Mark & Spenser Performance - Assignment Example

1. Executive Summary Dynamism has always been the trademark of any sustainable business. The moment any industry, organization or for that matter even individual associated with business or commerce, stops responding to the ambience or keeps vegetating, it is the onset of decline. Change is a panacea for sustainability and it is a universal law of nature too. Change can either fetch fortunes or it can be detrimental. This depends on how one handles and manages change. In technical terms this is what is called as “Change Management”. It needs a great deal of environmental analysis, introspection, strategic layout and strong will to sustain a change. This assignment is an endeavor in this respect. It will consider the UK based retail giant Mark & Spenser (M & S) specially its food section. It will peep into the important changes made from the view point of M & S. On the basis of this analysis, this assignment will take a critical stand over it. Moreover it will also stress on the prediction of future changes. This assignment will deal with all important aspects of change management. It will also ccritically analyse the way in which change was managed and will use this knowledge to forecast changes that may happen in the future. Though the assignment deals with food section only, yet it can be generalised for other verticals also. 2. Introduction Marks & Spencer (M & S) is one of the High Street’s best known names and is a very famous UK's leading retailers. It deals in clothing and food along with home products and financial services as well. To an estimate by studies around ten million people shop every week in its stores which are over 375 in number in UK only. Apart from it, M&S has 155 stores which are managed under international franchise in 28 countries. These are mostly in Europe, the Middle East, central and the Far East Asia. Along with it, one can find M & S stores in the Republic of Ireland, Hong Kong and also in US (supermarket group and Kings Super Markets). The company is structurally segregated into various strategic business units (SBUs). These SBUs cover a wide range from food to general merchandise. The general merchandise unit itself is further divided into various other sections. These sections are namely women’s clothing, menswear, lingerie, beauty and home. These various SBUs and sections in collaboration contribute to the company’s vision which is ‘to be the standard against which others are measured’. There are some inherent values of M & S which are in fact central to the operation of various business units and sections. These prominent core values are quality, value, service, innovation and trust. Though M & S handles various verticals but its core competency seems to be clothing and food sections only. However gone are the days when M&S was unchallenged as clothing sales are facing tremendous pressure from chains like Next and Asda. Also the food section revenues have taken toll by completion from Tesco and like. 3. Performance Background In the last half a decade, in reaction to the massive decline in sales, M & S has seen a series of changes in management and corporate structure. According to market specialists, the one time market leader in worldwide quality food and clothing retailer has now become old-fashioned, uncompetitive haze on the UK stock market. If one takes a close look to the declining phase of M & S which started in early 2000, it is can be inferred that this sluggish performance is a result of pressure from changing economic demand. This in turn has put M & S to undergo continual business realignment. These realignments reveal that important organisational or major changes have taken place within M & S. But as a matter of fact, these business realignments have not been developmental in nature. And this is the reason which can be attributable to the fact that the results of these business alignments have also been unsuccessful. The company has transformed their marketing mix. It has at times added and sometimes let go some products, service and customer. It has also resorted to retrenchment and down sizing which resulted in making a vast lot of employees redundant. But they still were unable to build up the ability to resolve their own problems. Analysing this case leads to the fact that there has been absence of any methodical and well planned strategy for change management in this organisation. One can infer that if M & S wants to undergo successful change, then it needs to renovate itself into a learning organisation and is required to make use of knowledge creation and management. The retail gain adopted two different set of strategies during the period of 2001 to 2004 and onwards. But taking a closer look, the problems to be addressed by these strategies were same. These problems were: To stick to the core competencies of food and fashion in times of immense competition To make its core business less imitable to rivals To manage prevailing out of date and not in fashion image 3.1. Strategies adopted : 2001-2004 Followings are the highlights of the strategic stand taken to cope with the change during the period of 2001-2004. To sell only own brand products in the stores. To stress on ready made meals and already prepare food Quality of food items to include prevailing taste and likings To come up with Health & Beauty departments Revamp stores faster for being cost effective Strategically reorganize selling space within stores To tie up with Brooks