Statistical Analysis of Sales, Costs, and Profits of Mark and Spencer - Statistics Project Example

Statistical Analysis of Sales, Costs, and Profits of Mark and Spencer Statistical Analysis of Sales, Costs, and Profits of Mark and Spencer I. Introduction Mark and Spencer also known as M&S is one of the leading international outfit dealers. It deals with the out fits for all categories; from children to adults. The company has branches all over the world with the main branch and headquarters being in the UK. This explains why the company handles its management into what can be termed as two quarters; those branches that are based in the united Kingdom (all referred to as UK branch ), and those in other countries other than UK (all referred to as international branch). In the financial report of the company, it is always indicated as UK and international (Spencer, & West, 2012). To emphasize on the vastness of the company, we have to recognize that it operate in 43 countries with about 387 stores across the world (Spencer, & West, 2012). The company has made it possible for customers to access their items online and take the responsibility of delivery. This they confirm has made them realize more sales hence more profit in the recent years. Aims and Objectives I have chosen the company because of its wide international network and the complication in how it handles it finances. The company no annual financial report and thus the aim of this paper is to explore the chronological account of the company’s sales, costs and profits in the last 10 years that is from 2002 to now. In this endeavor, I want to establish whether the company has been making profit over this period or not. I will also consider the growth of the rate or otherwise over the same period. A comparative analysis of the three items will also be analyzed. This will take the perspective of the UK and the international branches. Finally, a comparison of the two branches will be done in terms of the stated items (sales, costs, and profits). Methodology The methodology of handling this will be concise; I will consider the financial statement of the company over the last 10 years containing the three items discussed above and extract them. After this, they will be analyzed using simple data analysis tool (excel) to interpret the data. Once the data is interpreted, representative diagrams will be used to capture the details after comparison. This will include bar graphs, charts and so on. The analyzed data will then be interpreted through careful observation of the trend in the last ten years of the company’s performance. II. Presentation and Description of Data Below is the performance of the company for the last 10 years that is from 2002. It includes the sales, costs, and profits of the company spread over the years. Form the table below, it can be seen that the company has maintained upward growth in terms of almost all the three items considered. It is also evidenced that the company has more activities in the UK than all the other international branches. This indicates how rooted the company is in the UK. About 80% of the company’s profit comes from the operations in the UK. Other international branches only contribute the remaining 20 percent (Zhang, 2012). The information considered in this table is the cumulative 10 years report from the company books of accounts. The information given is analyzed as below Mark and Spencer Performance in the last 10 years giving detailed information on the Sales, costs, and profits. Year/Item 2002 2003 2004 2005 2006 2007 2008 2009 2011 2012 SALES UK 6, 313 6,321 6,345 7,214 7,458 8,200 8,210 8,345 8,432 8,733 Inter. 567 571 612 654 715 748 810 896 917 1,007 COSTS UK 1,234 1,254 1,300 1,452 1,487 1,624 1,789 1,795 1,812 1,914 Inter. 102 112 135 146 149 152 154 160 165 174 PROFIT UK 5,079 5,067 5,245 5,762 5,971 6,576 6,412 6,550 7,515 6,819 Inter. 465 459 577 508 566 596 656 736 752 833 The company has also invested in opening most of the branches within UK and other international countries. This is in their bid to widen the extent of their market base. Even in the overwhelming expenditure in this establishment, the company has kept a remarkable performance in terms of the profit making. If the international braches can pick, the company believes they will be in a position of making fortunes. It is though worrying that the company gets fewer income from the many international branches than those in the UK (Zhang, 2012). This can only interpret that purchasing power in the international branches are quite low and this explains why the company has invested in the online system of availing their products their customers. The company has also carried out a SWOT analysis and has realized that most of their threats emanates from their competitors. They have also realized that they have strength on the brand name and want to use that to lure more customers into their products. The company is committed in maintaining an exponential growth in terms of their profit margin (Kazmier, Staton, & Fulks, 2011). Considering the information given above, I will do a comprehensive analysis of the data, interprets it, and give a report thereof. III. Analysis of Growth, Central Tendency, and Spread a. Sales On using the excel sheet, the average sales of the company in the decade is 7695.333 for the international branches, the average is 749.7 (Independent auditors report, 2012). It confirms that the UK branches are ten folds higher in sales than the other international branches. The information is presented in the graph below for further information. This graph compares the average sales of the company in the last decade; that of the UK branches and the international branches This information confirms that the level of business activities of Mark and Spenser in the UK branches is much more active than the rest of the World’s branches, this can be attributed to the fact the it is much more established and has a strong brand name compared to other international branches where new market are explored. The range of the averages is 6,946 Million pounds. This is quite significant (Independent auditors report, 2012). b. Costs Costs in this case include the money spent by the company in major activities like marketing and advertisement in a bid to create customer awareness of the business in certain places. For instance, the company has engaged in several activates of exploring internet advertisement to capture the full extent of the market. Other expenditure of course goes to the salaries and establishment of the merchandise branches. Other are incurred in the logistics that involves the daily running of the of the company operations. Again, the company’s cost will be analyzed according to the UK and the international branches and will be represented in the chart as shown below. From the observation made on the cost, it is a replica of the sales figures of the international and the UK branches. This can be interpreted that the company has given a lot of emphasis to the areas where they experience high sales. It is also attributed to the management cost in the daily operation of the business in the busiest branches of the UK. This is in terms of salaries and so on. The average costs of the incurred inn the UK branches is 1,566 million