Marks And Spencer: An Analysis

Introduction

Marks and Spencer is one of the UK’s leading retailers. MandS was founded by a partnership between Michael marks, a polish immigrant from Slonim and Thomas Spencer in the early years 1884 to 1949. Then the next few years Michael marks opened some market stalls in many locations like North West of England. In 1984, Thomas Spencer invested in Marks activities and the plan to open the first store in partnership at 20, Cheetham Hill Road, Manchester. And that was the first founding of the present Mark and Spencer retail company.

They started their business with a simple business strategy which was to sell quality products under the label of “St Michael”. M&S lingerie, women’s clothes and girl’s school uniform

Task 1:

Strategic Formulation:

According to G Johnson & K Scholes, Strategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations.

In simple words, business strategy is a plan which is set by an organisation in terms of future performance. It also gathers what are the plans needed to get the goals set. Whenever embryonic your strategy it is important to understand which position you want to start from in terms of the current performance levels.

In addition it is important to consider the important factors which can influence the ability to achieve the strategy. So as M&S strategy is including the following components they are vision, mission and goals.

As M&S Vision is “to be standard against which all others are measured”

M&S Mission is “to make aspirational quality accessible to all”

And

M&S Values are “Quality, value, service, innovation and trust”

Meaning of Stakeholder:

Stakeholders are persons, groups or institution with interest in a project or programme. Stakeholder analysis helps to find out the interest of stakeholder in relation to the project, to identify the conflict of interest and understand the relations between stakeholders for the project interest is drawn.

M&S’s management gave a great support that helped in its growth. But recently M&S’s mangers seems to fail on leading the group to lower and lower sales and profits and their strategic decisions. Shareholders are feeling insecure for future because the share prices are falling down. Hence, M&S needs to undertake various steps to maintain the market share and retain its stakeholder in the business for the future growth and success.

Stakeholder management has two important elements Stakeholder Analysis and Stakeholder Planning. Stakeholder analysis is a technique used to identify the key and important people who are needed for the project whereas stakeholder planning is a support that would help to succeed the plans.

Importances of Stakeholder Analysis that is carried by M&S are as follow:

To understand the relationship with the stakeholder.

To understand the stakeholder’s place in the organization.

To understand the importance of the stakeholder in the organization.

Stakeholder’s power

Stakeholder’s priorities

Associated risk areas.

To help decide better strategies and decision

To help accept the strategy and decision of the organization.

http://www.actuaries.org.uk/?a=161691

take the diagram from this for stakeholder of M&S

What is Stakeholder Mapping? Description

During the Stakeholder analysis process, it is useful to classify the various stakeholders by drawing pictures of what stakeholder’s interest they represent, what groups they are in, the amount of power they process, whether they symbolize inhabiting or following factors for the organisation to recognize its objectives, or which methods they should be dealt with. Stakeholder Mapping is the process to create such pictures to clarify the position.

Business strategy definition:

Strategic or institutional management is the conduct of drafting, implementing and evaluating cross functional decision that will enable an organization to achieve its long term.

According to Arieu (2007),” there is strategic consistency when the actions of an organization are consistence with the expectation of management, and these in turn are with the markets and the context.”

As M&S is the UK’s leading retailers, M&S sells stylish, great value clothing and home products, as it also deliver excellent quality food, reliably sourced from around 2,000 suppliers globally. M&S has a commitment as to provide advanced quality products at a reasonable price which has built a £8 billion turnover, M&S employ 68,000 employees in 30 countries, and has more than 500 stores and serving ten millions of customers each and every week.

M&S have spent the last five years putting in place tough foundations in line with the long term plans. M&S have introduced new products and services in the core business of general merchandising (GM) and food, expanding the international business, broadening the multi-national portfolio, and putting the plan A in the heart of our business. M&S also respond to the changing needs of the customers by improving the values without comprising on quality; something M&S keep viewing the short term pain for a long term gain. M&S with its strong brand, delivering the right products and with the exclusive experienced management team, M&S are now:

Operational executive and increase in the pace of change in the business

Increasing M&S direct by structuring more channels to markets.

M&S keep building their international portfolio so as to grow the global customer base

M&S keeps updating with the current brand communication.

