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What can be done to stop Marks & Spencers profits falling?

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Introduction

What can be done to stop Marks & Spencers profits falling? Marks & Spencers has had a consistent record of success and profitability until recently when they were suddenly hit by falling sales. Marks & Spencers were totally unprepared for this and while they were developing new stores and expanding the business their competitors were strengthening. Because Marks & Spencers have been highly successful and competitive for so long there was no pressure to improve the business and now its competitors have overtaken and underlying problems have arisen, something needs to be done. The business needs a complete overhaul management needs to be streamlined, the business structure needs to be re-organised to make it more efficient and the marketing mix need to be changed to begin with. I shall research into Marks & Spencers mostly by going to their website and finding break-even charts, profit and loss accounts and financial results for recent years. I will also go into Marks and Spencer stores and ask for relevant information such as accounts, and I will look around stores to see if anything needs to be improved such as the layout and the appearance of the shop etc. I will look at Marks & Spencers product ranges and the style of its clothes to see if the quality is up to standard and the clothes are fashionable. ...read more.

Middle

The current ratio shows that 1999 had better liquidity than 1998 and the Acid test ratio shows the same so the company does not have a liquidity problem as the number is higher than 1. So Marks & Spencers is less likely to have a cash flow this year than in 1998 because its ratios are better. The consolidated profit and loss accounts show where the problem lies. In UK retail the clothing, footwear and gifts sales are the main problem as they have gone down by the most, Home furnishings have also gone down but not by as much as the clothing sector. The foods sector has had little loss in turnover so not a lot needs to be improved in this sector. The financial services part of the business has done well as its turnover has gone up so this area of the business does not need to be re-organised. Overseas retail in Europe is doing well as turnover is increasing and Brooks Brother and Kings Supermarkets turnovers are increasing, so the problem is the clothing sector of the UK retail part of the business and this is where profit is being lost. Measures need to be taken to boost sales in the clothing sector of the business. New styles and new products could be introduced. Market research into what styles and products to introduce needs to be done to find out what the public wants. ...read more.

Conclusion

I think Marks and Spencer should expand these aspects of the business and improve them to further improve their popularity. More choice and originality in the food section and a promotion campaign could greatly increase turnover and popularity. Financial services is successful because it offers competitive rates on loans and mortgages etc, as long as M&S keeps rates competitive this side of the business should do well. Putting leaflets in newspapers advertising promotions, special offers and new products etc will increase sales but will also make people aware of new products and offers so they can take advantage of them. More assistants in shops are needed as it is hard to find an assistant when you need one this may anger customer and this is bad PR. Hiring assistants may increase costs slightly but helpful assistants will improve customer relations and they won't have to look round the shop just to get some help. Also assistants will give a more friendly and helpful feel to the stores. Efficiency could improve if motivation amongst employees was better. At the moment employees don't feel secure in their jobs, as there has been a lot of job losses at M&S recently. Employees need to be told that their jobs are safe a small pay rise could be given. Once Marks & Spencers starts implementing well researched recovery programmes the business will once again have its past success and profitability.? ? Dale Anderson BS Portfolio Miss Clarke ? Dale Anderson BS Portfolio Miss Clarke ? Dale Anderson BS Portfolio Miss Clarke ...read more.

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