Marks and Spencer - Strategic Dimensions of a Renowned Retailer - Coursework Example

Marks and Spencer Online Store (M&S.com) Contents Contents 2 Executive Summary 3 2. Introduction 3 3. Company Identification 4 4. Balanced Scorecard 5 5. Strategy Map 11 6. Firm Recommendations 14 7. Critically Discuss and Evaluate 16 8. References 18 9. Appendix 19 Appendix 1 19 1. Executive Summary This study has outlined strategic dimensions of a renowned retailer, Marks and Spencer. There are two strategic models incorporated within this study like balance score card and strategy map. Balanced score card denotes strategic position of a company from four different perspectives. Organizational perspective indicates appropriate measures to be undertaken so as to ensure long term sustainability. Process perspective evaluates various loopholes which need to be eradicated to address customer needs. Customer perspective is all about image building in the market place. Financial perspective is associated with financial outcomes. All these perspectives are collaborated to facilitate long term growth strategy. Marks and Spencer online store has further scope for development. The company needs to be inclined towards quality service, employee productivity and proper allocation of funds. Strategy map indicates that Marks and Spencer should reflect upon value added services so as to retain wide base of loyal customers for longer time period. 2. Introduction This study would be focused on balanced scorecard and strategy map analysis of Marks and Spencer. Marks and Spencer is a multinational retailer which has its headquarters based in London. This organization specializes in home products, luxury food products and clothing. The company was incorporated in 1884 by Thomas Spencer and Michael Marks. Marks and Spencer was initially inclined towards setting up of retail stores but later online platform was also designed. E-commerce has gained significance in recent years and it enables a firm to stay competitive in the market place. There are wide array of online stores that offer fashionable clothes, accessories, shoes, etc. Marks and Spencer possesses different segments in its online store. It can be stated that online store is designed by many fashion retailers. The core value of this firm is its high quality and brand image. In all its product categories, superior quality level is retained. Marks and Spencer is a multi-channel, international retailer having its business operations expanded across the globe. High competitiveness can be witnessed in the retail sector. Online business strategy is adopted by many firms so as to avoid the issue of intense rivalry. This study would highlight two important strategic tools such as strategy map and balanced scorecard. Balanced scorecard will be framed on the basis of financial, customer, internal business process and innovation or learning perspective. Strategy map is formulated based on the components identified in a balanced scorecard. There shall be certain recommendations made to the board of directors which would be dependent on chosen strategic tools. Various business perspectives would be analyzed in this study in order to determine current business condition. 3. Company Identification Vision The vision statement of an organization reflects its future goal or long-term objective. Marks & Spencer over the years have delivered exceptional product quality to all its customers. Its vision statement is – “to be an inspirational and unique retail firm in its operating regions”. Mission The mission of this retail organization is to exceed customer’s expectations in context of value, customer service, product range and quality. This organization is not only focused on enhancing customer service but even gives equal importance to employees. The mission of the company also encompasses rewarding staff members adequately so that they contribute towards organizational productivity. Its mission even comprises of providing satisfactory returns to its shareholders. Strategies The business strategies of Marks and Spencer are aligned with innovation and quality. Technology has always been key success driver for this company. The firm has opted for diversification strategy since its incorporation. New products are offered by the company for new geographical segments. Forward thinking products are developed by the organization so as to satisfy needs of target audience. Innovative products delivered by Marks and Spencer encompass body sensor hosiery, secret support fabrics, non-iron cotton and machine washable clothes. Food stores were also opened by the firm to attract wide base of customers. 4. Balanced Scorecard A framework of balanced scorecard is provided in Appendix 1. 4.1 Perspective 1: Innovation and Learning (table 1) Marks & Spencer innovation and learning All learning and innovation goals are for the firm Goal KPI Target Initiative/action Organizational development Long term development Rapid growth Sustained growth of firm Building a team for future Culture Employee engagement Collaboration Reduced team conflicts Inter-departmental coordination Learning and development programs Involvement of employees in decision making process Management Strategic decision making Proactive measures Ability to manage competitive conditions Meetings organized in regular time interval Performance Reward system Customer relationship management Improved percentage of customer loyalty Career development plans for top performers Performance based pay system As per table 1, learning and innovation perspective is basically designed so as to understand current business scenario and future targets of the company in context of innovation or organizational development. Marks and Spencer online store is aiming towards retaining best talent in the system so that customer satisfaction level can be improved. KPIs of this perspective mainly highlight long term organizational development objectives. 4.2 Perspective 2: Internal Business Processes (table 2) Marks & Spencer internal business perspective All internal business goals are for the firm Goal KPI Target Initiative or actions Supply chain operations Effective supply chain or distribution Global distribution Expansion of supplier base in foreign markets Technology based logistic system Presence of suppliers in international markets Centralized distribution process CSR activities Community development Innovative practices Decreased level of environmental degradation Usage of renewable raw materials Working with charities Retention Employee relations Employee turnover rate Employee engagement and performance oriented work culture Job rotation facilities Career growth plans for team members Growth Customer management and product safety Customer feedback Feedback on customer’s shopping experience Customer loyalty programs Table 2 clearly indicates the internal business process perspectives. The company manages global business operations. Supply chain forms an essential component in the internal business procedure. This is simply because it is associated with timely delivery of goods or services to end customers. However other KPIs are centred towards enhancing satisfaction levels of customers and retaining employees. 