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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 to
explain M & S’s competitive advantages. The value chain focuses on inbound
logistics, 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’s
Current and Historic Strategies M & S implemented different strategies to solve various problems
when it was at different periods of development. The following is M & S’s main strategies. Firstly, M & S tried
to build a good relationship with its suppliers and customers as its strategy. M
& S ensured the highest quality of products through working with its
suppliers and encouraging them to use the most efficient and modern production
techniques so that M & S got more competitive advantages in terms of
quality 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 the
development of the company. Therefore, the reputation of highest quality of
products was built among M & S’s customers. Secondly, the strategy
concentrated on restructuring, namely, top management level separated company
into three parts between 1998 and 1999 when M & S had faced the
difficulties. Furthermore, M & S adopted a customer-focused strategy in
order to identify customer preference and trends and deeply understand what
customers really need because its competitors were more responsive to changing
market. Thirdly, M & S implemented creating a new corporate image strategy.
M & S changed store image, built a pilot store, separated management
structure into seven business units and launched new product brand so that the
strategy became more customer focused. Moreover, M & S had implemented
expansion overseas markets strategy in order to look for new business
opportunity. However, the strategy did not develop in overseas markets smoothly
so that M & S had to change its original strategy to close its stores and
withdrew overseas markets. M & S changed its suppliers as cutting cost
strategy. For instance, it switched its suppliers of certain products, such as
clothing range, instead of 100 percent Asian supplier. Finally, M & S
implemented expansion Strategic Model for the
Success of M & S M & S has a huge success about profits and market share during the
late 1990s. The success of M & S is analysed through value chain in order
to explain competitive advantages of M & S for adding value for its
customer. The primary activities of value chain consist of inbound logistics,
operations, outbound logistics, marketing & sales and service. The analysis
will focus on inbound logistics, operations and marketing & service of M
& S. Firstly, inbound logistics are concerned with getting the goods from
suppliers and storing them until the goods are required by operations, handling
and transporting them within the company (Lynch 2003). In terms of inbound
logistics of M & S, it may consider the size of stock and how to deal with
the excess stock. In M & S case, it planed to offer clothes at a discounted
price to factory outlet malls. The aim of the plan is to sell excess stock. The
benefits of the plan for M & S are that it may reduce the cost of stock and
the rest stock space can be used for new items. M & S has to do like that
because some competitors of M & S have done it. Secondly, operations activities consist of plant layout, supplier control
and quality control. M & S built good relationship with its supplier. The
relationship between M & S and its suppliers guarantees not only quality of
products but also improves cooperation between them. The relationship is
concerned with encouraging its suppliers to use the most modern and efficient
production technologies and working with them to get the highest standards of
quality. On the one hand, M & S used mainly British suppliers in order to
ensure the quality of products. On the other hand, M & S established a
trade mark ‘St Michael’ as the sign of its high quality. These actions are
helpful to satisfy customers’ requirements about quality of product so that M
& S may get more competitive advantages for quality of products than its
competitors. Moreover, one of the successful facts is that M & S emphasised
its store layout. It built a pilot store and other stores are asked to follow it
so that M & S may keep consistency of its image. It is good for keeping
good company image among customers. Finally, the changes about marketing & service of M & S also
added its competitive advantages. Initially, M & S built ‘St Michael’ as
its quality sign of product so as to build customer loyalty and attract
customers to purchase its products. However, M & S has to respond for the
challenges for its competitors, such as Tesco, Gap, because M & S’s
competitors has responded more fast for customers’ changing needs than M &
S. M & S changed and created new
company image and launch new brand among customers. For example, it changed
store layout according to demographic characteristics and lifestyle patterns and
built pilot store in order to improve the atmosphere of shopping in the store
and satisfy customers’ needs at various levels. M & S stopped using its
famous green carrier bags and St Michael brand, even changed uniforms, packaging
and labelling. On the other hand, M & S asked George Davies to design
clothing and create its own new brand—‘Per Una’ so that it got good result that
the share price was raised after launching ‘Per Una’. M & S sent many
different new messages to its target customers. It means M & S has taken
account of focusing on customers. The aim of M & S is to make a clear new
image and distinguish between itself and its competitors to highlight its
advantages among the target customers. Moreover, M & S made its store
friendly through its major investment and rebuilt its new image with promotional
campaign. 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 new
clothing and food ranges in order to make more responsive to changing markets
and customer needs. The actions of M & S helped it has some successes, such
as stopping profit decline and slowing its sales decrease, although the effect
is not very great. M & S was looking for its competitive advantage and
identify new business opportunities when it adopted these actions. The Problems of Present
Strategy and Future Strategy M & S will meet some problems when it implements its expansion The following strategies are advised for the management of M & S in
the future. Firstly, M & S needs to change its organisation structure from
top to bottom and create its new organisation culture. The decision making
speed of M & S was prevented by its centralised authority and bureaucracy.
For example, disagreement with directives of store managers were not sent to
top management level when they felt negative effects on policies and decisions,
which is from top management level. Furthermore, highly and complicated
organisation structure of M & S had a negative effect on decision making so
that the process of decision making was slow because its main board was a group
operating committee, which was consisted of 19 members. Even, the communication
between top management level and its staff was prevented because executives and
directors’ offices were separated from their staff. If M & S implements
great changes to its board and organisation structure and culture, such as flatter
and increased decentralisation organisation structure, it will be more
responsive 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 changing
during the process of its development. Meanwhile, its competitors do not ignore
customer 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 of
the market, and Tesco which offers added value products. Its competitors
segment customers so that the products which are provided for its target
customers are much clearer than before. Although M & S’ success partly
depends on Marks’ understanding for customer preferences and trends, his
understanding is only his own opinion and estimate for market so that buyers of
M & S concentrate on the types of products which is what Marks would like when
buyers select products. Therefore, continuing customer-focused strategy will
improve the estimate and be more responsive to target market and customer needs. Thirdly, M & S should try to exploit and revitalise its financial
services as the part of future strategy. M & S has considered joint
venture, outsourcing and a partial flotation to solve the problems of its
financial services. Further, its financial services had strong brand
recognition among customers and got trust from them. These are the basis of exploiting
and revitalising. Therefore, financial services will give M & S an
opportunity to reach new market share. Finally, M & S may adopt joint ventures, alliances or other forms of
co-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 for
restore its competitive advantages, M & S may adopt joint ventures or
alliances. There are some benefits for M & S through joint ventures or
alliances. It will share some of the assets, capital, skills, information and
other important resources from its partner. For example, M & S may adopt
joint ventures in the Conclusion M & S implemented different strategies to prevent its sales and
profit decrease during the process of its development, such as building a good
relationship with its suppliers and customers, customer-focused strategy, high
quality of product, expansion overseas markets strategy and so on. M & S
has to respond for the challenges from its competitors so that it has to change
and create new company image and launch new brand among customers. M & S
becomes more responsive to customer preferences, trends and customer needs
through these strategies changes. However, if M & S plans to compete with
its rivals and get further developments, it needs to change its organisation
structure from top to bottom, and create its new organisation culture so as to
make its management more efficiently. Furthermore, it will be useful to continue
customer-focused strategy or adopt joint ventures in the (Word count: 2281) |
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