Leadership and Change Management in M&S - Case Study Example

?Word Count -2206 excluding references , table and charts. Strategic Management (Marks & Spencer Case Introduction “Brief Summary of the Case” Started as penny bazaars in 1880, the M&S Plc later concentrated on stores, which had simple pricing strategy and its logo treated by customers as a mark of quality. The basic aims of M&S are to offer at a reasonable price, high-quality products with its trade mark “St.Michael”, to compel the suppliers to engage in most efficient and modern production strategies, offering convinient shopping experience to its customers, to simplify its operations thereby enhancing its business efficiency and to develop good relations with its stakeholders namely suppliers, customers, employees and communities in which M&S operate. It is able to source quality products from centralized buying office and later transfers the same to its stores. In each and every store, analogues procedures are being followed and hence, the independence of managers was constrained. In the past, various CEOs concentrated on quality of merchandise, supplier control and layout of stores. During the 11-year tenure of Sir Richard Greenbury as Chairman cum CEO, M&S enjoyed twice the market share as compared to any other retailers in the industry and witnessed the growth successively as they were no major changes to its style of operations or functioning. However, in 1998, M&S strategy met a great disaster as it performance was far below than normal for many successive years. Its lost its major chunk of customer’s base due to its competitors ability to source very competitive merchandises from low-cost nations and there had been cut-throat competition from retailers like Gap, Oasis, Next, Matalam and Asda. Due to poor performance, Sir Richard Greenbury was shown exit doors in 1999. In 2000, Luc Van de Velde appointed himself as Chairman cum CEO, and he earnestly attempted to turnaround the M&S Plc in his short span tenure that prolonged up to 2004. With aim of focusing on UK market, Velde appointed a head for UK retail and segmented the customers of the company employing the store within a store perception. He successfully entered into a joint venture with designer George Davies. In 2003, he introduced the Simply food notion and started to open stand alone food stores in 2003 in UK. Velde era made a turnaround of M&S Plc between 2000 and 2004 but also M&S encountered successive takeover attempts by the Arcadia Group. Another innovation that Luc Van de Velde brought was the introduction loyalty cards which gave the customers reward points that can be used during their future purchases at M&S stores. However, in the year 2004, M&S witnessed a deep decline in their sales, lost major of its market share to its competitors, mainly due to over-emphasis on Per Una. Rose Stuart succeeded Luc Van de Velde in 2004, and he followed a strategy of under promising but excess delivering in terms of targets set. In 2008, Rose was re-designated as Chairman cum CEO when UK was facing utter economic crisis. Since then, the scenery did not improve in 2009 also, Rose and his marketing director were to forego ? 1 million package bonus of M&S shares and in 2010, Rose relinquished his position as chairman and functioned as CEO of the company. Introduce the theory or concept to be used in analysing the assignment This paper tries to explore about competitive strategy on which M&S might accomplish competitive advantage in the market. As per Michael Porter, an organisation could achieve the competitive advantage by adhering to three various generic strategies like focus, overall cost leadership and differentiation. As per Cliff Bowman and Richard D’ Aveni, market-facing generic strategies are having competitive advantages, which is accomplished by offering customers with what they exactly need or want more efficiently and effectively than its competitors. (Cousins & Coskett 2007:275) In UK, M&S was the number-one retailer, but it failed to comprehend or to recognise the transforming social fashions and tastes in the high street. Due to this, its revenues fell down, its share price declined, there were high turnovers of top executives, and the M&S was subject to successive takeover bid. (“Angwin, Cummings and Smith 2011”) State the objectives or aim of the assignment The main objective of this paper is to analyse the sources of the competitive advantages that M&S follows, which is footed upon the strategy clock which enshrines Michael Porter’s kinds of differentiation and spotlighting together with pricing strategy. II. Sources of the competitive advantages of M&S and routes taken using the strategy clock. “The Strategy Clock” Porter’s strategy clock is footed upon three factors – cost leadership, focus – either narrow or wide, low-cost or differentiation. (Strategy Explorers 2012:3). Discuss the concept of a strategy clock and the route taken by the company Porter’s strategy clock is footed upon three factors – cost leaderships, focus – either narrow or wide, low-cost or