pounds compared to the 145 million pounds incurred in the international braches. Range of the costs is 1,421 million pounds (Independent auditors report, 2012). c. Profits Just like nay other business, the company aims at making profit at the end of every financial year when they reconcile their books of account. The profit considered here if after the necessary tax deduction and can be referred to as net profit. It follows that the UK branches do realize much profit compared to the international one on the ground of sales they do make at the end of the year. From the table, it can be seen the company has maintained making profit for the whole period of ten years it is considered. This is a remarkably gesture even if the profit margin has not been exponential growing. It is also construable that the company has also invested in other international branches; such investments always pull down the profit margin. Marks and Spencer is arguably one of the most prolific outfit dealer in the global with their products presence felt everywhere in the planet (Bolland, 2012). Just like in the case of the sales and the cost, the profit of the two companies will be analyzed comparatively in the form of average in the last decade. This is shown below; Comparatively, the UK branches do make more than the international branches. The UK profit is ten folds higher than the international. It stands at 6,100 million pounds while that of the international one stands at 614 million pounds. This produces the range of 5,486 million pounds (Independent auditors report, 2012). Even though their is a significant disparities in the spread of sales, costs and profit between the UK and the other international branches, it is important to note that the spread of the individuals year’s compares well and are consistent both in the UK branches and those of the international. The margin difference of the successive years the UK and the international are not showing any big disparity and it can be understood that the company performance in the areas are showing correlation. In this regard, Mark and Spencer do have yearly strategic plans that they intend to achieve at the end of the year. In their fore casting, they set the benchmarks that they use to gauge and evaluate their performance index. IV. Forecasting Every business does have their future expectation or prediction on how to manage the business dynamics regarding sales, costs, and profit. A business has to be unique in doing this following the observation they have made in the last financial year. They consider every factor and use the information to device some improvement that they use to set a benchmark. Mark and Spencer have made the necessary forecasting on the three items; sales, cost and profit that are important in identifying whether a business is in the path of development or not. Away from forecasting on the three items only, the company has also made forecasting on some of the important facets of business like customer demands, workforce attrition, making prediction on the possible exposure to detrimental acts of fraud and risks (Independent auditors report, 2012). i. Sales Sales is the business lifeline, a business that is not making more sales than the cost is of course making loses and has no reason for existing. Mark and Spencer has engaged a team of experts that explore the possible new strategies than can be used to increase the sales of the company globally. This explains why the company has made it possible to venture into online sales. They have also opted to deliver good to their esteem customers. They intend to lure more customers in order to increase the sales of the company. In the next season, the company wants to increase their sales by about 5.8% (Independent auditors report, 2012). This is following a careful study on the customer’s preferences and would want to conform to them. ii. Costs Costs involve the money the business spends on other activities and must always be less than the sales to believe that the business is making profit. The forecast the company is having on costs is to reduce it to the only necessary areas. The company has embarked on an evaluation program in which they are keenly following the impact of the various programs they are running in widening the market for the company (Bolland, 2012). Those that will be found not to contribute much to the company will be scrapped from the list of programs, as they will be considered unproductive cost centers. The company in the recent annual financial report decided to reduce significantly the level of the company cost in the next financial year. They want to improve efficiency in running their program and venture much into the information technology as a way of reducing cost and reducing fraud at the same time associated with manual human operation (Bolland, 2012). They have also decided to revolutionize their operation system to become relevant with the contemporary pace. iii. Profit This is the most important of a business after all is done. The final tally of the profit is the main interest of every business and they will always ensure they improve the quantity of this by ignoring other businesses engagements that are not productive. The company by evaluating and using the information that have obtained in the sales and the cost is able to check on the margin of the profit. The company has decided to embark on possible plans to make the profit margin increase. The company expects to have a growth of about 2% in the profit margin annually (Bolland, 2012). V. Comparison and Analysis of Individual Results In view of the company’s recent performance, it can be construed that it has been successful in making profit annually according to their reports. Though at in most of the cases, the profit seem to be stagnating, it has been attributed to the ever expansion of the international branches in a bid to establish a wider market base. VI. Conclusion Mark and Spencer is one of the most prolific outfit dealers in the world, in this sense, they face a number of challenges in their daily operation more so in the international branches. In this study, I could not get the individual performance of the braches and give a comparative analysis. Instead, the international braches were clustered together and their performance averaged together. This indicates that one can do a study of the international branches and give a detailed analysis of hoe they do compare. References Marks & Spencer strategic review: Marc Bolland plays it safe on the home front | Business | guardian.co.uk . (n.d.). Latest US news, world news, sport and comment from the Guardian | guardiannews.com | The Guardian . Retrieved November 6, 2012, from http://www.guardian.co.uk/business/2010/nov/09/marks-and-spencer-review-nils-pratley Kazmier, L. J., Staton, M. K., & Fulks, D. L. (2011). Business statistics (Abridgement [ed.] / ed.). New York: McGraw-Hill. M&S | Financial Statements | Independent auditors report. (n.d.). M&S. Retrieved November 6, 2012, from http://annualreport.marksandspencer.com/financial-statements/independant-auditors-report/index.html Spencer, M., & West, R. V. (2012). Mark Spencer. Santa Fe, NM: Gerald Peters Gallery. Zhang, G. P. (2012). Neural networks in business forecasting. Hershey, Pa.: Idea Group Pub. Read More