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Exploring Corporate Strategy of Marks and Spencer - Case Study Example

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The author will begin with the statement that multi-line retailer observed in the paper "Corporate Strategy of Marks and Spencer" was founded in 1884 in Leeds UK by Michael Marks and Thomas Spencer who established a niche by selling varied branded goods…
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Download file to see previous pages 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. This founder approach, in terms of agency theory, in addition to the centralized organizational control aspects extends to other areas as well. Examples of the top-down centralized control that created problems for H&S can be seen in the company’s commitment to classic product lines and the reduction of sales floor staffing that hurt service delivery (Collier, 2004). In terms of the company’s product approach, the case study by Collier (2004) stated a key reason for declining sales represented competitors moving onto goods that were priced similar to M&S but were trendy and design-conscious, such as The Gap, Next, Oasis and others versus M&S’s classic styles. The moderate pricing that had served M&S for decades was now also under attack from discount chains and supermarkets such as Tesco, ASDA. Walmart, and others (Collier, 2004). In addition, these supermarkets were also competing with M&S’s food segment using lower prices and branded products (Collier, 2004). Evidence of the struggles M&S was having with strategy was summed up in an article that appeared in the Financial Times in 1999 that stated: “There are so many items here to find and they don’t tend to segregate it out, so there’s something I might like next to something my granny might like” (Collier, 2004, p. 31). The appointment of Lus Vandevelde as chairman lead to strategy changes representing four strategies (Collier, 2004): The creation of clear profit centers; The creation of a customer-facing organization (customer-centric); Restoring overseas profit, and Building revenues in the financial services sector that represented a better utilization of M&S store cards. These foundational aspects addressed core problems within Marks and Spencer that shaped strategies which addressed the core issues of the company and resulted in profit and revenue gains. The above strategies were utilized by the company to craft its approach to retail operations that were based on the application of a fundamental formula represented by the following (Collier, 2004): A simple pricing structure, Offering high-quality merchandise under the St. Michael brand name, Clothing was selected based on a generic, essential theme at reasonable prices, Quality control by working closely with suppliers, Providing customers with helpful and friendly service, Having a close-knit family type atmosphere by employing staff that fit this customer mode. Leverage of financial services (credit card issuance) to increase distribution of M&S cards and the resulting interest charges they bring. ...Download file to see next pagesRead More
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