Transforming Supply Chains into Integrated Value Systems - Dissertation Example

Transforming Supply Chains into Integrated Value Systems Executive Summary The world is changing at a fast rate hence companies are reviving their strategy to retain their competitiveness and to attain the position of market leader in the respective industries. In recent past a major change has been noticed in retail industries. With the changing life style and living standards of people throughout the world the companies in retail business are also changing their strategies. One of the well known retail chain company, Marks & Spencer is trying hard to enhance its market share hence the company decided to develop a strong brand. Before implementing the plan the company analyses what change needs to be introduced in its resources and how the change should be introduce in the prevailing business. In the given report an in-depth analysis has been done to explain what changes does the company needs to introduce in its resources and how the change should be introduced. To support the arguments theories are explains as and when required. Conclusion is also grown which explains how the strategy will assist the company in gaining higher market share. Introduction The recession affected almost all the sectors in developed nations like US and UK but as compared to developed nations, affect of recession was quite mild on the developing countries. Hence they were able to overcome economic crisis of 2008-09 at much faster rate and succeeded in achieving a higher economic growth rate. As per some market analysts, people of developing nations acquired higher purchasing power in the last decade. This scenario led more and more retail companies to compete against each other to enter these nations (PricewaterhouseCoopers, 2010, p.1-2). Marks & Spencer is no exception to it. The company already exists in many part of the world and yet it is trying hard to further penetrate the unexplored potential markets located in third world countries. In retail business brand name and brand image make a great difference on the business, so if a company needs to attain high competitive position, then its brand image should be improved. The commonly accepted definition of brand is “A brand is a name or a symbol of identification” (Segel, 2007, p.29). Companies use the concept of brand building to enhance their market share and to attract more and more customers in different markets. Marks & Spencer already has a well known brand image, but since the company is changing its market strategy so it is better to build a strong brand image. It is a common believe that a strong brand name adds value to the products and services offered by the company and customer considers worth purchasing it. Through brand name the company convey its product and service standards and the quality benchmark followed by it. Therefore it can be concluded that a successful brand image can bring about great change in the customer’s attitude regarding its products and services. As Marks & Spencer attempts to develop a successful brand image, it needs to take care of certain specific factors that directly affect the company’s decision. As for example the company should ascertain how people, information, finance and technology be changed for developing a successful brand image in the market. Change can be successful only if it is implemented through a pre-planned and properly executed change management process. Therefore the management of Marks & Spencer should develop their change management plan after taking into account time, power and organisational culture as three vital factors. Marks & Spencer Marks & Spencer is a well known name in global retail business and people consider it as a symbol of quality and style. The company sources reveal that, around 21 million people visit their stores each week. Marks & Spencer offers a well diversified product portfolio that comprises of food items, high value clothing and home products of excellent quality. Last year’s economic recession reduced the purchasing power of the customers throughout the world; however the effect was not so harsh on profitability of Marks & Spencer. The company pays importance to different needs of their customers and offers them all those products which the customers consider worth their money. Marks & Spencer has a business plan that attempts to “Go Green” for retaining a sustainable growth in the long run and for this the company has decided to change 100 things in their current business practices. The company has decided to involve all its 21 million customers in developing a sustainable plan (Marks and Spencer Group plc, 2010, p.3). Marks & Spencer has a strong market share in UK, but since the economic condition of UK needs more time to overcome the economic crisis of 2008-09, Marks & Spencer is targeting developing nations like China and India to enhance its customer base. However the people of Asia Pacific have distinct needs, so the company should first understand their requirements before introducing the required change in the product portfolio to suit their needs. Change in resources for enabling success Ailawadia & Keler (2004) explains that “retailing had been a major flux during and since the last decade, especially in the grocery and general merchandise industry” (Glynn, 2009, p.132). There were many retailers who achieved their business goals after developing a strong brand image, few of them were GAP, H & M, Wal-Mart and Home depot. Before developing a brand image the company needs to identify its core competency, whether it is the quality of the products that it offers, or the relation maintained with the customers. In case of Marks and Spencer the company pays great importance to the client’s satisfaction as well as the quality of the products offered to the customers. This can be considered as one of the core value of the company. Considering the core values of the company it can be concluded that Marks and Spencer can become a successful brand after introducing a personal touch in their sales activity. In present market there are many retail giants but none of them offer an informal atmosphere in their retail shops, so Marks & Spencer will be the first one to introduce such a revolutionary change in their business culture. Before introducing any major change in the business mode, the company should analyse its resources in terms of people, information, finance and