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Marks and Spencer Problems and Strategies - Case Study Example

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This paper "Marks and Spencer Problems and Strategies" is a case study on Marks and Spencer with a look into different time periods starting in the 1990s. These periods consisted of the company formulating new strategy approaches aimed at addressing problem areas and challenges…
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Download file to see previous pages Marks and Spencer Company was founded in 1884 in Leeds UK by Michael Marks and Thomas Spencer who established a niche by selling varied branded goods (Scott and Walker, 2017). From that beginning, the company grew from its initial one outlet to 1.463 stores globally and revenues of £5.9bn (Marks & Spencer, 2018). Despite the success in growth that included its pioneering no questions asked refund policy and year-round stocking of timeless goods described as “… classic, wearable fashions …” (Collier, 2004, 28), M&S started to experience declining customer satisfaction and sales. The reversal of the company’s opinion by the general public and its revenues was due to some factors. One of these represented cost controls implemented by the chain’s CEO Richard Greenbury where the company operated under a centralized authority. This is a systems organizational theory approach that Miller and Rice (2013) describe as a company operating in an interrelated manner where small changes in one part can cause changes in other segments, but the information and focus are top-down. Latif et al (2012) advise that whilst a centralized organizational provides a highly efficient structure for conducting business decisions and maintaining control, it suffers from layers of bureaucracy. This can inhibit information from the lower levels of operations and management is passed on to top management that is more interested in a top-down approach that limits customer-centric feedback (Latif et al, 2012). An example, in the instance of M&S, represented the reduction of full-time employees as a cost-saving measure that resulted in a lower level of in-store efficiencies and interaction with customers (Collier, 2004). The top-down centralized operating structure minimized upward communication concerning the fact store managers concealed they added staff on Greenbury store visits to provide a false sense of heightened service levels to appease his strategy (Collier, 2004). This inability to communicate upward also applied to other policies and decisions that top management was not made aware of (Collier, 2004). The result is the chain declined steadily in terms of customer satisfaction levels (71% in 1995, 62% in 1998 and 45% in 1999) (Collier, 2004). The above is a core aspect which is present throughout this analysis that is repeated in terms of the failure of the company to respond to new market trends and internal changes because of its centralized top-down approach. The centralized organizational control structure at Marks & Spencer, as identified in the opening chapter, needs to be remembered as a core problem that has plagued company operations throughout this analysis. This centralized organizational approach was established by its founders when they opened the first store and continued after their passing as family members opted to retain control over operations (Goffee and Scase, 2015; Ward, 2003). Marks and Spencer’s centralized organizational structure represents the common approach used by many founders and strong business leaders who desire control over their operations under the principles of agency theory (Mudambi and Pedersen, 2007; Lan and Hercleous, 2010). Agency theory is brought forth in this analysis because it addresses disputes that usually arise in areas such as a difference in terms of goals, or the aversion of risk (Ballwieser, et al, 2012). This is an important underpinning that provides an understanding concerning the look into problems impacting Marks and Spencer. ...Download file to see next pagesRead More
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