Analysis of Business Sustainability Approaches - Marks and Spencers - Case Study Example

Analysis of Business Sustainability Approaches: The Case of Marks and Spencers’ Plan A Customer inserts his/her name Course grade Professor 25th October 2015 Table of Contents Capital management through Plan A 4 About Plan A 4 Impact on capitals through Plan A 5 Who are M& S stakeholders? 5 Integrating into operations and Strategic Business Units 7 Strategic opportunities and challenges for M&S operations and sustainability 8 Integrating sustainability in the organizational values 8 Strategic approach and magnitude to make a difference 9 Completely embrace of stakeholders in M& S operations 10 Giving shareholders significant material benefits 10 Not just about savings 11 Operational opportunities and challenges for sustainability from Plan A 11 Conclusion 13 Executive Summary Marks & Spencer aims at becoming the world’s greatest sustainable retailer by 2015. Marks and Spencers initiated Plan A in January 2007 as a 100 point, five year plan to assist in environmental protection. The key elements of the plan are to ensure responsible sourcing of raw materials, waste reduction, and community empowerment. Plan A is another name for M &S ethical and environmental goals. After realizing the main aim of making its UK business carbon neutral, M & S now introduced new commitments that will guide the company operations in ethical and environmental issues for the next ten years. The Plan A 2020 consists of 100 newly revised and current commitments. The ultimate M & S goal is to become the world’s greatest sustainable retailer. The current essay is aimed at considering Marks and Spencers’ (M & S) strategic approach to contemporary business challenges. The paper will аnаlyse the approaches used by M & S to effectively manage its capitals to create value for its stakeholders through their Plan A strategy. The paper will also evaluate how Plan A might provide strategic and operational opportunities and challenges for M&S operations and sustainability internationally. Introduction The Integrated Reporting initiative endeavours to provide organizations with a framework for enhancing a clear communiqué regarding how an organization attains long term value through interplay of factors like strategy, performance, and strategy in the locale of its external environment. 1 The current essay is aimed at considering Marks and Spencers’ (M & S) strategic approach to contemporary business challenges. The paper will analyse the approaches used by M & S to effectively manage its capitals to create value for its stakeholders through their Plan A strategy. The paper will also evaluate how Plan A might provide strategic and operational opportunities and challenges for M&S operations and sustainability internationally2. Capital management through Plan A About Plan A Marks and Spencers initiated Plan A in January 2007 as a 100 point, five year plan to assist in environmental protection. The plan was also aimed at entrenching ethical behaviours among the various M&S stakeholders including its employees, suppliers and customer. The key elements of the plan are to ensure responsible sourcing of raw materials, waste reduction, and community empowerment. Plan A is another name for M &S ethical and environmental goals. Impact on capitals through Plan A Marks and Spencers’ plan A has had tremendous impact on various capitals including financial, social, natural, intellectual, and manufactured. A comprehensive framework of how the plan is impacting on various capitals is as shown below:- Figure 1: The complete picture of an organisation’s value creation process, locating the business model as central (source: The IIRC 2013) Who are M& S stakeholders? The M&S has various stakeholders that are crucial for the successful implementation of the Plan A initiative. One of the Key M&S stakeholders is the senior management team. The management team is a crucial stakeholder as it is responsible for steering the organization towards the realization of the Plan A initiative. This group is concerned with integration of Plan A into all the spheres of M& S operations to ensure sustainability. The team include the group chairman, executive committee members and other senior managers. The other crucial stakeholder is the M& S shareholders. The shareholders weld direct and indirect powers on how the organization operates and how M& S uses money. The shareholders also influence the management and have in the past caused changes at the top through applying pressure. Major shareholders were also involved in conceptualization and actual implementation of M& S strategies such as the funds for pension, which consist of funds from managers together with their professional analysts. Those with Small shares and majority of the private investors traditionally held their holdings in the company and could exercise limited direct power, but could also decide to sell their shares. Another important M & S stakeholder is the analysts and commentators. This group is responsible for the success of the M&S brand and has been promoting Plan A through dissemination of content ranging from financial and news to technical and sustainability reports through print and other digital content. This has a direct impact on how external players and consumers perceive the organization. Such kinds of reports regarding the current status of the organization have been much written in the recent times. Even though the reports could elicit very little direct influence, but the writer’s opinions are reviewed by other important stakeholders meaning that they are worth identifying separately. M & S employees are also important stakeholders. They are obviously concerned about what will happen to the company in the future in matters of job security and predictions. There were protests brought about by the decision of closing the Marks & Spencer’s store chains in France and the entire Europe in 2001.The employees are also crucial to the success of Plan A since they are mandated to ensure that they integrate the plan in all the company operations. The other important stakeholder is M&S suppliers. These stakeholders decision to frequently change their supply chains radically affected most of Marks & Spencer’s