A chosen company will be discussed here; its mission, organisational structure and culture will be described. Marks and Spencer is chosen as an example in this report.

University Degree Business and Administrative studies

Introduction

In today's world, managers face complex and challenging pressures and opportunities. They must ensure the efficient use of resources and, at the same time, find ways of guaranteeing the long-term effectiveness of the organisations for which they work.

The company history

In 1882 a 23-year old Polish refugee, Michael Marks, with a £5 credit from Leeds wholesaler Isaac Dewhirst, began travelling as a peddler selling buttons, needles, and stockings. After two years, he had earned enough to take a stall in the Leeds market. Due to his language problems his policy was 'Don't ask the price, it's a penny'. After expanding to other markets, Marks decided he needed a partner, and Dewhist recommended his cashier, Tom Spencer. In 1884, Marks and Spencer was founded. By 1901 the company had twenty-four stalls and twelve shops, including three in London.

Mark's son, Simon, joined Marks & Spencer just before his father's death in1907. One of his most notable initiatives was to bring his best friend, Israel Sieff, into company. Sieff, who was to spend the rest of his life in Marks &Spencer, was a former schoolmate and neighbour.

Simon Marks used to turn up at stores without previous warning. With inflation, the old penny limit was surpassed, replaced by five shillings, and eventually limits were scrapped. To keep prices down, though, the company sought to bypass wholesalers and deal directly with manufacturers. Today, about a thousand suppliers, many producing exclusively for Marks & Spencer, work closely with the company and submit to frequent inspections and follow minute specifications.

By 1980s the company had more than 30,000 shareholders and was one of the UK's leading retailers of food, men's, women's and children's fashion. These products formed the core business together with home furnishing, accessories and financial services, which are introduced in 1985.

Company mission

Marks & Spencer represents the mainstream. It sells to the British consumer. It is the store that today's British housewife shops, that her mother shopped at and that maybe her grandmother shopped at. Once the British go into Marks and Spencer store, they know what to expect.

What they expect is, first, a no-frills presentation. Marks & Spencer stores have no elaborate window dressing, no fancy lighting, and no boutique-type arrangements in the corner. They could be described as austere compared to other department stores. There is homogeneous daylight-quality lighting throughout the store.

In there the British also expect to see clearly labelled products. There is a description of what the product is and how much it cost above each stand. All the garments are arranged by style, colour and size. The same format for display and labelling could be seen throughout the store.

The British do ...

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The British do not go to Marks & Spencer to buy the latest fashions; they go to there for the 'timeless' clothing. It is a guarantee of conformity and of 'wearability' to a classic look. Also, the customers are not disturbed by aggressive salesperson nor pushed to buy when asking for information.

Moreover, Marks and Spencer have a reputation for honesty and fair-trading practice because of their return policy. Customers have the right to change their minds.

Finally, Marks and Spencer is one of the few retailers that can manage to convince buyers of their commitment to quality for value. It is due to their strict policy with product suppliers, to their concern for quality and to the money-back guarantee.

Marks & Spencer UK and Eire

Fashion

Clothing accounted for 49% of domestic sales in 1990 and has been traditionally the company's core business, though declining as a percentage of total turnover. Quality and value for money is the consumer image of the company's merchandise. Product age groups cover all age groups from baby's wear upwards. There is little competition from other UK variety chains e.g. Littlewoods. However, individual departments face competition from speciality retailer e.g. Next for Men, The Burton's Group's Principles.

Food

According to analysts Smith Barney, Marks and Spencer is the sixth largest food retailer in the UK. It operates a high margin, low market share, business in food. Few basic commodities are on offer but a quality range of fresh produce, together with an innovative range of 'ready prepared meals' and a narrow selection of wines from the basic merchandise offer. Food accounted for approximately 38% of total turnover in 1990.

Other areas

The company developed a new strategic direction in the UK during the mid 1980s through its diversification into financial services home furnishing and the launch of a physical modernisation programme adding to 1 million sq. ft. in selling space between 1986 and 1988.

Organisational Structure

Marks & Spencer conforms to the typical centralised structure, which is a feature of UK multiple retailers. The business is highly centralised. Buying decisions are made centrally and goods then distributed to stores. A uniform pricing policy exists in the UK. This supports the company's return policy, whereby goods purchased at one store can be returned to another store. The company has no manufacturing capacity in the UK and is therefore a pure retail business. The strength of its relationships with suppliers, most of them are UK-based, enables Marks & Spencer to operate on the lines of a vertically integrated company.

