Strategic Management for Marks and Spencer Plc - Essay Example

Author Name: Module/Course: Instructor: Date: Strategic management for Marks and Spencer plc Executive Summary The global business environment currently faces challenges resulting from globalization. Competition pressures form the order of the day in the present enterprises, both in domestic as well as international markets. To counter such problems, strategic management strategies have been initiated by most businesses, however, the theories, models and conceptual frameworks designed earlier in regard to consumer behavior and customer satisfaction seem not to be working in the right direction, this is due to dramatic twists in consumer attitudes that comes with the current high tech global market environment. Food, clothing and apparel chain stores currently are rushing en masse to gain competitive advantage via online presence. The stores have developed closer relationships with customers through web experiences (Taylor Continuity Strategy the Global View). Introduction In today’s context, business scenario is dynamic and characterized by limited time periods, niche opportunities and presence of ever increasing risks. This requires precise decision making strategies, which if not correctly implemented would run firm’s costs skyrocketing and eventual collapses. Due care should therefore be exercised to cub the speed of businesses in the current high octane ventures that are metamorphosing constantly towards global empires. As a consequence, greater responsibility is imposed to senior management in terms of strategic management practices. This scenario calls for Marks and Spencer management to exercise strong, good and logic driven tools in corporate financial management and strategic marketing of the company’s products (Taylor Continuity Strategy the Global View). Organizational strategic management is one of the key areas as enterprises strive to compound issues brought about by globalization where, virtual teams and social networks have replaced boardroom meetings, while knowledge based technologies are replacing infrastructure at lightening speed. Likewise, self-leadership and values are currently replacing control and command chain in management practices. For these reasons, organizations currently seek for employees who are competent in teamwork and emotional intelligence, least consideration is leveled on technical smartness alone. Thus globalization and organizational diversity has brought abundant opportunities, yet it has also bestowed immense challenges on organization administrators (Taylor Continuity Strategy the Global View). As from 1990’s Marks and Spencer engaged in market diversification techniques to gain advantage in the competition through decision making. However, strategic management strategies were necessary to introduce key factors into theory and Financial planning applications. This paper mainly analyses strategies undertaken by Marks and Spencer Plc between 2006 and 2009 in its management of business environment to enhance its capital output, competitive risks, global distribution and production (Gong and Zhang). Company Overview Marks and Spencer has been business for over 125 years, current UK’s leading retailer of quality, home products, food and clothing contrasts with the penny Bazaar when it commenced. Michael Marks and Tom Spencer created a joint venture in 1894 into retail business, with the first shop opening up in West Yorkshire, Leeds’ Cross Arcade in 1904. The Current group chairman and CEO Stuart Rose, was appointed in 2004 during the Groups, 120th anniversary. Marks and Spencer, boasts over 21 million customers in UK, and 296 stores in 40 territorial international market segment. Its business operations engages a team of 78,000 personnel with over 2,000 suppliers to ensure continuity in supply chain, quality service, innovative and trust products (Marks and Spencer). By the mid of first quarter of 2010, the firms Market share price recorded positive strength, gaining 6.30 points to stand at 360.00p. Diversified business portfolio on international market consists of owned and franchise stores with projections that by 2010/211 the international market segment will be able to contribute 15 to 20% of the Group revenues (Marks and Spencer). The group is currently running 668 outlet stores in UK, which have been modified into contemporary and bright destinations offering a wide range of hospitality services. Marks and Spencer is currently, guided by an intergrading Plan A initiated in January 2007 to run100 rigorous environmental and social targets in view to improve its business outlook by 2012 (Marks and Spencer, 2009). According to financial summary for Marks and Spencer, total revenue between March 2008 and March 2009 grew by a margin of + 0.4% from 9,022.0 million pounds to 9,062.1 million pounds. Contribution to this growth margin by the UK market was – 1.7%, while International market contributed +25% (see Appendix 6) (Marks and Spencer). Environment Analysis Global competition in Food and Apparel sector centers on two main paradigms, research on competitor relationships and domination theory and customer behavior. The competitive paradigm affirms an organizations competitive advantage strategy which depends