long-time suppliers. Finally, the customers are key stakeholders in the M&S. Customers have a potential to drastically impact on the operations of the Plan since the money they spend on buying M&S products is used to fund company operations. M&S decline in trade reflects the many customers deciding to do some of their shopping at some other places, though it should be stressed that Marks & Spencer is the largest British non-food retailer3. Integrating into operations and Strategic Business Units Marks and Spencers had unstructured environmental and social programs before the inception of Plan A. Unlike the present arrangement where Plan A is implemented by all employees, a specialist was responsible for any corporate social responsibility. Consequently, Plan A has empowered many employees and instilled a sense of ownership of the plan since Plan A has become integral to M & S business principle and strategy. Plan A has been crafted to be an avenue for managing change in the organization. For example, there is additional responsibilities and duty allocation in the human resource department that include training employees on healthy eating. The organization has also commissioned a website to inform its employees and the public on environmental sustainability. The expansion of the M& S stores has been structured to take care of the environment through integrating good ecological practices. In order to motivate employees to come up with innovative ideas, the plan has established a fund that will reward innovative ecological ideas. This has motivated employees to embrace Plan A and strive to come up with novel ideas aimed at promoting ethical and environmental goals in all platforms of M&S operations. Strategic opportunities and challenges for M&S operations and sustainability Plan A has focused on streamlining the activities of M & S to reduce or phase out activities that contribute to climate change and generation of waste. The plan is also cutting across other aspects of consumers such as responsible exploitation of natural resources and concern for employee and consumer health and wellbeing. The plan is also seeking to enhance the practice of fair partnership through embedding ethical and environmental conservation every sector of the organization. These efforts resulted in£145m worth of savings, up from £135m the previous year, in a business that reported profits before tax of just over £580m.4 Integrating sustainability in the organizational values While & S has the general aim of ensuring profitability, Plan A offers an opportunity for the company to put together sustainability values and mission. The company has been very successful in selling good quality clothing with great-value and home products, and quality food5. This has been partly due to pursuing a goal for sourcing raw materials in a responsible and sustainable manner from approximately 2000 suppliers across the globe. In addition, the company has ensured that it maintains a pool of talented and skilled workforce that currently stands at slightly above 81,000 people in UK and globally. Marks and Spencer main values has been; innovation, trust, service, quality and value as described in the company’s progressive report. It is evident that sustainability has not been openly cited here, nevertheless it is revealed in a more subtle manner hence suggesting how it becomes incorporated to M&S’s strategies and culture. Strategic approach and magnitude to make a difference From the initial stages of Plan A, it was apparent that M&S intended to go all the way in its operations to ensure sustainability. Consequently, Plan A was formulated on the premise that it would help in integration of ethical and environmental consciousness into every facet of how it conducts its business. This target was realized and overshot as the initial 100 commitments agreed in 2007 grew to 180 in 2010 with a 2015 deadline.6 M&S has a sharp contrast to other corporations which are guarded in trying to promote business sustainability partially. Alternatively, the organization recognized the naivety of trying partial change from the start. Through Plan A, M&S was capacitated in ensuring complete integration of sustainability across all its business operations. Further, the organization assumed a way of doing business that would assist in victorious plan implementation. Behind each success, beginning from reducing non-biodegradable packing to introduction of carbon neutral chocolate and clothing, is a collective effort of varied region of the organization. The entire target would have been impossible to achieve without integrating good financial and procurement systems among other controls were part of the organizational work ethics7. Completely embrace of stakeholders in M& S operations Deep looking at M&S’s achievements shows that the organization did not concern itself with only reducing the food waste by 40 per cent, improving the efficiency in energy, or being carbon neutral, but also ensured that the stakeholders were engaged. The company was appreciative of the fact that for it to become a sustainable world-class retailer it needed to bring onboard its shareholders and not just assess performance or assimilate sustainability measurements. Consequently, the organization has gone out of its way to ensure that it has a close working relationship with its stakeholders. For example, the organization recently held a conference in which it brought together its suppliers, trade regulators, and employees in discussions with involving implementation of Plan A. The event was also graced by its customers and associations in an effort to offer an all inclusive platform for genuine discussions in Plan A implementation. The ability to have an open and genuine discussion with its suppliers is an indication of strength and M&S’s to accommodating the needs and opinions of all people who are involved in the plan. M&S appreciates that its target of incorporating social and environmental sustainability into business profit is a crucial matter across many financiers, and henceforth endeavours to slot in stakeholders during its integrated reporting8. Giving shareholders significant material benefits Shareholders have enormous impact on the brand success including strategies and