Business Management - Marks and spencer plc - Essay Example

Topic Pestle Analysis We will examine Marks & Spencer plc and their possible use of Pestle analysis in their business decisions. We will in particular look at the environmental and technological factors. Marks & Spencer’s success is subjective by factors operating in its internal and external environment; by adopting strategies to manipulate these factors to its advantage, it can increase its success. Any successful company will not only acknowledge the current factors but also anticipate change, so that it can benefit from this change (Stimpson. P, 2000, p 99) Proper use of Pestle analysis will avoid Marks & Spencer taking actions that are likely to lead to failure for reasons out of your control. “It helps in ensuring that what they are doing is associated positively with the powerful sources of change that are affecting the working environment. Hence, they are much more likely to be successful than if your activities oppose it. The analysis is also of use when launching a new product or service (for example a new technology or any ethical practice) by helping you breaks free of assumptions and adapting to the realities of the new environment”, said Thompson, J. in 2002. Marks & Spencer (M&S) is a major British retail store chain, founded in 1884. In the year 2008, it was ranked the 43rd largest retailer in the world. M&S was ranked 17 in The Times "Top 100 Graduate Employers 2008". Apart from selling clothing and food, most of its domestic stores have started expanding into home wares, furniture and technology. The company made a pre-tax profit of about 1 billion pounds, though a few years after that, it sunk into a crisis which lasted for many years. Since the late 1990s M&S has experienced serious business insecurities and has made a lot of attempts to revive its business. In 2004, M&S was in the news of an attempted takeover by Arcadia Group & Bhs boss, Philip Green. A recovery plan was declared involving selling off the financial services business to HSBC Bank plc,.The takeover bid was withdrawn after failing to get adequate backing from shareholders. A lot of reasons could have contributed to it but now we will look at the technological aspect of the company. All businesses have to use other resources than labour, so to that extent all businesses are affected by technology. Technology has made an indelible impact on businesses and will continue to do so. Technology especially Information Technology creates both opportunities and threats for business activity. Marks & Spencer both use and adapt to technology because firms compete and the market are both global and highly sensitive for most of the products and services. When analysing the technological factors of M & S, I came across many points. Entering e-commerce by giving consumers the access to do online shopping by sitting at home brings many benefits to the company like brand loyalty, increased profitability and sales revenue. Computer aided designs and bar coding are all new innovations to the way business is done because they have advanced technology. “Customers care more than ever how products are made" said Stuart Rose, Chief Executive Officer (www.corporate.marksandspencer.com press release 30 January2006). “The company launched a variety of domestic technology products known as (T04). More than thirty-six stores have now started offering this range. Television installation and technical help are the additional services offered” said Steven Sharp, Executive Director of Marketing and E-commerce, (2006) (http://www.careerbuilder.com/Jobs/Company/C8F2KK6DYNVRQCQC9YJ/Borgwarner-Inc/). Technology systems include a huge number of software which helps in managing the business. Technology hardware such as laptops, desktops, mobile phones, BlackBerry, Bluetooth devices, internet, communication, research funding, photocopiers and fax machines, are the products, which transmit and record information reduces costs, improve quality of goods –both clothing and food, and lead to innovation giving the company a competitive edge. Marks & Spencer has seen a great impact on design and manufacture through product technology. It frequently determines the speed and nature of production flow on the line, the quality of the product, the part the workers play in the process and the creation or disposal of waste. New products emerge and new demand is created in the market place. Technology is not cheap at any level and increase fixed costs. But in this case the market is so huge that these costs are spread and helps in reducing unit costs, as it is large in terms of capital employed, market share and capital intensity. On the Human Resources department of M & S, technology has led to redundancies; as technology has changed methods and replaced people at various levels in organisation, increased employment on technology-related skills, some deskilling replacing craft skills and multi-skilling as the workforce has had to become more flexible in response to the need to work with technology. Technology has also changed the way people are paid through bank accounts and the way consumers buy goods through credit or debit cards. A Senior Packaging Technologist at Marks and Spencer plc in the department of Foods Business Unit is Dr Mark Caul. He said at the Starpack Summit (2008) that, “we are responsible for ensuring that M&S packaging brand standards are maintained; Quality, Value, Innovation, Safety and Trust”. He adds, “We are liable for an innovation agenda, ensuring packaging legislation is complied with, delivering safe packaging and ensuring M&S high quality standards are met”. (http://www.scribd.com/doc/19140967/Brand-sucess-vs-Brand-Failures) Technology helps create new products and at first they are expensive but then the price falls as firms enter the market. Moreover the internet has become cheaper now. Consumer behaviour and expectations will continually be evolved and affected by technology. Ignoring this fact can lead organisations to extinct. A famous writer on management, Peter Drucker, (Stimpson, P, 2000, p 51) says “When a firm accept their legal and moral obligations to stakeholders other than investors, it is said to be accepting corporate responsibility. It becomes a public responsibility when firms are being ethical or environmental conscious”. I have noticed that Marks and Spencer has given immense amount of consideration to the environmental factors. They might