Financial Analysis of Marks and Spencer - Research Paper Example

New innovative product and services. Charge cards, currency exchange and wedding insurance Large investment on R&D with long and existing history on brand development (e.g. Charge cards, wedding and travel insurance).Effective and easy distribution chain. Stores located in almost all of UK major cities, online sales and catalogue. Co-branding with HSBC a great opportunity for new products and services launchContinuous improvement and development of new products i.e. charge card, wedding insurance with musicians and artists.

Many of the brands are well known, cost leadership with high quality. A major player in the clothing industry with continuous increase in record revenue and own brand of children's apparelLow cost operators, product differentiation, broad market focusOpportunities.Developing market opportunities and emerging markets. The potentials associated with the internet are numerous. Creating a customer supplier interface will proof quite profitable.Developing countries markets still remain virgin. This market makesup80% of the world's population.

Entering and strengthening holds into potential markets such as India and China.Opportunities for merger, acquisition, and joint ventures are bound.The world becoming a global village is an indication of weakening trade barriers.The creation of a common market for Europe and Africa.Mortgage lending makes up about 75% of UK retail lending market. Opportunities abound in this market.Existing relationship with HSBC bank could be exploited as a breakthrough into other European markets.E-marketing for M&S money could create a strategic interface with other product of the M&S group .

ThreatsMore than ten competitors and other niche players operating almost in the same markets and products.. This section also uses the balance score card to provide a methodology for approaching the valuation and an appraisal of the method used as opposed to other methods. Section 5 provides a conclusion and a recommendation. Marks and Spencer Group plc is the holding company of the Marks & Spencer group of companies. The Company is a retailer of clothing, food and home products. The Company trades in wholly owned stores in the Republic of Ireland and Hong Kong, as well as in worldwide franchise stores.

It had 144 Simply Food stores across the United Kingdom. International business comprises wholly owned stores, in the Republic of Ireland and Hong Kong, and 198 M&S branded franchise stores worldwide, including 22 stores opened during the fiscal year ended April 1, 2006. The company proves to be the most profitable earning a return on equity of 45% in 2006. One can also observe improvements in the figures from 2005 except the figure for return on investment which witnessed a decrease from 12% in 2005 to 10% in 2006.

However, the company is more profitable than most of the industry peer group. The liquidity ratios show that the operating leverage is very high. This is because it current liabilities outweigh current assets. Its cash flows from operations might therefore be unable to cover current liabilities.