technology. The company has a strategic goal to change the environment of it stores from a traditional formal to a more contemporary informal one, so it should introduce necessary changes in its existing resources. The required changes for the four vital resources are discussed below: People: For an organisation its people or work force is very crucial, thus the success of the company greatly depends on the potential of the workforce (Kalb, 1993, p.23). As per Marks & Spencer its work force is its strategic partner because they represent the company to the outside world. At present the company uses “Your M&S”, this logo is designed to make the customers understand that Marks & Spencer gives utmost importance to its customers and its main aim is to fulfil the customer needs as far as possible. This logo can be well utilised as a symbol of informal retail environment and can help the company to become a strong brand. However this can be only possible if the human resource of the company is well trained to generate an informal environment (Barton, n.d.) First and foremost the company needs to convey its new strategy of changing the stores’ environment from a formal towards an informal and personal one. The employees need to be encouraged for active participation because they are the ones who have direct interaction with the customers and can understand the needs and behaviour of the customers. Therefore the suggestions provided by the work force should be used in changing the shops’ environment. The employees should be well trained so that they can develop a warm relation with the customers. For this the company can hire local people in their stores who have a better understanding of the culture and value system. Finance: In last year the company experienced uneven revenue generation in different parts of the world. Revenue generated in UK declined by 1.7 percent whereas revenue from the international market enhanced by 25.9 percent (Marks and Spencer plc, 2010). Hence the financial position of the company is not much stable and the company is not in a state to make much financial investments in developing a brand image in the market. From last few years the company is renovating its stores to give a new look to them, hence the allotted budget can be used for giving an informal look to the stores without making too much investments. The employees should also try for optimum utilisation of resources in the company and to cut down all those expenses which are irrelevant at present. Information: Being a retail chain, success of the company depends on how well the company manages its supply chain. As the company has a well diversified business in different parts of the world, so flow of information should to be transparent. If the company needs to achieve informal relation with the customer, first and foremost management should understand which information to be passed to the customers and which should be confined within the organisation, so the company should improve its information technology structure (Handfield & Nichols, 2002, p.61). Through proper utilisation of the available information, the company can depict consumer behaviour in a much better way and this information can be used for developing a successful brand in the market. Technology: In the year 2007, Marks & Spencer invested around £450million for revamping its supply chain and information technology system. This investment was made with the aim of enhancing sales from website and online business (Grant, 2007). However it will be difficult for the company to maintain an informal environment while conducting business through web. However technology can be used to collect significant data to understand the purchasing pattern of the customers in different retail stores of the company. Technology can also be used to make a more homely and informal environment within the retail shops of Marks & Spencer. Therefore the company needs to undertake all the above mentioned components and the required changes should be introduced to achieve the strategy of developing a successful brand in the market. Implementation of change: It is quite difficult to develop an appropriate strategy that can assist the company to achieve its organisational goal but it is equally difficult to implement the strategy successfully. First and foremost the organisation needs to understand which type of changes it is planning to introduce in the business. Considering the speed with which the changes will be introduced and the extent of them, there is four broad categories in which they can be classified. These are explained in the diagram given below: Figure 1: Types of change (Source: The Strategy Unit, n.d.) In the case of Marks & Spencer, the company is planning to attain a strong brand position for enhancing its market share in the existing markets. This strong image will assist the company to explore new potential markets in developing nations. Hence the company will introduce “adoption” for the required changes. Developing a successful brand is called an adoption change because it will be an incremental change, the management will introduce required changes in the business culture. The process of change will continue for many years because with the passage of time requirement of customers will change so the company will go on adjusting its products and services to suit the needs of the customers. Adaptation requires dynamic changes in the cultural web of the company. The main elements of the culture are presented with the help of the diagram given below: Figure 2: Culture web (Source: Mind Tools, n.d.) The change can be achieved by introducing required changes in the organisational culture of the company so we can say that change will be introduced in the organisational culture itself. Few steps that need to be taken while introducing the changes are discussed below: Changing the logo of Marks & Spencer- At present the company’s logo is “Your M&S” which explains how much importance the company gives to its customers. As the company is planning to introduce an informal environment in its retail outlets, it needs to change its logo. The logo should be such which reflects the company’s core values and customers can interpret what management wants to convey. While developing an informal environment in the retail chains, change needs to be introduced in the organisational structure and the power structure. Organisation structure represents the