M&S Plc is one of the popular British retailers with its headquarters situated in UK in Westminster. The branch stores set up across 42 countries with about 365 branches in UK alone, focus on two major lines of product, exclusive clothes and quality food stuff. M&S is also known as Marks and Spencer, Marks and Sparks. The Founders of the company were Michael Marks AND Thomas Spencer in Leeds, establishing the system in 1884.
Currently over 20 million people walk in to the stores each week.
A work force of about 78 thousand to cater to the customers with value products sourced from about 2000 suppliers from across the globe.
Specializing in women’s wear and lingerie as well as menswear and kid’s wear , the company has extended lines of food products accounting for close upon 50 % of each of clothing and food , in overall global market. The food specialties include home need , groceries , and readymade and partly prepared foods.
The missions of the organization are set so as to realize a vision based on an economically value based , ecologically viable and socially appealing market culture.
Attempts are made to analyze status of MS from strategy point of view , identifying and critically examining the areas , relevance of the strategy models that shape the company , and strategy direction that resulted from the change drivers of the market environment. As such the introductory module of the essay will outline the a brief summary as the company profile , introduction to literature review , sources of competitive advantage, review of literature introduces referring to strategy clock , competency and competitive advantage .
Likewise this will critically analyze change management strategies adopted by Marks and Spencer and competence of M&S.
According to C.K Prahald et al (1980 ) core Competency is a business concept that refers to a unique strength an organization can have. This can by anything like economies of scale , Strong investment , robust and reliable technology , long experience in the market, a very large base of loyal customers. Etc. He elaborates that core competency is an unique attribute that makes company unique in the way the organization or the employees work, by providing a difficult to imitate, an all applicable, end user value based benefits.
Source : http://www.mindtools.com/pages/article/newSTR_93.htm.
Cliff Bowman et all ( 1996) established the Strategy Clock model by providing eight mixes of price-quality combinations.
Strategy Clock model provides tools for analyzing and justifying the success and failures Marks and Spencer has experienced throughout its life cycle. The M&S being the one exclusive clothing and food retail chain with the head office in UK along with its international network had to face impacts caused by the markets environment due to not having the right strategy combination in terms of product quality , value and price.
Position 1: Low Price/Low Value
This is a phase , which it is very difficult for firms to compete I in because of low quality as well as little or no differentiation , However if the company is unable to provide differentiation and quality to an extent of competing with the other companies those businesses have to remain in this level of strategic clock. Where M&S is concerned it is an exclusive organization concentration of premium price based segment and in no way can it afford to adopt this strategy. Cliff Bowman et all ( 1996)
Further this level depends on low margin high volume based profit earning. Cost effective volumes of sales and continued dependence on new customers will be required since there will be no customer loyalty expected. But the price must be attractive enough to convince the customers.
Position 2: Low Price
This is not much different as above except the a little higher level of product value perceived. Firms compete also on large volumes low margin basis. Some sectors of Wall Marts also adopt this strategy for attracting cost conscious markets with minimum range of product value, where product quality is higher than the level 1. Marks and Spencer targeting above average profit and higher perceived value and brand quality, has no reason to go into this strategy.
Position 3: Hybrid (moderate price/moderate differentiation)
Certain product lines of Marks and Spencer are perceived to be of moderate value value in its food sector as well as womenswear . But the price factor far low as compared to M&S who target the higher strata of all geographical areas. This strategy makes sure that these goods are reasonable enough to convince the customer and prices are fair like in discount stores. Cliff Bowman et all ( 1996)
Hybrids are interesting companies. They offer products at a low cost, but offer products with a higher perceived value than thos of other low cost competitors. Volume is an issue here but these companies build a reputation of offering fair prices for reasonable goods. Good examples of companies that pursue this strategy are discount department stores. The quality and value is good and the consumer is assured of reasonable prices. This combination builds customer loyalty.
Position 4: Differentiation
Differentiation will provide increased value . Increased value is created by increased cost , or using economies of scale or by increased market share and sales. M&S succeeded achieving differentiation by introducing Per Una designer wear and increased lines of women apparels , lingerie as well as kids wear and men’s wear. Differentiation with branding is very important. One of the reasons why M&S got on to a downward trend is because of not being able to out performs the competitor brands like BEST , OASIS etc
Position 5: Focused Differentiation
In fact this is one of the main strategy for competing in the industry, as employed by Marks & Spencer is focus differentiation , by introducing premium price and exclusive brands targeting the brand conscious niche with very high profit margins. Men’s shirts branded Marks and Spencer was carrying a very high perceived value in the market. However the perception was affected by some competitors like Next who provided also seamless brand quality and assured reliability in the market which was adequate enough to outperform the certain segments of M&S.
Position 6: Increased Price/Standard Product
Among the various mix of strategy clock certain levels don’t have much strategic value as it apparently implies. For instance fixing a very high price for standard products as per the market perception will not be a reliable solution. This kind of approach may be applicable only if customers are experiencing a temporary lack of substitutes driving a firm into a monopolistic status then the customers may go for a product regardless of the price. Or for temporary circumstances where customers have inconvenience in accessing alternatives and substitutes. Position 7: High Price/Low Value, as a classic example of a monopoly status this option is very difficult to survive in the competitive market and not relevant for Marks and Spencer.
Marks and Spencer was one of the first and foremost clothing retailer in UK . Their being , monopolistic ( sole retail for such a brand and the price itself was a competitive advantage underpinned by the innovativeness of attributed to MS. That is such a price quality combination was first released by MS under a St Michael brand which was perceived high .