4.3 Perspective 3: Customer (table 3) Marks & Spencer customer perspective All customer goals are for the firm Goal KPI Target Initiative or actions Quality Product quality Brand awareness Build up a strong brand image Marketing tools – promotional strategies Customer service Superior quality Online service Gaining customer confidence towards online portal Highlighting customer feedback to gain confidence Loyalty Loyal customers globally International market performance Customer retention for longer period of time Discounts on regular purchase Loyalty cards Prices Value for money Revenue margins Setting competitive price range Sales forecasting High price constituted by innovative product range Table 3 reflects upon the third perspective of balance scorecard – customer. It is an important perspective since it influences sales and revenue of a company. To be more precise Marks & Spencer has always been an innovative and customer oriented firm. Online platform gives immense opportunity to the company in terms of accessing larger base of customers. 4.4 Perspective 4: Financial (table 4) Marks & Spencer financial perspective All financial goals are for the firm Goal KPI Target Initiative or actions Cash flow Generating adequate revenue Focusing on the financial ratios Continuous improvement of the gross margin Decreasing the capital expenditure Improving the performance of the business Increasing the gross profit margin by more than 31.5% Decreasing the capital expenditure of 450 million pound The cash conversion cycle is decreased to almost 6 days Shareholders Return on shareholders’ investment Increase in sales Increasing the sales by more than 5% in the Financial year 2015-2016. Proper utilization of the asset of the company. Profitability Increasing return from the capital employed Expanding its business in the international market performance Expanding the business by increasing the revenue generated from the international market by 27% in the next three years (Marks & Spencer’s, 2015). Increasing the market share from 3.9 % to 4.9% Increase in revenue by more than 10% Sales growth Value of sales Designing new websites Developing the growth rate by more than 7% Improving the online sales service by 22.8% 5. Strategy Map - Definition A strategy map is a diagrammatic representation of goals that is pursued by management team or an organization. Each of the bands in the strategy map represents a particular perspective (Cole, 2003). Strategy map helps in communicating strategy and adopting suitable measures to evaluate progress of a firm while strategic implementation. - Key Objective The key objective of a strategy map is to determine organizational efforts in context of implementing a particular strategy. This map classifies a link between various strategic perspectives. It is utilized as a strategy development tool. Strategic objectives can be outlined through this map which could be later used by managers. Strategy map helps in recommending future strategies for a firm. - Business Focus Marks & Spencer is one of the renowned companies in the retail segment. The inauguration of an online store was to acquire maximum percentage of foreign markets. The business firm has always focused on innovation, product diversification, customer loyalty and quality. - Business organization and strategy Strategy map given above clearly highlights the four perspectives of balance scorecard. The business strategies formulated by the company are dependent on internal business process and customer centric views (Mcfarlin and Sweeney, 2008). It can be stated that the internal organizational process revolves around proper management of employees. This signifies accomplishment of goals or objectives. The company follows a centralized decision making approach whereby employees are involved in the decision making process in certain circumstance. Internal business process perspective states that the firm is inclined towards innovation, proper customer relationship management and CSR activities (Barney, 2006). The future goal of the firm is to expand on its base of global customers. Online platform is often not trusted by majority customers. However in current scenario focus has shifted towards such platform due to shopping at convenience. Marks and Spencer online store has witnessed a growth in customer base but still there is scope for improvement. Competitive position can be achieved by a company only through price and quality. Functionality of the business organization is governed through retention of best talent within the organizational system. The financial perspective of the concerned company is considered by taking into consideration the sales growth, cash flow, shareholders and the profitability. The KPI focuses on improving the revenue generating capacity of the company by expanding its business in the international market. The company experiences a slow sales growth rate; therefore it is adopting necessary measures for increasing its sales growth by the next financial year. The company is engaged in online sales therefore it is emphasized on introducing and designing new websites for attracting its customers. The concerned company is likely to face competition on the verge of expanding its market in the international market. Therefore the company is focusing on implementing various competitive strategies for gaining competitive advantages over others. The company in order to promote its sales focused on providing more importance for improving its online sales. The new website will induce more customers to shop online (Kaplan and Norton, 2006). 