As M&S celebrate their 125th anniversary they have revealed reputation for Trust, Quality, Service, Value and Innovation. These central part values of M&S are as important today as they ever have been.

M&S has nearly 300 stores in UK which is the shop keeping leader. It is country’s largest retailer and the main business is Clothing which contribute 17% on market share price. M&S has always targeted the middle aged class especially their clothing department and specifically the women’s wear. Per Una is the brand that is very popular in UK. M&S has decided to expand and explore new market in Malaysia. M&S share price is also falling due to recession; hence investors are worried about it. Therefore a detail research is carried out to solve the problem and to launch a new clothing range in Malaysia as per the expansion plan.

M&S has carried out the environmental and organizational audit in order implement its expansion plan with strong clothing range and wide range of products to retain the market position and increase the share price.

Following is the SWOT analysis that is carried by M&S to first decide it strengths, weakness, opportunities and threats of entering in new market for launching a range of new clothing in women’s wear.

SWOT Analysis for M&S.

Internal

Strengths

Weaknesses

Own branded products under own labels.

Best Quality service

Having their own farm which gives Fresh/ Quality Food.

Large Range of products

Understands customer trends and preferences.

Online-Shopping

Existing store coverage is leading to difficulties

High price as compare to competitors

Very dependent on the performance of own labels

External

Opportunities

Threats

Expansion into the new markets.

Retail Partnerships

Internet shopping

Available technology to improve their functioning.

Cheap-chains targeting the high end market

Overseas groups entering the market

Threats from discount store which offers same price with trendy clothing range.

With above analysis it is clear that M&S can use a strategy that will allow them to enter new market like Malaysia. M&S can certainly use its brand image and name to get familiar in the market and to face the competition. Though there is threats and weakness that needs to be taken care by M&S in order to be successful in the expansion plan to maintain the market share price.

Table 2 – M&S Industry, PEST Analysis

Political

Economic

European Integration and Free Trade Agreement.

Open market for British companies to invest in European.

Competition Commission

EU Competition Law

2009 Market value £5.66bn

Relative Recession proof industry

Optimistic customer

Booming retail industry

Socio Cultural

Technological

Change in consumer taste and lifestyle.

Organics and healthy eating

Environmental conscious

Internet selling.

IT and Communication

Supply Chain Optimization

Cool Storage and Transport

Stock Management and Bar Code

Above analysis gives a clear picture about the European market as a part of expansion for M&S.

INTERNAL AUDIT:

M&S has decided to conduct the Organizational audit through Porter’s Generic Value chain.

Porter’s Generic Value Chain

Inbound

Logistics

>

Operations

>

Outbound

Logistics

>

Marketing

&

Sales

>

Service

>

M

A

R

G

I

N

Firm Infrastructure

HR Management

Technology Development

Procurement

Diagram 1: http://www.netmba.com/strategy/value-chain/

M&S goal behind these activities is to give the customers the value that exceeds the cost of activities and thereby this offer will result in the profit margin.

The value chain activities explain M&S’s:

Inbound Logistic: This explain the distribution to manufacturing of M&S and even warehousing of the raw materials.

Operations: Operation explains the process of transforming raw materials into finished products and service to sell them in M&S outlets.

Outbound Logistics: The manufacturing and distribution of finished goods.

Marketing and Sales: carrying out the market research to identify the customers ‘need and requirement to face the competition in the market.

Service: After the product and services are sold M&S has a strong support of customers. M&S takes every complaint seriously because no problem is small in business in this modern competitive world.

M&S supports these activities with:

The infrastructure of the M&S firm is guided with organizational structure, control system and company culture.

Put Diagram please to explain:

Human resource management: M&S takes additional care in selecting its workforce to make that it keeps the values and market position.

TASK 2:

Table 2 – M&S – Boston Consulting Group Matrix

Relative Market Share

High

Low

Rate of Market Growth

High

Stars

Question Marks

Organic foods

Clothing range

Online shopping#

Indian own brand foods

Services

Bakery

Low

Cash Cows

Dogs

‘Perfectly Balanced’ Own Brand Label Products

Wines & Delicatessen

Counter sales (Fish, Cheese, Pattisserie, Meat)

Frozen uncooked foods

Flowers

Entertainment goods

STRATEGIC PLANNING:

There are six steps in strategic planning, M&S has covered few step as discussed above with various analysis carried out.