on the structure of industry environment in terms of unfolding core competences or operational structure. While a cooperative paradigm places emphasis on collaborative advantage strategy by focusing on inter-organizational cooperative agreements with other industry players in order to built global networks with the aim of achieving mutual benefits. The two paradigms are combined are known as coopetitive strategy (Bradley). The coopetitive strategies among Food and Apparel industry players encompasses survey on how organizations competitive advantage is derived form specific assets in the firm, market know how and product positioning as well as interaction through complimentary assets through formation of alliances and collaborations with suppliers, partners, competitors, and customers (M’Chirgui). In addition, the Food and Apparel industry is characterized by both vertical and horizontal interactions, the former being relationships of buyer-seller while the later is competition among Food and Apparel providers. Alternatively, this interaction assumes two forms, network relationships and dyadic or a simple tow-enterprise interaction. Therefore, the Food and Apparel industry is likened to a virtual firm composed of several Business Partners using Information Technology to Link/Share Assets, People, Costs, Ideas, and Resources for the purpose of producing a service or product. Ultimately, the firms engage in opportunity-Exploitation and adaptations aimed at provision of world-class excellence in their jurisdiction areas through application of technologies and competencies (Chen). Successful of launching Marks and Spencer products on the international scene therefore requires critical focus on development of marketing and management policies and strategies to face real international market environment. This is because, growth of global economy leads to marketing dynamisms brought by different cultures meeting on the global market. Therefore, international marketing analysis of firms venturing into this complex arena seeks to describe relevant concepts and addressing global issues encountered by international business executives (Matthias et al.). However, the question is how to estimate the sales potential in given market segments or countries. Estimation of sales potential is achieved through screening of the total size of the current market in that country. The sales rates may be determined from trade and production data, and consumer surveys. However, the econometric model is employed to measure sales indirectly through relation of causative factors since it is cheaper than the survey method (see Appendix 2) (Armstrong 190-198). Marks and Spencer market positioning strategies The poor performance of Marks and Spencer before 2002 could be labeled on the firms interesting budgetary decisions where the first causality in scaling down its budgets targeted communications and marketing departments. This measure drastically affected the firms’ public relations due to lack of public image in print or electronic media. (Formica). To counter the current challenges, most Marks and Spencer has shifted to Smart Marketing strategies. Smart marketing is not just a product of an idea but originates from analysis of the market and design of a marketing plan (Digmind). Previously, the firm relied on traditional, Consumer Insight practices to analyze consumer buying patterns through assumptions that they are driven by opinions, actions, attitude and culture. Marks and Spencer management discovered, that current consumer behaviour situation is unique to traditional marketing insights as a result of the changing trends in buyer behavior, where more consumers turn to online shopping. Therefore the firm has implemented online presence through website marketing strategies (Marks and Spencer). Marketing Mix Marketing mix refers to a set of standard marketing variables that any firm implements for purposes of attaining desirable solution on targeted market penetration. Marketing mix is characterized by 4Ps which are Product, Price, Place and promotion (see Appendix 3). Positioning of products or services in Clothing and apparel sector is currently a complex process and requires skillful analysis of competitors, target market, product quality, price, communication, and distribution (John and Michael).This calls for essential skills like creativity and media strategies. To position a product is in essence the selling aspect, thus Marks and Spencer applied skillful selling concept to consumers through motivation by instilling an image or tangible benefit to the minds of consumers. Advertisement is a major product positioning strategy. The ad communicative message targets, brand leadership, innovation, head-on, product differentiation and lifestyle see Appendix 4).. However, this strategy is always challenged by presence of competitors and it needs to keep changing by repositioning of the products as per consumers attitude change or direct competitor variations (Tuckwell). Marks and Spencer top managers have currently, mastered the industry drivers needed to propel the firms’ competitive advantage on the international market. Therefore, M&S initiated sound development of marketing and management policies and strategies to face real international