differentiation. Cost leadership is associated with minimizing costs to such a magnitude that competitors cannot compete with them and the aggregate cost leadership has the advantage of benefiting more market shares by employing their cost benefits by offering lower prices. M & S being the market leader and large-scale operations in UK, it is able to negotiate with the suppliers favorable price right from its merchandises on its shelves to distribution agreements , store leases, etc. Thus, these competitive benefits create positive market domination and to earn better revenues. M &S due to its scale of operation is able to transform the product mix to cater demand and derive advantage form the enhanced sales. Since M&S is a price leader, and its low cost management is facilitating the business to withstand its rank. On the vast range of merchandise, M & S has been able to create the image among the consumers as a one-stop shopping point for merchandise deals. M & S is focusing on minimizing waste, cost-savings prospects and not adding values or frills which clients consider as insignificant to the service or product. Thus, cost leadership in M&S is able to create volume sales opportunities and market share, economies of scale is being achieved. (Thompson & Martin 2010:201). Through differentiation, one can make the customers to feel the difference about their products from that of their competitors. Through ring-fencing (differentiation), a company can differentiate its product from the rest of the market as it may have its own supply and demand schedule and can enjoy monopoly style of revenues. Higher prices can be charged by the company as long as it is able successfully differentiate its products from that of its competitors. As per Faulkner & Bowman (1995), differentiation must always come along with apparent value. Range of Services Offered by Supermarkets in UK Super Markets Frozen Food Fresh Food Organic Food Fair-Trade Products Premium Products Middle Range Products Low Price Products Manufacturer brands Own Label Brands TESCO 8.54% 23.17% 2.44% 0.00% 12.20% 10.98% 29.27% 8.54% 4.88% ASDA 12.05% 18.07% 3.61% 3.61% 8.43% 9.64% 36.14% 6.02% 2.41% MORRISONS 14.29% 14.29% 0.00% 0.00% 17.86% 3.57% 42.88% 7.14% 0.00% J SAINSBURY 9.38% 28.13% 9.38% 3.13% 9.38% 9.38% 25.00% 3.13% 3.13% Marks & Spencer 11.76% 17.65% 0.00% 5.88% 23.33% 11.76% 29.41% 0.00% 0.00% (Obitz 2009:40). M & S is able to differentiate from its competitors by offering high premium products as compared to its competitors as depicted in the above chart. Supermarkets are endeavoring to create a brand identify for their own label products, particularly to fascinate customers to their stores. But, M&S is not engaged in either in own branded products or in manufactured products as compared to their competitors. If they concentrate on these areas, they can be better placed with their competitors and can survive when there is economic recession or a slump in the market. Further, M&S employ a mixture of services, price and quality to usher differentials to differentiate them from their competitors. (Obitz 2009:40). Through focusing , a business can target either just one chosen group or a wide range of target groups footed upon their income ,age, location, gender ,interests, lifestyles , etc. For instance, wide scope or shotgun approach is the main TV channels like ITV or BBC in UK where it targets wide group of audience and MTV, where it concentrates on teenage music lovers only. M & S focus its attention on its core products namely clothing and food products and it is showing a concentrated focus on generic strategy on a relatively narrow segment namely a specific group of buyers (executives), high-end market segment, freshness of its merchandises .Further, M & S give more focus on its stores interiors so as to give more convenience when shopping is made at its stores. M & S is giving more focus on customer channels in its multi-channel retailing. (Thompson & Baden-Fuller 2010:171). Indentify the competences of M&S that gave competitive advantage Rose Stuart, during his era, evolved the 11-point strategic plan to accomplish flip-flop which spotlight on five core values endeavored to get back the core clients of M&S, mainly through value, quality, service and trust. He introduced various reforms namely calling back Per Una Due, acquisition of Per Una from Davies, dropping more than 500 food items, to minimise overstocking through sourcing efficiency and increasing supply chain, minimizing unwanted and waste administration expense, enhancing the core service, aiming good returns to investors, shifting to on the outskirt town retail stores, redundancy and restructuring, transforming mentality of employees and elevating or shutting down stores. Due to Rose’s efforts, M&S is once again placed well to perform well in the falling market. III. Types of Changes Employed by M&S Discuss what is change and change management The change phase commences with what and why requires to change and prolongs right through to the implementation and execution of change. The