St Michael brand value comes from partly and greatly from the country of origin value which is difficult to be imitated by any other country. So country of origin is a core competency. Using st Michael brand is also significant since it is one of the brands positioned at inception itself. Other competitive advantages of not having a compatible brand due to lack globalization of trends in clothing and strict attachment of European value and mentality of Asians.
Further core competencies resulted from economies of scale and attention to details in terms of meeting the basic needs of humans through quality apparel and food products. Further customer courteousness , accessibility and availability , customer care services like 9 months money back guarantee along with cost efficiencies achieved through streamlining and operational supply chain efficiencies becoming the core competencies. A large clientele base also provided a competitive advantage until some of the segments were attracted and deviated by the rivals.
Type of change employed by the Management
Source: Exploring Strategic Change , Balogun, J and Hope Hailey, V (1999) Prentice Hall
Change management involves matching of various leadership roles and leadership styles base on the type of changes to be effected. Depending on the organizational culture and paradigm of change, changes may adopt various changing strategies in terms of evolutionary, revolutionary, adaptation or reconstruction fashion. Even in the case of M&S changes may not be mutually exclusive . Some the change implementations based on the extend and speed of change will be outlined as follows. Firstly Evolutionary change are normally implemented on long term basis with a futuristic change goal in mind Where M&S is concerned its basic paradigm involved in scanning the environment for changes in the trend of social fashion needs and 4 P mixes were changes from time to time to adapt to changing social needs.
For example innovative designs like Per Una , in womenswear and lingerie and kinds wear as well as men’s shirts . Coordinating interrelated activities proactively may enable a course of this nature. Secondly adaptation is an incremental realignment of the modus operandi ( Mode of operation), with a gradual approach. Introducing customer loyalty cards and voucher systems was a move towards retaining the customer through loyalty which was supposed to ward off competition . Next the Big Bang Revolution is reactive approach in a competitive context that requires an abrupt , simultaneous mostly under coerced situations due to urgency and immediacy need for change.
Many Big Bang operations implemented included sacking and reappointment of CEOs until tangible improvement was guaranteed, closing down some non cost effective branches internationally , adopting stores within stores concept, switching outsourcing options from local costly supplies to cost effectives suppliers etc. Finally Reconstruction is a Big Bang realignment for meeting change requirements fast in many fronts. As such , where M&S is concerned these change implementation methods can be critically evaluated by referring to the impacts caused by environmental change factors from time to time. Prahalad, C.K et al ( 1990)
Accordingly It is important to make reference to the timeline of the M&S case in order to track issues faced by the market due to changes in the competitive environment. The firm founded by Michael Marks was taken over by Simon Marks having partnered with Spencer. Upward trend of the firm started from ever since. However the era followed by Richeard Greenburry tenure started to become turbulent due the some changes on the method of operation by Mr. Greenburry CEO and the Chairperson.
Despite all the core competencies discussed above the M&S started suffering. This apparently was due to increasing imitation and competition in the market. The prime competitors were Oasis , Next , BHS , Debenhams , River Island , Tesco and Morrison’s. ( http://uk.answers.yahoo.com) . The turbulent factors from the business environment was due to increased supplier power , falling share prices , outsourcing rate from cheaper suppliers was very slow , competitors were on the increase , unfavorable organization culture dominated by bureaucracy. However the Venderdvelder period from 2000 to 2004 saw a positive change via a turnaround policy implemented.
Changes implemented included appointment of a head to the UK retail , store within store concept , Per Una joint venture and George Davies as designer , addition of a food sector , customer loyalty cards and vouchers system , streamlining , investment ( removal of certain lines of food products ) and operational ( supply chain , value chain efficiency )activities , changes to cultural model ( employee attitudes , motivation and upgrading physical logos brand quality etc.)
It can be summarized that M&S was holding top strategic position at the very inception of the business. As threats were increasing due to new entrants and competitors M&S had to implement strategy effectively in order to compete at its level. In line the management started formulating and implementing change management strategies at various level of intensity. After the implementation of change which ranged from evolutionary, revolutionary through adaptation and reconstruction there was a choice of varied strategic solutions implemented at various stages and countries. The changes involved identifying the internal weaknesses and trying to match the environment.
Finally intensity of rivalry was considerably mitigated although M&S was able to gain its original status. From a personal perspective it is recommended that M&S adopts a holistic approach to doing business , by bringing about more fundamental changes in the cultural paradigm minimizing bureaucracy and via globalization customerization and greatly differentiated products and services with online based made to order options and electronic portals via a successful ecommerce solution.
Books/Magazines
1. Bringing discipline to strategy , K.P. and Sujit Balakrishnan (1996), , The McKinsey Quarterly, No.4. 2. How Competitive Forces Shape Strategy, Porter, M.E. (1979), Harvard Business Review, March/April 1979. 3. “The Five Competitive Forces That Shape Strategy” Porter, M.E. (2008), Harvard business Review, January 2008. 4. “Core Competence of the Corporation”, Prahalad, C.K and Hamel, Gary (May 1990), Harvard Business Review (Harvard Business Publishing 5. “Exploring Strategic Change” , Balogun, J and Hope
Hailey, V (1999) Prentice Hall 6. “Competitive and Corporate Strategy Bowman”, C. and Faulkner, D. (1997), “”, Irwin, London.
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