Marks and Spencer Case Study

Introduction

 

The essay explains what the important parts of Marks and Spencer’s (M& S) current and historic strategies are. The value chain is analysed toexplain M & S’s competitive advantages. The value chain focuses on inboundlogistics, operations and marketing & service analysis of M & S.Furthermore, the essay interprets what the problems of present strategies M& S will meet in the future and what new strategy M & S may follow.

 

Key Components of M & S’sCurrent and Historic Strategies

 

M & S implemented different strategies to solve various problemswhen it was at different periods of development.

 

The following is M & S’s main strategies. Firstly, M & S triedto build a good relationship with its suppliers and customers as its strategy. M& S ensured the highest quality of products through working with itssuppliers and encouraging them to use the most efficient and modern productiontechniques so that M & S got more competitive advantages in terms ofquality of products than its competitors. For example, M & S introduced the‘St Michael’ logo as its sign of quality of products at the beginning of thedevelopment of the company. Therefore, the reputation of highest quality ofproducts was built among M & S’s customers. Secondly, the strategyconcentrated on restructuring, namely, top management level separated companyinto three parts between 1998 and 1999 when M & S had faced thedifficulties. Furthermore, M & S adopted a customer-focused strategy inorder to identify customer preference and trends and deeply understand whatcustomers really need because its competitors were more responsive to changingmarket. Thirdly, M & S implemented creating a new corporate image strategy.M & S changed store image, built a pilot store, separated managementstructure into seven business units and launched new product brand so that thestrategy became more customer focused. Moreover, M & S had implementedexpansion overseas markets strategy in order to look for new businessopportunity. However, the strategy did not develop in overseas markets smoothlyso that M & S had to change its original strategy to close its stores andwithdrew overseas markets. M & S changed its suppliers as cutting coststrategy. For instance, it switched its suppliers of certain products, such asclothing range, instead of 100 percent Asian supplier. Finally, M & Simplemented expansion UKmarket with new product ranges strategy through developing its homewaredepartment, Simply Food convenience store, and financial services.

 

Strategic Model for theSuccess of M & S

 

M & S has a huge success about profits and market share during thelate 1990s. The success of M & S is analysed through value chain in orderto explain competitive advantages of M & S for adding value for itscustomer. The primary activities of value chain consist of inbound logistics,operations, outbound logistics, marketing & sales and service. The analysiswill focus on inbound logistics, operations and marketing & service of M& S.

 

Firstly, inbound logistics are concerned with getting the goods fromsuppliers and storing them until the goods are required by operations, handlingand transporting them within the company (Lynch 2003). In terms of inboundlogistics of M & S, it may consider the size of stock and how to deal withthe excess stock. In M & S case, it planed to offer clothes at a discountedprice to factory outlet malls. The aim of the plan is to sell excess stock. Thebenefits of the plan for M & S are that it may reduce the cost of stock andthe rest stock space can be used for new items. M & S has to do like thatbecause some competitors of M & S have done it.

 

Secondly, operations activities consist of plant layout, supplier controland quality control. M & S built good relationship with its supplier. Therelationship between M & S and its suppliers guarantees not only quality ofproducts but also improves cooperation between them. The relationship isconcerned with encouraging its suppliers to use the most modern and efficientproduction technologies and working with them to get the highest standards ofquality. On the one hand, M & S used mainly British suppliers in order toensure the quality of products. On the other hand, M & S established atrade mark ‘St Michael’ as the sign of its high quality. These actions arehelpful to satisfy customers’ requirements about quality of product so that M& S may get more competitive advantages for quality of products than itscompetitors. Moreover, one of the successful facts is that M & S emphasisedits store layout. It built a pilot store and other stores are asked to follow itso that M & S may keep consistency of its image. It is good for keepinggood company image among customers.

 

Finally, the changes about marketing & service of M & S alsoadded its competitive advantages. Initially, M & S built ‘St Michael’ asits quality sign of product so as to build customer loyalty and attractcustomers to purchase its products. However, M & S has to respond for thechallenges for its competitors, such as Tesco, Gap, because M & S’scompetitors has responded more fast for customers’ changing needs than M &S.  M & S changed and created newcompany image and launch new brand among customers. For example, it changedstore layout according to demographic characteristics and lifestyle patterns andbuilt pilot store in order to improve the atmosphere of shopping in the storeand satisfy customers’ needs at various levels. M & S stopped using itsfamous green carrier bags and St Michael brand, even changed uniforms, packagingand labelling. On the other hand, M & S asked George Davies to designclothing and create its own new brand—‘Per Una’ so that it got good result thatthe share price was raised after launching ‘Per Una’. M & S sent manydifferent new messages to its target customers. It means M & S has takenaccount of focusing on customers. The aim of M & S is to make a clear newimage and distinguish between itself and its competitors to highlight itsadvantages among the target customers. Moreover, M & S made its storefriendly through its major investment and rebuilt its new image with promotionalcampaign. In terms of service, M & S took account of improving its service,such as providing customers with more shop floor staff and adding fitting rooms.Furthermore, M & S established a wide marketing department and launched newclothing and food ranges in order to make more responsive to changing marketsand customer needs. The actions of M & S helped it has some successes, suchas stopping profit decline and slowing its sales decrease, although the effectis not very great. M & S was looking for its competitive advantage andidentify new business opportunities when it adopted these actions.