core objective of change is to fine tune and bring into line the business to new realism that is constantly presenting and budding themselves. Failing to acknowledge new realities or initiating change efforts footed upon a phony understanding or realizing the emerging realities, is an indicator of poor business leadership and certainly has a drastic impact on the future of the business. (Beerel 2009: XVI). Thus, Sir Richard Greenbury failure to understand these changes in 1999 made him to quit the M&S as Greenbury failed to adopt the competitor’s strategy of sourcing low cost merchandises from nations that have lesser cost. Greenbury did not make any attempts to prevent the switching of loyalty of its customers, especially in womenswear section to its competitors. Greenbury had not taken efforts to adopt these changes in the M&S immediately and hence, M & S had to lose its market share to its competitors. “Discuss the types of change” As per Johnson and Scholes (1999), change can be divided into two categories namely incremental change and transformational change. The strategic development in business is being carried out through incremental change with the sporadic requirement for more transformational change which normally in retort to trigger or pressures in the external environment. An incremental change is one, which is footed upon the organisation’s talents, benefits and routines and is hence more likely to gain momentum. Transformational change is tailored in tune with the changes in the merchandise market in which business is operating. (Knowledge & Simms 2005:99). Critically discuss what type of change the company adopted With aim of focusing on UK market, Velde appointed a head for UK retail and segmented the customers of the company employing the store within a store perception. In M & S, Velde successfully entered into a joint venture with designer George Davies into the M&S Plc. In 2003, he introduced the Simply food notion and started to open stand alone food stores in 2003 in UK. Velde era made a turnaround of M&S Plc between 2000 and 2004. Another innovation that Luc Van de Velde brought was the introduction loyalty cards which gave the customers reward points that can be used during their future purchases at M&S stores. (Robarts 2004). Rose Stuart, during his era, evolved the 11-point strategic plan to accomplish flip-flop which spotlight on five core values endeavored to get back the core clients of M&S, mainly through value, quality, service and trust. (Finch 2010). IV – “Conclusion” M & S owns a number of recognisable strategic resources, which have been influential in catering customer’s key success elements and hence, offering long-run returns to its shareholders, and they include the wide ambit of value –for money, its own products, convinient location and high-class interiors of its stores, it has irrefutable reputation and image, it has well trained employees with a commitment to serve its customer and well planned supply-chain management systems. It is to be observed that the basic values or principles on which the M & S business has grown and prospered from the basic values or principles on which the M & S business has grown and prospered, stayed without any changes when there have been and prolong to be, strategic changes introduced in the last few years. M & S now focus on high-quality products with good value for money, good relations with all stakeholders namely customers, employees, communities and suppliers. It is now focusing on simple operations with convenience and comfortable stores. (Thompson & Martin 2010:17). According to me, various CEO’s in M & S including Greenbury, Velde & Rose gave importance to cost leadership, differentiation and focusing as emphasized by Porter and also quickly adapted to changes to put the M&S on right track for its effective performance. List of References Angwin D, Cummings S & Smith C. (2011). Cases. New Delhi: John Wiley & Sons. Beerel, A. (2009). Leadership and Change Management. New York: SAGE. Cousins, J & Coskett, D. (2007). Management, 2nd Edition. New Delhi: Pearson Education India. Finch. (2010). Sir Stuart Rose Heads for the Big Business Checkout. [online] available from < http://www.guardian.co.uk/business/2010/may/30/stuart-rose-marks-spencer-farewell> [accessed 29 December 2012] Knowledge S & Simms, H. (2005).Organisational Behavior and Change Management. New Delhi: Select Knowledge Limited. Obitz, C. (2009). Supermarket: Differentiation in the UK: A Theoretical and Empirical Investigation. Robarts, G. (2004). Whatever Happened to ‘Lucky Luc’? [online] available from [accessed 29 December 2012] Strategy Explorers. (2012). Do You have a Competitive Strategy? [online] available from < http://www.strategyexplorers.com/whitepapers/Do-you-have-a-competitive-strategy.pdf> [accessed 29 December 2012] Thompson, J L & Martin, F. (2010). Strategic Management: Awareness and Change. New York: Cengage Learning. Thomson, N & Badden-Fuller C. (2010). Basic Strategy in Context European Text and Cases. London: John Wiley and Sons. Read More