market environment challenges, Luc Vandevelde, the Chairman and Chief Executive of Marks & Spencer recognized this challenges, in his 2001 AGM speech he outlined strategic management policies investments in technology, employees, and exploration of new geographic locations as long term business measures (Matthias et al.). The objective was to change the organizations values in order to attract and maintain exemplary performance workers. This strategy will match with the needs of growth of the global economy which requires employees with the right personalities to handle marketing dynamisms brought by different cultures meeting on the global market. Business plan strategies factoring on aspects of international marketing analysis of the firm’s ventures into the complex global arena must address the relevant concepts and global issues encountered by international business executives (Matthias et al). Despite the 2008/09 economic turmoil and world trade imbalances, 2010 is actually the right time for Marks and Spencer to draw a closer relationship with members of the public for success of its business endeavors after most Nations including UK government injected economic stimulus packages to revive individual country economies. Marks and Spencer have initiated the framework for selecting and evaluating strategies in product and market development which involves 1. Strategic analysis to identify the organizations circumstances, 2. Formulation of strategic options to identify possibilities for development, 3 assessment of suitability to establish development rationale and screening options, 4 determination of suitability and acceptability of the strategies based on outcome performance such as returns on investment, risks and stakeholder reactions, 5 lay out feasibility studies of the market and product through market outlook, 6 finally, establish selection of strategies by planning, enforcing, learning and commanding (Marks and Spencer). Joint venture/acquisition or franchise is the order of the day for businesses engaged in Supply chain business. Marks and Spencer is no exception to this rule, in fact the company is in itself the product of joint venture between Michael Marks and Tom Spencer. Therefore, acquisition and integration are potential techniques to maintain supply chain and customer satisfaction. In addition the processes increases awareness to features of subsidiaries and affiliates which the helps in determination of a company’s potency. However, the is a demerit of increased costs and lost time due to training needs and retention which are necessary for success of subsidiary/franchise firms (What is the Strategy). M&S Objectives and a strategic development plan In laying foundation targeting business prosperity by 2014, Marks and Spencer strategic management team have considered acceptability and suitability of the management strategies critically, for example by conducting the firms lifecycle analyses, product positioning, value chain analysis, business profiling, and portfolio analyses to balance and strengthen the activities that will lead to viable financial outcome. The framework is encrypted in market development concepts summarized in the following Table (What is the Strategy). Concept To understand The strategy addresses PESTEL The growth or declining dynamics of the industry structure Convergence issues in the industry Scenarios Business risks or uncertainty Provision of contingency plans 5-forces Competitive forces in the sector Identification of market entry barriers Strategic groups Mobility barriers, groups, and strategic spaces attractiveness Product repositioning Core competence Establishment of industry threshold standards on the basis of competitive advantage Elimination of weaknesses and exploitation of strengths Value chain Identification of opportunities for vertical outsourcing and integration Seek options in integration such as formation of mergers or alliances (joint venture or franchise) Stakeholders Acceptability to stakeholders through interest and power Impacts on stakeholders in terms of interest or managing power Cultural web The actual acceptability, effect on the feasibility Management of potential threats from cultural clash in the alliance/merger business Table1.Shows current strategic management practices in Marks and Spencer Marks and Spencer’s current achievements and successful strategic marketing is attributed to the inability for its products to be replicated, distinguished and unique key performance indicators, brand power, deep integration in World and UK culture and the slogan’s and Marks and Spencer trademark which serves as the company’s fingerprints (What is the Strategy). This paper recommends as marketing strategies which ought to address key needs and taste of consumers to gain appreciation and appeal to the ads. In addition, the company needs improvement in its public relations and corporate affairs, there has been cases of public displeasure and outrage due to labour and manufacturing practices such as improvement and streamlining of wages across its workforce. Key purposes, objectives this paper recommends for business recovery and sustainability in Marks and Spencer can be outlined as follows: Marks and Spencer management structure needs to be reviewed