helping customers to gain inspiration online and find the right product for their look. Try Tuesday, our online inspiration service, already has 160,000 customers signed up, of which 62% say they have bought something as a result.

PERFORMANCE INDICATORS

Group Revenue - 10.6bn+0.7%

Group Profit before tax - 580.9m-5.4%

ROCE14%

Free Cash Flow - 417.5-28.7%