responsibilities shared among the employees and their mutual relationships, so the management of Marks & Spencer need to incorporate the feel of informal and personal behaviour among the employees of the stores. Each and every employee of the company needs to be introduced with the company’s strategy to change its formal store culture to an informal and personal one. This will assist them to share common beliefs for attaining the corporate goal. The strategy of the company: The main strategy of the company is to develop a strong brand for the company in its existing market in UK. This strategy can be achieved by developing a new logo that will reflect company’s core value system. The internal environment of the company should be made more informal hence the organisational structure should be made flat. This will enhance communication among the employees who take care of different departments and exchange of information will take place at a faster rate. As the front line staff is the one who actually comes in direct contact with the customers so they can provide may important information regarding consumer behaviour. According to the information provided by the front line staff the management can introduce required change in the brand image of the company. So as per the new strategy the front line employees will gain more power and will perform a vital role by assisting the management to develop a strong brand image. Success of a change depends on how well the change management plan is developed and how it is implemented. Few common steps for a change management process are as follows: Figure 3: Implementation steps of change (Source: Bartsch, n.d.) According to the chart given above it appears that first of all management needs to develop a change management board who will be responsible for developing the change management plan and also to implement it. This board will have members from different departments working at different regions of the world. They will consult other employees and gather information regarding customer behaviour to understand the changing needs of the customers belonging to different parts of the world. After that they will develop a change management plan which will clearly explain what needs to be done. Once the plan is developed it needs to be shared among all the stakeholders of the company. Later on the stakeholders will work hand in hand with each other to implement the plan successfully. The factors affecting change management process can be well stated through the diagram given below. Figure 4: Change kaleidoscope (Source: Balogun, 2001, p.6) While implementing the change, care needs to be taken to ensure that the management succeeds in handling the transitional phase in the best possible manner. It has been often found that when the company announces a specific change that requires to be implemented in the company, its employees initially resist the change. It then becomes the responsibility of the management to assist the employees to understand why the change has been introduced and how they will be benefited through this. Different stages of transitional are illustrated below: Figure 5: Transition curve (Source: Chappell, 2009) When Marks & Spencer introduces change in the way they deal with their customers, more or less the same situation will arise in different departments and retail stores. Initially the employees may not be confident of the change and thus their productivity will decline. It will then be the responsibility of the management (operational, middle level & strategic) to help the employees in understanding the nature of change and the benefits generated out of it. Management should arrange for specific training programmes (on job and off job). These training programmes will provide the requisite knowledge and skill to the employees so that they can take an active part of this change and assist the company in achieving the desired goal. A successful change management process can only be attained if the management adopts a suitable leadership style. In present market condition a leader needs to follow transformational leadership style. A transitional leader supports the followers and helps them to transform themselves and gain the required knowledge & skills. The same leadership style needs to be followed by the managers of Marks & Spencer while implementing the change in their stores’ environment and developing a strong brand image in the market. Therefore while developing a successful brand; Marks & Spencer needs to follow a well planned change management process. Conclusion The market is dynamic in nature and degree of competition is increasing day by day. The same can be inferred for retail market where new entrants are entering the industry and market share of the leaders are shrinking. To retain the leadership state, different companies are introducing different strategies in their businesses. Marks & Spencer can gain competency in the retail industry by developing a strong brand image in the market. This brand image will help the company to convey their core values like high quality of product and customer focused business policies to the potential customer base. However the company needs to first analyse the change it will introduce in people, information, finance and technology for developing a strong brand. Success of the change executed depends on its planning and implementation process. Hence the management of Marks & Spencer needs to understand “what & how” of changes. For making the change management process successful, there must be a blend of appropriate leadership style and positive attitude of the employees. Therefore it is not just the management who can achieve desired goal, rather both management and employees need to work side by side to introduce the required modifications in the company’s brand image. Reference Balogun, J. January 2001. Strategic change. Management Quarterly Part 10. [Pdf]. Available at: http://www.tomorrowsleaders.com/A5569D/icaew/content.nsf/DocumentLookup/ICAEWSTR0109/$file/MQ10+Strategy.pdf [Accessed on April 6, 2010]. Barton, C. No date. How Marks & Spencer Hires and Retains Experienced Staff at their Manchester Shared Services Center. Marks & Spencer. Bartsch, C. No date. Target Account Selling. [Online]. Available at: http://www.mcsemag.info/live/MAG_Target_Account_Selling.AxCMS [Accessed on April 21, 2010]. Chappell, S. 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