In this task we will discuss the strategies to be used for entering in new market as part expansion plan.

M&S and every companies has three main generic strategies available either become the lowest cost retailer or differentiate product and services in such a way that the customers so that they will pay a premium price. Generic strategies result:

Cost Leadership, Differentiation and Focus.

M&S’s core products ( food and clothing ), it emphasis a focus generic Strategies as it concentrates on a narrow segment

A particular set of groups such as executives

Market segmentation such as high end

Product feature such as freshness and within the chosen segments M&S attempts to achieve differentiation from Tesco, Asda and any high street retailer. Needs that can be better serviced by focusing entirely on it.

Competitive Strategy:

Competitive Strategy is about being different. It means deliberately choosing to perform activities differently or to perform different activities than rivals to deliver a unique mix of value ( Michael E Porter)

The essence of strategy lies in creating tomorrow’s competitive advantages faster than competitors mimic the ones you posses today (Gary Hamel & C K Prahalad)

Porter’s four generic Competitive Strategies

M&S Generic Strategies:

As per these strategies it is argued that to establish its competitive advantage the business needs to make two fundamental decisions which are:

Whether to compete on Cost.

Its competitive scope.

Cost Leadership:

As M&S has decided to enter the market which is more competitive at price. In order to enter broad cross section of the market by introducing products and service at low price. M&S wants to sustain and retain customers in European market; hence it has kept its cost as low as possible to keep low prices for the products and service. MS has to make sure that its quality or the features of the product are untouched with the efforts being at low cost.

Market place is more dominated by price, as the product is same from seller to seller.

Differentiation:

M&S will be introducing its product with differentiated feature. M&S own brand such as Per Una is very popular within UK that attracts customers frmom aged 35, M&S will launch its a new clothing range that will attract customers from aged 20 to 25. It will have a new clothing range with low prices to attract young customer.

New Group Strategy and Structure:

Based on the above analysis and research and strategic review, the board of M&S announced in April 29 of 2009 significant changes to the structure group and strategy. Highlighting the new plans which will be used to retain the customers and increase the share price in the market:

More focus on UK retail:

Own brands will be modified and will be made more stylish to attract young group of people as well. M&S will be selling more of its own brand and products exclusive to M&S so that customers can be rest assure that the products are quality, value and service.

Recovery plan for range of clothes:

There is a huge growth in products like Home, food and Beauty.

Store improvement Programme

Focused customer service

Closure of loss making business, Cost cutting measures and realisation of value:

M&S is a huge company, customer, investor and everyone has great expectation from them. Therefore M&S intend to merge or close business which is making losses. M&S intend to close the subsidiary in the European rather than the Irish one. Selling of brooks in king brothers market and super markets in the US as there are no suitable platform for future international expansion by M&S in US. M&S has opened a new store in China through franchising.

M&S intends to close its loss making business including a dedicated call centre with about 340 jobs in total.

Cost cutting is one of the best ways to reduce the costs of goods sold by using foreign suppliers and less supplier mainly to Asia.

TASK 3:

Lately, M&S has faced some tough competition and that’s how it’s time for M&S to come up with new market for growth.

In order to analyse the market and find a new market M&S has adopted the Ansoff’s product – market matrix.

Table 4 – M&S – The Ansoff Matrix; Growth Vector Components

Products

Existing

New

Markets

Existing

Market Penetration

Product Development

Improve service and quality

Repositioning

Withdrawal

Expand Own Brand Labels

Introduce new products

Expand to non-food sector

New

Market Development

Diversification

Internationalising & Globalization

Expand abroad

Online shopping

Conglomerate

Acquisitions

Above Ansoff matrix suggest that M&S can use this as a base to plot its expansion plan for future.

In order to develop a new marketing strategy, M&S carried out a market research.