Brothers & Kings Super Markets USA 3.2. Strategies adopted : 2004-2008 Come up with few number of new Simply Food stores (10 in spite o 32). Initiatives to bring back the consumers of the age range of 35 to 55 year specially the women consumers from discount stores and supermarkets. This was to be done by balancing the shelves in terms of taste, quality and price. Food business to concentrate again on quality and innovation Maintain attention to occasional and younger consumers also Window displays to be improved by means of facelift. To shed 500 lines form the food business. To save on suppliers through volume discounts and fewer mark downs Food wastage to be cut by £10m a year by 2006-2007. (Source: Website of Mark & Spenser) 4. Managing Change at Marks and Spencer As already discussed, M & S is facing immense pressure from external economic factors. But it has not reverted back successfully. This is the reason that well planned change management approach is required. This assignment uses prevalent theories and models of change management in the organizational development perspective, in order to put forward an outline for intended change. 4.1. Future Orientation Now one needs to go through strategic standpoint from the future perspective of M & S. The following discusses it in detail. 4.1.1. Focus on UK retail M & S need to sell only its own brand products so that it can guarantee its customers the quality and value for products and service which they expect. If M & S concentrate on UK retail more, then it will be easier for it to deliver improvements in product appeal and its availability. This in turn will enhance value and will help restoring the connections with core customers. 4.1.2. Expansion in food section as core competency Even in adverse conditions, Food unit of M & S has been performing well. It has also earned consumers’ confidence by providing quality and novelty and expedience. Being the core competence, food unit can be the decisive podium for future growth. This is more important when M & S is taking into account avenues for future expansion of selling channels. 4.1.3. Store renewal The company need to expedite its ongoing store renewal process. The renewal process makes the stores more cost effective and brings down the cost of operation. This in turn adds to the kitty of increased revenue for M & S. 4.1.4. Intensive use of Space The space should be relocated as per the selling potential of the products on display. More appealing locations should be provided for the higher growth product. Like impulse buys in food section should be given preference. 4.1.5. Consumer Orientation The services and facilities need a face lift in order to become more consumer oriented. This includes provision of 24 X 7 services in metro cities, modernised of stores to be attractive and appealing, providing easy-to-shop ambience. 4.1.6. Closing loss making stores M & S need to assess all the stores in terms of their existing and future profitability. Then it needs to close down its loss-making stores and units. Like its business in continental Europe is not a success. There are many stores which are made operational without properly understanding the markets there. On the contrary, the business in the Republic of Ireland has been growing fast and profitably. Thus the company needs to exploit such avenues. 4.1.7. Franchising Business There are very many places where it is difficult to understand market or tap it without the help of local partner. In such situations, M & s need to take resort to franchising business model. It brings down the set up as well as the operating cost on one hand. On other hand it aids to increased revenues by better market understanding. 4.1.8. Cost Cutting The maximum potential for cost cutting seems to be in bringing down the cost goods sold. This can be achieved by bringing in less number of suppliers. Moreover this will increase the potential for volume discounts also. The concept of outsourcing can be brought into practise to avail cheaper products and raw materials. Like right now 70 % of total suppliers are from UK. It can easily be brought down for cost effective sourcing from countries in Asia and Africa. Another avenue for cost cutting is by bringing down the administrative cost. 5. Change in Food Consumption Pattern Taylor Nelson Sofres (TNS) which is a consumer research agency, has conducted a study to look at the changing patter of food consumption by people especially in UK. It incorporates consumption trends over the last decade. This study can be very helpful for the retailers like M & S to get to know how the influencer and motivators are changing and according they can adopt the suitable strategies. (Source: TNS Worldpanel) According to the above cited study, the health aspect of food is now becoming more important factor for consumers over time. Thus M & S need to make their products acceptable from this view point. Enjoyment of food comes next in the pattern. It is followed by practicality which means ease and speed of preparation along with availability of individual portions. 6. Change Process Now the management of the change process will be discussed so that the proposed changes to be made in M & S should be taken care of. 6.1. Facilitation Facilitating a change process means taking it through four steps of Diagnosing, Planning and Implementing, Evaluation (Dyer, 2004). 