 

The Problems of PresentStrategy and Future Strategy

 

M & S will meet some problems when it implements its expansion UKmarket with new product range. Firstly, its childrenswear, and womenswear didnot have good performances so that M & S has to plan to segment itsofferings more attractively. The reason is that M & S provided attractivediscounts during some special periods so that the price of new goods is lowerthan the price of its cost when it sold new goods. Secondly, homeware range andfood store are new products ranges for M & s so that it is not very familiarwith them and does not have enough experiences to understand what customerreally wants. Furthermore, the competitors about homeware range and food storehave much more competitive advantages and experiences than M & S because M& S is only a new entrant. The problems of M & S’s organisationstructure and culture have not been changed well. It will influence how toimplement the strategy efficiently. For instance, the important decision willbe taken too long time by top management level and the top management leveldoes not have relevant experiences about new product ranges.

 

The following strategies are advised for the management of M & S inthe future. Firstly, M & S needs to change its organisation structure fromtop to bottom and create its new organisation culture. The decision makingspeed of M & S was prevented by its centralised authority and bureaucracy.For example, disagreement with directives of store managers were not sent totop management level when they felt negative effects on policies and decisions,which is from top management level. Furthermore, highly and complicatedorganisation structure of M & S had a negative effect on decision making sothat the process of decision making was slow because its main board was a groupoperating committee, which was consisted of 19 members. Even, the communicationbetween top management level and its staff was prevented because executives anddirectors’ offices were separated from their staff. If M & S implementsgreat changes to its board and organisation structure and culture, such as flatterand increased decentralisation organisation structure, it will be moreresponsive to market and customer needs and make decisions much more quickly.

 

Secondly, the future strategy should continue customer-focused strategy.M & S did not perceive that the market and customer needs are changingduring the process of its development. Meanwhile, its competitors do not ignorecustomer preferences and trends so that they can attract customers from M &S, such as The Gap at the top end of the market, Matalan at the bottom end ofthe market, and Tesco which offers added value products. Its competitorssegment customers so that the products which are provided for its targetcustomers are much clearer than before. Although M & S’ success partlydepends on Marks’ understanding for customer preferences and trends, hisunderstanding is only his own opinion and estimate for market so that buyers ofM & S concentrate on the types of products which is what Marks would like whenbuyers select products. Therefore, continuing customer-focused strategy willimprove the estimate and be more responsive to target market and customer needs.

 

Thirdly, M & S should try to exploit and revitalise its financialservices as the part of future strategy. M & S has considered jointventure, outsourcing and a partial flotation to solve the problems of itsfinancial services. Further, its financial services had strong brandrecognition among customers and got trust from them. These are the basis of exploitingand revitalising. Therefore, financial services will give M & S anopportunity to reach new market share.

 

Finally, M & S may adopt joint ventures, alliances or other forms ofco-operation as its future strategy. Some competitors were interested in M& S in 1991 so that acquisition rumour appeared in the company. If M &S does not want to be acquired by its competitors in the future and look forrestore its competitive advantages, M & S may adopt joint ventures oralliances. There are some benefits for M & S through joint ventures oralliances. It will share some of the assets, capital, skills, information andother important resources from its partner. For example, M & S may adoptjoint ventures in the UKmarket. Joint ventures also may helps M & S gain a lot of capital to investnew product ranges and explore the market. The risk of exploring market will bereduced through sharing the project each other and the rapid market access willbe achieved for M & S and its partner. Moreover, the organisation cultureand structure of its partner will influence the culture and structure of M& S. As another example, M & S will also get more benefits through strategicbusiness alliances when it considers expanding overseas market again. On theone hand, M & S may save various costs because of economies of scale fromcollaboration with local partner. On the other hand, M & S may overcome thepressures of local government and trade union with its partner. Reversely, itmay have some troubles in local market. For example, the plan of M & S’sclosing stores in France wasprevented by French government because it had broken French employment law andM & S was not familiar with it so that M & S did not withdraw from France marketsmoothly. Furthermore, M & S will make access to local market more easilythrough strategic business alliances.

 

Conclusion

M & S implemented different strategies to prevent its sales andprofit decrease during the process of its development, such as building a goodrelationship with its suppliers and customers, customer-focused strategy, highquality of product, expansion overseas markets strategy and so on. M & Shas to respond for the challenges from its competitors so that it has to changeand create new company image and launch new brand among customers. M & Sbecomes more responsive to customer preferences, trends and customer needsthrough these strategies changes. However, if M & S plans to compete withits rivals and get further developments, it needs to change its organisationstructure from top to bottom, and create its new organisation culture so as tomake its management more efficiently. Furthermore, it will be useful to continuecustomer-focused strategy or adopt joint ventures in the UK market andalliances in overseas markets for M & S.

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