M&S market research shows that the best way to bring new customers in their existing range would be by exploiting new markets (market development). The company when carried out the research in both primary and secondary and as a outcome, they find the opportunity to target between the ages 18-25 which also includes the students (three million) as potential customers, with a spending ratio of £12 billion.

To aim the youth (students) so that they start shopping for their early student days, M&S set a new strategy. 90 universities were contacted and the company used variety of tactics to attract the students like give free gifts at fresher’s fair, free voucher, direct mail flyers and we banners. This would help the students to maintain their loyalty over degree course and ahead in working life.

To increase the awareness about the M&S value and products, the company set up a campaign. This campaign was really helpful where M&S achieved business aims, including growth and a new market (students, youngsters).

“Trendy with less price” catalogue was another step towards substantive growth. It was launched in 2009 with an aim that it benefits the company as well as the customers which offers a variety of product, free home delivery, and online service as well.

To maintain this rapid growth, M&S is also planning to take discounted offers internationally with opening new stores in different countries, to further expand the growth in business with a unique selling proposition.

M&S market research gives the result that the existing product into new markets was the best direction to take further

TASK 4:

In Addition, M&S is to adopt a new system to manage supply. M&S is introducing merchandise lifecycle software (Trade Stone Software system) which will support its global sourcing initiatives. This software will reduce the time which will take to bring new products to market, increase imports over an unspecified timeframe and expand its product selection.

And with the introduction of the CPR (Customer Pulled Replenishment), M&S is planning to implement on the financial strategy by reducing labour costs and stock handling.

Accordingly, M&S will be maintaining different levels of implementations of strategies.

Following the operational strategy for M&S Below is a cash flow statement for M&S expansion plan in European Market with new clothing range and new product line.

Above is the GAP analysis will help M&S to set realistic goals and as a basis for identifying the extent to which existing strategies will fail to meet performance objectives in the future.

GAP analysis will help M&S to realise the requirement and effort required to fill in the GAP from where we are to where we want to go, this gap between this two questions will help M&S to fill the gap with all resources that is needed. While planning the strategies M&S has forecasted desired revenue/profits.

It is then possible to consider how this gap may be bridged, as M&S has decided to fill in the gap with expansion and launching a new clothing launch for attracting customers from 20-25 years.

Expectancy Theory (Vroom)

Effort

hh

Expectancy?

Leads to

Performance

Instrumentality

Leads to

Outcome (Reward)

Valence?

Personal Goals

After a extraordinary amount of research over the last few years it shows an increasing realisation of the customer satisfaction and customer focus in the company, M&S decided to rebrand few of its stores by applying over the last few years it shows an increasing realisation of the customer satisfaction and customer focus in the company, M&S decided to rebrand few of its stores by applying whole new concept design to take M&S forward.

With the new merchandising techniques and displays M&S have found a real positive change in the customers hopping environment.

Additionally, to increase the effort towards its modernised offer M&S is also mulling a revamp of few of its stores.

Moreover, M&S also continues to fine-tune its portfolio, transferring its existing store into larger sites such as Oxford Street store, which took over a site formerly occupied by C&A in 2002.

In order to carry out the market surreys and research, M&S is evaluating systems in their organisation. To form the budget of the company M&S are opening new stores and departments. As well, the company is working on the limitations to achieve the targets. For example M&S has recently evaluated a recycling technique (Plan A) through which it is generating quite a lot of money.

Referencing:

http://books.google.co.uk/books?id=8KS4gKNgLysC&pg=PT29&dq=G+Johnson+%26+K+Scholes&cd=1#v=onepage&q=G%20Johnson%20%26%20K%20Scholes&f=false

http://en.wikipedia.org/wiki/Business_Strategy

http://www.coursework4you.co.uk/essays-and-dissertations/bcg-growth-sharemarket.php

http://www.netmba.com/strategy/matrix/bcg/

http://www.examstutor.com/business/resources/companyprofiles/marksandspencer/strategyinsight.php (about m&s details and information…….)

http://www.echeat.com/essay.php?t=29922

http://www.thinkingmanagers.com/management/market-strategy.php

http://www.oxbridgewriters.com/essays/marketing/marks-spencers-corporate-objectives.php

http://www.coursework4you.co.uk/essays-and-dissertations/ansoff-analysis.php