Organisational Culture

Approach to management

Marks &Spencer's success stems directly from what they call the 'gut-feeling' of 'trial-and-error' approach to management Historically, Marks and Spencer did no marketing research. As stated by Marcus Sieff, a former chief executive of Mark & Spencer, it's fundamental principle is 'If it sell, stock up; if doesn't, remove it'

The 'gut feeling' came up from the top. 'Trial-and-error' means putting an item out on the shelf to sell and taking it away immediately when it does out. Certain stores are used as pilots for the introduction of new items to the line. The most frequently used is the Marble Arch store in London.

Although it seems that Marks & Spencer is insensitive to customer needs because of their approach to marketing research, in can be argued that, in fact, they are ultra-sensitive. The fact that no item is kept on the shelf unless it receives immediate customer acceptance means that the company does not attempt in any way to impose its tastes upon the consumer. The direct reflection of what customers want and are ready to buy is what can be seen in the store.

Managing by 'gut-feeling' is equivalent to managing by keeping in touch with customer. By visiting stores on a continuous basis and testing the product to be sold. The capacity to manage by 'gut-feeling' is not the exclusive domain of the chairman. At Marks & Spencer, all staff is expected to be able to develop a feeling for what the customer wants. Therefore, employees of Marks & Spencer are their best customers and all managers regularly put themselves in their customer's shoes. The company's ability to succeed in guessing what the customer wants is due to the experience that all management staff has on the front-line.

Promotion Policy

At Mark & Spencer, all management staff is expected to have worked on the front-line and to have many years of experience in the stores before being move on to other posts and head office. 90% of all management position are filled by employees, who have been with the company for more than 5 years and at least 2 of which were on the shop floor.

One of the company's rules is that it does not recruit management staff from outside, expect in highly specialised fields. The company trains and develops its own management staff through the recruitment of Management Trainees, who fresh from university or have only a few year's working experience.

Centralisation/ Decentralisation

Centralisation and decentralisation are the two clear movements inside Marks & Spencer. It is a very centralised company where the Head Office made almost every decision leaving the stores just its implementation.

As the size of the company grows bigger and bigger, it becomes harder and less effective to centralise all the decisions. Therefore, there is now a tendency to decentralise decisions and to make stores more responsible and active for them.

Problems facing by Marks & Spencer

Fashion retailing in England is now experiencing the worst crisis since the early Nineties. The reasons behind the crisis are that first of all, there is the emergence of wave after wave of new foreign entrants with attractive, low-priced offers. Moreover, the buying habits of customers has changed, they have other things to spend their money on, like mobile phones, computers, restaurants and DIY. The cut-price competition has boosted volumes little and reduced the value of clothing spending in total.

It may be bad enough that clothing retailers are having to fight to stop customers heading straight for Dixons or Ikea, but another fundamental problem is that there are too many clothing shops.

It is said that the ground occupied by chain stores from Bhs to Marks & Spencer has vanished because the mid-market doesn't exist anymore. Also, it is said that some customers saw Marks & Spencer's clothing lines as unexciting and lacking the quality.

Another big problem is the competitive environment Marks & Spencer faces with rivals like Next and River Island. As the people's lifestyle increase, there is more and more competition for Marks & Spencer.

The internal research of Marks & Spencer, which was carrying out at the end of 1999, shows that the people thought the company was ignoring the competition; obsessing about processes; lacking staff on the sale floor and not putting the customer at the heart of the business.

The continuing decline of market share and the decrease in profits shows that it is the time for change. And every employee in Marks & Spencer must take part in it. During the past two years, Marks and Spencer has carried out different changing policies such as company restructuring and innovation. It would be nice to see Marks and Spencer could overcome this difficult period and remain its status as a fashion enterprise.

References

Shenker, I. (1987). Marks & Spencer, the Uniquely British Aunty. Smithsonian: London. Nov 1987, p142.
Tse, K.K. (1985). Marks & Spencer: Anatomy of Britain's Most Efficiently Management Company. Pergamon: London.
Rees, G. (1969). St.Michael. A History of Marks & Spencer. Weidenfeld & Nicholson: London.
Horovitz, J and Jurgens-Panak, M. (1992). Total Customer Satisfaction: Lessons from 50 Companies with Top Quality Customer Service. Pitman: London.
Marks & Spencer's Web Page (2000).
Marks & Spencer's Web Page (2000).
Stevens, J. (1999) On your marks: the magazine for Marks & Spencer staff Oct 99,

London: Corporate Communications

Horovitz, J and Jurgens-Panak, M. (1992). Total Customer Satisfaction: Lessons from 50 Companies with Top Quality Customer Service. Pitman: London.
Sieff, M. (1990). Marcus Sieff on Management. Weidenfeldd & Nicholson: London.
Stevens, J. (1999) On your marks: the magazine for Marks & Spencer staff Oct 99,

London: Corporate Communications: London.