6.1.1. Diagnosis This step deals with primary question of what, who and how. 6.1.2. Planning and Implementation This stage of interventions should be conceded collaboratively with all the members of the organization. This will ensure the collective ownership and understanding of change by everyone in the organisation. It should be taken into consideration that the required intervention must be designed in a way to achieve the goals arising from diagnosis (Blake and Mouton (1964)). 6.1.3. Evaluation The evaluation phase should start once the intervention has been implemented. This will help to recognise the desired effect of the intervention. Evaluation during and after the implementation, will help providing M & S, with feedback about the intervention. 6.2. Nature of Change The nature of change to be implemented varies from organisation to organisation and from situation to situation. In this case all the following three kinds of change need to be implemented. They are namely as follows. 6.2.1. Cultural Changes This will include M & S to formulate a clear strategic vision which will display top-management commitment. It has to adopt top down approach. M & S top management need to modify the organizational structure to support the proposed change (Dutton & Duckerich, 1987). At the same time the company will have to develop ethical and legal sensitivity (Millward, 2005). 6.2.2. Self Design Changes Opposed to quick ‘off the shelf’ solutions, the self design changes will transform M & S in order to meet the challenges of competition (Mohrman and Cummings (1989)). This is multi- layered approach. Here M & S will have to continuously resort to designing and implementing change at all levels. It emphasizes the need for self design as. 6.2.3. Knowledge Management and Learning based changes Organizational learning and knowledge management will add up to the ability of M & S to get hold of new knowledge. But for this M & S need to focus on team building along with structural design and employee involvement. It emphasizes on the issues associated with human resources. 7. Critique As a matter of fact every situation which requires change is different from each other. This in turn requires different approaches and methodologies for change management. Though this assignment has discussed the approach to tackle change management in M & S on the basis of proposing models in the literature, yet it is unable to give any concrete guidelines on the proposed change. In absence of ground realities inside the organisation, only a generic set of directions has been provided. Thus it is up to the change initiators to take it into account and be flexible in their approach. Also this assignment cannot present the outlook on the end results of the proposed change. 8. Conclusion The UK based retail giant M & S is reeling under competitive pressure. Thus it needs to adopt certain changes which must be well managed. M & S should be determined to restore its lost reputation of quality, value, service and innovation with its customers. Through the proposed change management, it must create a simpler more focused organisation. It should concentrate more on its core competencies so that it is positioned to achieve faster and in time recovery to grab new prospect both in the UK and abroad. By very nature, these changes will be painful for some of the people. But these changes are in fact very essential for building a stronger and prosperous future for Marks & Spencer. 9. References 1. Blake and Mouton (1964) cited in Millward L. (2005-in press), Understanding Occupational and Organizational Psychology. London: Sage Publications Ltd. 2. Cummings, T.G. & Worley, C.G. (2005). Organization Development and Change (8th ed). Ohio: South-Western. 3. Lewin (1951) cited in Cummings, T.G. & Worley, C.G. (2005). Organization Development and Change (8th ed). Ohio: South-Western. 4. Millward L. (2005-in press), Understanding Occupational and Organizational Psychology. London: Sage Publications Ltd. 5. David, S. (2004): Management Control Systems Theory and C/SCSC; National Estimator, pp. 29-34 6. Dyer, W. (2004): Strategies for Managing Change. Reading, Massachusetts: Addison Wesley Publishing Company, Inc 7. Hiatt, J. (2006): A Model for Change in Business; Government and the Community; Learning Centre Publications; Loveland 8. Hilltop, J. (2002): European Human Resource Management in Transition; Prentice Hall; New York 9. James, H. (2001): Business Process Improvement; the Breakthrough Strategy for Total Quality, Productivity, and Competitiveness; McGraw-Hill Trade 10. Mark M., and Donald M. (2003): Advanced Access: Reducing Waiting and Delays in Organizations. JAMA, pp 1039-1045 11. Maundy, L. (2001): An Introduction to Human to Human Resource Management: Theory and Practice: Macmillan, Palgrave 12. Michael B. (2004): Beyond Bankable Dollars: Establishing a Business: Case for Improving Health Care. The Commonwealth Fund 13. Murray, D. (2004): Changing Ways: A Practical Tool for Implementing Change within Organizations. New York, New York: AMACOM, A Division of American Management Association. 14. Palmer, I and Akin, G. (2006): Managing organizational change; a multiple perspectives approach, McGraw- Hill Irwin 15. Rampton, L. (2003): Human Resource Management. Melbourne press, New York 16. Richard. A, (2000): Terms Of Engagement: Changing The Way We Change Organizations. San Francisco, California: Berrett-Koehler Publishers 17. Rose, S. (2008): Change Management; retrieved from; www.marksandspencer.com; accessed on 16-05-09 18. Thomson, C. and Rampton, L. (2003): Human Resource Management. Melbourne press, New York Read More