include climate changes occurring due to global warming, which has become a significant issue. Many industries are giving consideration to protect the environment and have started manufacturing more environmentally friendly products as well as services. This helps in moving demand patterns and creating more business opportunities. Other factors may include staff morale, staff attitudes, and organisational culture and consumer values. Marks & Spencer ensures that it reduces pollution by using the latest ‘green’ equipment or use recycled materials rather than limited natural products to have a real marketing and promotional benefit as consumers are becoming increasingly aware of environmental issues. The company executives committed to using carbon offsetting as the last option in cases “where it is required by government or where the technology for green air or road transport will not be available for the foreseeable future". (http://news.bbc.co.uk/2/hi/business/6262453.stm) Their low polluting production methods and responsible waste disposal reduce the chances of the business breaking environmental laws and avoiding bad publicity. Long term financial benefits could be gained by generating electricity using solar panels but will involve heavy capital expenditure but would later on lead to substantial cost savings. A marketing campaign, Look behind the Label was introduced in 2006, the purpose being highlighting to customers, the different ethical codes of conduct and practices, by M&S’s production and sourcing methods. This included environmentally friendly textile dyes, Fair-trade products( which is discussed later) and sustainable fishing. All tea and coffee sold in M&S stores is now Fair-trade. Moreover the company offers clothing lines made from Fair-trade Cotton in selected departments. The company chairman (2007) said “I am personally committed to further promoting green issues and the recycling of plastic bottles”. Anti-Zionists have condemned the company for its support for the State of Israel. Former Chairman of M&S, Lord Marcus Sieff (2007), wrote “support for the economic development of Israel was one of the fundamental objectives of M&S. Anti-Zionist activists have started a campaign against the company forcing some stores to re-label their goods and change their sign.” (http://www.mpacuk.org/story/021009/zionists-ms-rejects-millions-pounds-israeli-colony-goods.html) M&S launched an initiative, known as "Plan A", on 15 January 2007 to radically increase the environmental sustainability of the business within 5 years and expected to charge £200 million. The plan covers "100 commitments over 5 years to address the key social and environmental challenges facing M&S today and in the future" with the tag-line "Because there is no Plan B". Five themes are to be committed including ‘fair partnership, waste, climate change, sustainable raw materials, and health. Its’ ail is to become carbon neutral by the introduction of Building Research Establishments Environmental Assessment Technology (BRE-EAM), green electricity, anaerobic digestion, green stores, company cars, energy efficiency and having on-site renewable, by 2012. Plan A’s way to cut waste includes transporting no waste to landfills, food waste reduction and alternate disposal and improving use of recycled and recyclable materials in consumable products. Company chairman Sir Stuart Rose (2007) announced “we will reduce non-glass wastage by 25% and plastic carrier bag usage by 33% in the near future and make sure that packaging can be easily recycled and composited. We also aim to use materials from only those resources which protect the environment and the world’s natural resources for the next generations like organic food and sustainable farming”. He also says, "If you believe that all of us are going to have to advocate the current green issue on climate or waste then there is no substitute. And I also believe this is one more way of distinguishing ourselves from others, instead of just following the typical retail tactic of pretending or showing that we are reducing retail prices by £70m." (http://www.scribd.com/doc/19140967/Brand-sucess-vs-Brand-Failures) Their Fair-partner strategy is to set new trading standards that improve the lives and communities for those who work with them by supporting their ethical conformity monitoring, using local resources of the country, giving consumers essential product information and purchasing guidelines. Their range of healthier options and traffic light labeling system on packaging will help customers make informed food decisions about natural colours, use of salt of which excessive use is called slow poisoning and offering at least 30% healthier food lines for a healthier lifestyle. The campaign director at Greenpeace UK, Blake Lee-Harwood (2007), praised their effort. "Were glad a company like M&S has proposals that begin to counterpart the scale of the challenge of climate change. Probably it is just to say it is the most comprehensive sustainability programme by a British retail store. But it is still only a step in the right direction. Not a revolution." He thinks that M&Ss decision to provide customers with clear labeling on air freighted food lines is a bold step. "This is a space where other conventional retailers havent dared to go yet. Hence, now it will be difficult for others to ignore the move." (http://www.guardian.co.uk/business/2007/jan/15/marksspencer.retail) In order to achieve its technological and environmental objectives M & S needs to set targets and measure performance accordingly. It has already created a sustainability framework which identifies the companys principle key environmental impacts and which will fortify the future strategy of action for reducing them. References: 1. Byars, L. (1991) Strategic Management, Formulation and Implementation – Concepts and Cases, New York: HarperCollins. 2. Capron, N. and Glazer, R. (1987) Marketing and technology: a strategic co alignment, Journal of Marketing, Vol. 51 Issue 3, pp.10-21. 3. Cooper, L. (2000) Strategic marketing planning for radically new products, Journal of Marketing, Vol. 64 Issue 1, pp.1-15. 4. Pearce, J. and Robinson, R (2005) Strategic Management, 9th Edition, New York: McGraw-Hill. 5. Thompson, J. (2002) Strategic Management, 4th Edition, London: Thomson. 6. Stimson. P. (2002) Business Studies. First published in 2002. Printed in the United Kingdom at the University Press, Cambridge. Read More