priorities. Therefore, it is important M&S bring them on board if it is to realize the desired success. As has been correctly pointed out by one of the founders, M &S need to ensure that stakeholders share in the vision of the corporation so as to understand the importance of sustainability in business. Consequently, the organization has moved in to ensure that it creates products that have had material influence across all ranks in its business. This has made it unattainable for savers to use non-materiality reason as an excuse to stifle implementation of Plan A. Not just about savings Although M & S made net proceeds of approximately three hundred million U.S dollars as a consequence of Plan A, yet the aim was not always about money. The company has earned extra benefits than the savings from tangible benefits. There has also been opening up of opportunities in intangible benefits such as increased likeability of the company by employees and prospective shareholders. Consequently, it is imperative that M&S recognizes and embraces the various forms of benefits for it to flourish into a sustainable company.9 There is also increased feel good effect among the employees when they realise that they are contributing to make the world a better place. For example, M&S did not return any waste to the landfills in 2014. The company has also attained an important milestone in UK as it has zero carbon footprints in its operations. The plan is to attain similar status across all its global outlets and production facilities. The most important thing is that all the stakeholders including clients and employees have embraced Plan A. Operational opportunities and challenges for sustainability from Plan A Marks and Spencer have continued to deliver on Plan A commitments set in 2007. However, the emerging lessons were a major catalyst in their decision to extend their ambitious ethical and environmental goals beyond the original 2012 deadline. Consequently, M & S decided to set new targets that would go beyond 2015. This was necessitated by the need to maintain and improve on the gains realized by the operationalization of the initial Plan A10. Marks and Spencer have several sustainability challenges emanating from Plan A implementation. For example, in their engagement with clients, M&S will need to have comprehensive plans and customer-focused campaigns that will place Plan A at the heart of their brand marketing in order to engage millions of customers. In addition, they will need to improve on transparency across all their shops if their goal of being the global retail leader in transparency is to be achieved. Marks and Spencer will also need to develop and enhance their role in creating a cyclic economy. This may force them to scale up closed loop projects such as showping. The organization also has a sustainability challenge of ensuring that it provides a localised Plan A to all its operation areas addressing the unique needs of its various shops across the globe. This Plan will need to be reviewed periodically to ensure that M&S remains in touch with the communities where its customers and employees reside. Finally, the organization may be forced to work with numerous partners in order to build a global sustainable economy that is in tandem with its ethics and environmental goals. Acting in isolation of partner engagement may slow the pace of realising set targets. This may force it to continue to make substantial contribution through the Consumer Goods Forum and the World Economic Forum (WEF)11. Conclusion Marks and Spencer’s efforts aimed at embedding company responsibilities and sustainability remains a work in progress. They have however shown a case in business based on trust relationships with their employees, building a culture that is inclusive, stimulating innovations and coming up with long-term shared destined relationships with the suppliers and consumers. In 2007, M&S dedicated two hundred million pounds to the five years of Plan A in aid of its implementation. The decision to incorporate all the stakeholders in the promotion of the Plan A has seen M&S drastically reduce on environmental pollution. After two and a half years, M&S reported that instead of costing money, the innovations and the new means of doing things inspired by Plan A was leading to savings of fifty million pounds per year. The savings generated from adopting a more environmental friendly way of business are being recycled into further implementation of Plan A. The success of the Plan A in realising most of the set targets has seen the company make new commitments in ethical and environmental sustainability that will guide is operations in the next ten years. Bibliography Adams, CA, & GR Frost, "Integrating sustainability reporting into management practices”, Accounting Forum, vol. 32, no. 4, 2008, pp. 288-302. Bell, DE, N Sanghavi, & L Winig, "Marks and Spencer: Plan A, 2009, Retrieved 27 October 2015, Bell, DE, N Sanghavi, & L Winig, "Marks and Spencer: Plan A", Harvard Business School Case 509-029, January 2009. Brady, H, The Top 8 Things We Learned from Marks & Spencer's 2013 Plan A Report, Retrieved 27 October 2015, Burt, SL, K Mellahi, TP Jackson, & L Sparks, "Retail internationalization and retail failure: issues from the case of Marks and Spencer", The International Review of Retail, Distribution and Consumer Research, vol.12, no. 2, 2002, pp. 191-219. Campbell, D, & MRA Rahman, "A longitudinal examination of intellectual capital reporting in Marks & Spencer annual reports, 1978–2008”, The British Accounting Review, Vol. 42, no. 1, 2010, pp. 56-70. David, G ‘Embedding Corporate Responsibility and Sustainability Marks and Spencer’, Journal of Management Development, Vol. 30, no. 10, 2011, pp.1017-1026 Eccles, RG, & MP Krzus, One report: Integrated reporting for a sustainable strategy, John Wiley & Sons, London, 2010. International Integrated Reporting Council (IIRC), 2013, International Framework, Retrieved 28 October 2015, Porter, ME, & MR Kramer, "Creating shared value", Harvard business review, vol. 89, no. 1/2, 2011, pp. 62-77. Warhurst, A "Future roles of business in society: the expanding boundaries of corporate responsibility and a compelling case for partnership", Futures, vol. 37, no. 2, 2005, pp. 151-168. Read More