in terms of setting desired outcomes for groups, individuals and the whole organization. Within these guidelines, the objectives will open up avenues for environmental business orientation, linkage and coordination of decision making, and drawing control to strategic actions (Anderson & Coughlan 71-82). Secondly, the organization purpose statement such as mission should have common characteristics with central, overriding and visionary slogan geared towards staff motivation. This will generate working spirit in Marks and Spencer by opening up clear strategic objectives for every staff member in terms of financial expectations derived from the mission statement (see Appendix 1). Next, the set objectives in the firm should be able to meet required specifications for example by relating activities in the company to results (Anderson & Coughlan 71-82). Establishment of measures to quantify the results is necessary in achieving feasible objectives. Feasibility of the set objectives must as well have time scales and deadlines to ensure adherence to individual responsibility in terms of achievements, however, they should not be challenging instead achievable through the goal-strategy system. Likewise the company perspectives should have a balanced scorecard which meets its long term economic value (Bradley). These perspectives include financial, customer, internal, innovation, and learning. Within this domain Mark and Spencer should strive to generate fresh business markets through innovation, workers motivation, cost connected and capacity effectiveness, customer satisfaction, and improved returns on capital as well as cash flow (see Appendix 5) (Anderson & Coughlan 71-82). Conclusion Marks and Spencer is a profit-minded enterprise dedicated to delivery of quality products, engage in environmental protection, and ensures workers satisfaction. This paper analyzed the competitive environment characterized by internal and external environment in which the firm operates. There is no doubt that the company is striving to maintain its dedication to serve a wide clientele through designing and sustaining relationships with suppliers. Current marks and Spencer management can simply refer to the existing strategic management policies being used in running its operations as a long term investment. Hence, with effective implementation of the fore-discussed concepts Marks and Spencer continued commitment to best practices and improved standards is a major threat to competitors (Bradley). Works Cited Armstrong, J S. “An Application of Econometric Models to International.” Marketing Journal of Marketing Research 7 (1970):190-198. Anderson E, and AT, Coughlan. “International Market Entry and Expansion via Independent or Integrated Channels of Distribution.” Journal of Marketing 51 (1987): 71-82. Bradley, F. International marketing strategy. 2nd Ed. Prentice Hall, London; New York. 1995. Chen, J. VeriFone: The Transaction Automation Company. School of Business, Gonzaga University. 1997.12 March 2010 Digmind. Consumer Insight: How to Use Web and Social Media to Get Closer to Your Customer. 2009. 12 March 2010 . Formica, P. Market creation in the Dotcom economy. n.d.12 March 2010 Gong L, and Zhang, M. “Study on the Methods and Applications of Strategic Management Accounting.” International Journal of Business and Management. 2007. 12 March 2010 John CM, and Michael, SM. Consumer Behavior: Michael S. Minor Chapter 2: Consumer Behavior & the Marketing Manager. 2001. 12 March 2010 Marks and Spencer. Annual report and financial statements 2009 .2009. 12 March 2010 Matthias, Thorsten, and Helge, W. “A Decision-Analytic Approach to Blue-Ocean Strategy Development.” International Council for Small Business World Conference. 2008. 12 March 2010 M’Chirgui, Z. The economics of Smart Card industry: Towards coopetitive strategies, France. 2004. 12 March 2010 Taylor, M. Continuity Strategy the Global View. 12 March 2010 Tuckwell, Keith. “Chapter 3: Consumer Behavior Concepts and Target Marketing.” Canadian Advertising in Action, Canada: Pearson Education. 2009. 12 March 2010 What is the Strategy. Strategic management Lecture 8 Strategic decision and strategic goals.n.d. 12 March 2010 Appendices Appendix 1. Strategic management elements (Source: What is the Strategy (n.d.). Strategic management Lecture 8 Strategic decision and strategic goals). Appendix 2. Shows strategic process and the hierarchy of objectives to be implemented (Source: What is the Strategy (n.d.). Strategic management Lecture 8 Strategic decision and strategic goals). Appendix 3 Market penetration strategies (Ansoff matrix) Appendix 4. Marketing Mix model: Strategic product position management Appendix 5 Strategic Objectives Appendix 6. Marks & Spencer Financial Performance Year ended Turnover (£ M) Profit before tax (£ M) Net profit (£ M) Basic eps (p) 1 April 2006 7,797.70 745.7 520.6 31.4 2 April 2005 7,490.50 505.1 355 29.1 3 April 2004 8,301.50 781.6 552.3 24.2 29 March 2003 8,019.10 677.5 480.5 20.7 30 March 2002 8,135.40 335.9 153 5.4 31 March 2001 8,075.70 145.5 2.8 0 1 April 2000 8,195.50 417.5 258.7 9 31 March 1999 8,224.00 546.1 372.1 13 31 March 1998 8,243.30 1,155.00 815.9 28.6 31 March 1997 7,841.90 1,102.10 746.6 26.7 31March 1996 7,233.70 965.8 652.6 455.8 Read More