6. Firm Recommendations According to strategy map, there are wide array of perspectives which should be taken into consideration by the organization. Firstly, learning and innovation perspective highlights key targets of the company. Marks and Spencer operates in an intensely competitive market segment. Learning organization is the one that can survive in an extremely competitive business scenario. It is recommended that the company should focus on learning and development programs. Experiential learning would be most appropriate mechanism in order to develop a team for the future. Team members shall learn from their job experience and develop necessary expertise as and when required. Performance based work culture needs to be standardized for this online store. This will contribute towards skill development in employees and in turn improve upon quality of customer service. The second perspective as per strategy map was internal business process. Internal process mainly relates to supply chain operations. Logistics and distribution is a vital component since it indicates overall effectiveness of an operational procedure. Technology based logistic operations shall be helpful for the company in terms of managing global operations. Some automated codes can be generated that can be used to easily access ordered products. This would save time and improve upon overall efficiency level. Online platform decreases productivity level of supply chain operations (Lasserre, 2012). Customer loyalty can be facilitated through offering bonus points to customers. This will initiate further purchase and help in retaining customers. CSR approach can incorporate spreading awareness about usage of renewable material in business process. The company can also work in collaboration with external communities so as to contribute towards social responsibility approach. Customer perspective is another element of strategy map. Every business organization develops strategies to address customer needs and wants. Online store is an innovative platform which increases convenience shopping of customers. It is highly recommended that the company should focus on competitive pricing strategy. Value addition is a necessary factor when it comes to retail business. Customer service needs to contain that value addition aspect. Service delivery is recommended to be prompt in case of online shopping. Customers often do not rely on online platform due to security issues. However customer feedback can be acquired during every business transaction in order to make customers feel valued. Customer satisfaction is dependent on importance given by an organization before and after purchase. Considering the financial perspective of the concerned company it is observed that the company faced problem in increasing its revenue in the recent years. The market share of the company decreased from 4.9% to 3.9%; therefore it is required to reduce the cost in order to improve its profitability position. The gross profit margin which decreased in the previous year is expected to increase in the coming years improve the financial health of the business. The reduction in the capital expenditure will facilitate in increasing the cash flow position and profitability of the company. The decrease in sales can be improved by increasing the level of convenience of the customer in shopping online. The quick and prompt delivery of the products to the customers will increase the customer loyalty and will attract and prompt more customers to shop through online from the concerned company. The company is required to focus on increasing its cash from its international business. 7. Critically Discuss and Evaluate Marks and Spencer in the initially years could acquire low revenue margins. The company expanded its operations into profitable markets. Market opportunity was explored by the company to a great extent. Innovation has always been a driving force for Marks and Spencer. Setting up of an online store was an innovative strategy of the company. There is still scope for further improvement. Customer perspective needs to be focused on by the company. The strategy map outlines four different perspectives. Each of the perspective should be strongly correlated so as to deliver desirable outcomes. Customer service is often avoided by an organization in midst of surviving in a competitive business environment. This aspect is the most crucial factor. Retail industry is a highly competitive segment. There are wide array of companies who are offering quality products at least price range. In such scenario it becomes difficult to retain market position. Product quality and price are two important factors that need to be taken into consideration by Marks and Spencer. Competitive prices should be delivered by the firm for its diversified product range. Online platform enables customers to compare products and their characteristics, before undertaking a purchase decision. Hence it is an alarming issue for Marks and Spencer. Prices of its products need to be low enough to attract wide base of customers. International markets are accessed by the firm through this online retail store (Simerson, 2011). On the contrary, extremely low price range would change customer perception towards the brand. Customers might feel that the company has compromised with its product quality level so as to offer low prices. The focus of the company needs to be on target audience and their respective affordability range. Marketing strategies of the firm should be inclined towards key offerings and their associated benefits. Sales promotion activities are prevalent in the retail stores of Marks and Spencer. These activities should be even incorporated in the online store concept. Promotional discounts or offers might help in sustaining brand position. Loyalty schemes are not witnessed in online stores. This is because it becomes difficult to communicate with customers. On the other hand, it can be a differentiation strategy for Marks and Spencer. Loyalty card holders shall be provided with special discounts in certain festivals or on reaching bonus purchase points. Apart from customer centric approaches, it is also recommended that the firm should reflect upon its supply chain operations. The only way to survive in the competitive market place is to reduce lead time. There are strong rivals in e-commerce platform. Hence major aim of the firm along with customer relationship has to be technology based operations. Utilization of advanced technology will tend to decrease lead time between product being ordered and delivered to end customer. This approach would require high investments. Revenue margins of the online store are not satisfactory and have to be evaluated firstly before investing into technical equipments. A well maintained supplier base globally would decrease operational redundancies. Higher margins also can be avoided if long term relationship is developed with suppliers. 8. References Barney, J.B., 2006. Looking inside for competitive advantage. Academy of Management Executive, 23(2), pp. 197-245. Cole, G.A., 2003. Strategic management. Singapore: Cengage Learning EMEA. Kaplan, R.S. and Norton, D.P., 2006. Alignment: how to apply the balance scorecard to corporate strategy. Cambridge, Mass: Harvard Business School Press. Lasserre, P., 2012. Global strategic management. Singapore: Palgrave Macmillan. Marks & Spencer’s, 2015. Annual Report and financial statements. [Online] Available at: [Accessed 19th June 2015]. Mcfarlin, D. B. and Sweeney, P. D., 2008. International management. New Delhi: Dreamtech Press. Simerson, B.K., 2011. Strategic planning: a practical guide to strategy formulation and execution. USA: ABC-CLIO. 9. Appendix Appendix 1 Read More