2. Analyse and evaluate Marks and Spencer’s strategic resource capability
2.1overview
The capability of any organisation is fundamentally determined by the separate activities, which it undertakes in designing, producing, marketing, delivering and supporting its products or services. It is an understanding of these various activities and the linkages between them, which is crucial when assessing strategic capability. An organisations resources are not confined to those, which it owns. Strategic capability is strongly influenced by resources outside the organisation, which are an integral part of the chain between the product design, through production and marketing to the use of the product by consumers.
The concept of the value chain is linked to the ideas above. Indeed the most successful organisations have a consistent resource theme running through the value chain. E.g. if M&S choose to compete largely through cost leadership- this should be found in many aspect from procurement, to targeting markets and customer support. Importantly this cost competition strategy should also be sustained by the special linkages, which are developed within the value chain or with suppliers, channels or customers.
In the past M&S has experienced great difficulty implementing their value chain as it combines a cost based competitive strategy along with a differentiated brand approach. Such ideology means there is a conflict of strategies for example a cost competitive approach should utilise low cost sites with little service, whereas a brand focused approach would be based on a high cost well designed site in conjunction with a quality service as such for M&S value chain to be effective it must attempt to balance these objectives whilst maximising brand value and minimising cost. Porters generic strategies suggested that such a situation is undesirable and destined to failure as cost leaders or differentiators will be better placed to compete in each segment However the work of Kay Stopford and baden-fuller rejects porter assumption and points to Toyota cars and Benetton clothing both of which are differentiated yet have low costs. (Lynch 2000)
In the past M&S has been unable to do this however the appointment of Luc Vandevelde has drastically changed this. The following extract comes from the business week article A Sigh of Relief at Marks & Sparks, and will be used to evaluate elements of M&S strategic resource capability
To fix M&S, the 50-year-old Belgian executive has ushered in a younger and hipper management team, replacing all of its senior managers as well as board members, whose long tenure incited unfavourable comparisons to the British civil service. He also has slashed nearly 4,000 jobs, shuttered 38 money-losing stores in Europe, and spun off poor performers like clothing retailer Brooks Brothers and Kings Super Markets Inc. His decision to sever longstanding ties with British suppliers and shift three-quarters of all apparel production overseas has boosted clothing margins.
Overexpansion and a bungled foreign foray were largely responsible for M&S decline during the 1990s, M&S increased the size of its average British store by more than a third. Bad move: It had to offer more products just to fill the extra space. “They moved into areas such as mobile phones and jewelry, where they were just a me-too player,” . An ambitious move to establish a beachhead in Europe, where the chain opened 40 stores in France, Germany, Spain, and Belgium, failed because M&S was just another bland store and relatively unknown.
In hindsight, M&S might have fared better on the Continent had it concentrated on one of its two pillars of strength: lingerie and food. Underwear is M&S’s best-selling product in Britain, commanding more than 30% of the market, and could likely be exported in the future through small boutiques, Food is another growth area: Sales of M&S’s high-quality, ready-to-eat meals account for more than 40% of sales, despite competition from supermarket chains Tesco PLC and J Sainsbury PLC (Analysts say M&S could boost market share by opening small food shops outside big cities.
Now a humbled Marks & Sparks is returning to its roots. Vandevelde has spent $115 million in the past year to modernize one-third of his 290 stores in Britain. He also has hired top talent to update the chain’s frumpy image, including George Davies, the man behind the successful George line of clothing at Wal-Mart Stores Inc.’s British subsidiary, ASDA Group Ltd. Sales of Per Una, Davies’ trendy line of women’s wear for M&S, have been so strong since its September launch that the retailer had to delay rolling out the brand in all of its stores. The new collections have helped stem a decline in clothing sales. These rose 0.8% in the quarter ending Sept. 30--an improvement from a year ago, when they were down 9.1%. Merrill Lynch & Co. figures every percentage point in extra sales adds $43 million to pretax profits.
Vandevelde is also shaking up company culture. Buying decisions, once dictated by the head office, are now set at individual stores and based on local tastes.”
2.2 Finance
Financial resources can be used in order to identify areas of success for a firm and areas which need improving.
In terms of interest cover M&S excels however in terms of returns on investment, profit margins earnings, dividends, stock turnover and fixed asset turnover there is great room for investment.
2.3 Fortune.com
Fortune. Com provides a brief overview of an orgainisations resource capability and compares it to industry rank.
complex calculations are made to score a particular attribute. The information is based on historical data and thus may be unreliable e.g quality of management will probably rise due to vandevaldes shake ups. Though the table still provides some insights into M&S effectiveness.
Table 2.3 Fortune.com analysis of Nine of Marks and Spencers key attributes of reputation in comparision to its industry
(Source fortune.com)
Table 2.3 indicates that M&S Exceed Industry averages in terms of innovativeness, employee talent, and quality. However in most other cases it has failed to meet its industry average, long term investment value , financial soundness
2.4 Marks and spencer primary competences
2.4.1 Differentiation
M&S made an inspired move in capturing the services of george davies who recently successfully implemented a cost leadership brand approach at Asda by producing quality fashionable items at low cost. Such experience has been vital to the success of M&S and has allowed for greater brand differentiation
Davies has also implemented OpenAccounts Financials and eFinance to manage their back-office finance function and integrate with their supply chain. The OpenAccounts project has enabled Per Una to give their suppliers world-wide web-browser self-service access using OpenAccounts eFinance to enter and submit their own invoices in their own languages - automating processing and reducing the workload for the Per Una finance team.
The link up with David Beckham (BBC news, Beckham in talks to promote M&S brand) Britains mosts recognisable icon appears to be an inspired move. The development of Beckhams clothing range is likely to strongly appeal to parents of children from 1-13.
The sucees of such a venture will be greatly enhanced If Beckhams designs are worn by his son Brooklyn. As this will likely increase the value of the brand as people may see think if it good enough for Beckhams son its good enough for me. In addition this link up will be exclusive to M&S thus providing an association which is not matched by any competitor
2.4.2 Culture leadership and style
Buying decisions, once dictated by the head office, are now set at individual stores and based on local tastes. Such an approach indicates that previous executives may have attempted to retain a power/role culture though due to the vast nature of the firm such an approach appears to be futile as leaders are unable to retain vast amounts of power as there are too many elements which need to be addressed. Additionally the use of a role culture has vast aspects of bureaucracy which slow down the decision making process. Bureaucracy is of particular concern as regards clothing as fashion trends and changes occur so drastically. In which case fast effective decisions need to be made thus a role culture is inappropriate. Indeed the decentralisation of power indicates M&S have adopted a task culture. This is where work is undertaken in teams that are flexible, and expert views are valued. This culture is ideally suited to the fashion industry as strategic change is dependent on circumstances but may be fast when needed
As outlined above M&S has adopted a task culture and has given greater freedom to local managers. Motivation is likely to be enhanced as management success and failures can be analysed easier meaning greater opportunity for promotion and identification of areas that need improvement
The appointment of younger management teams is likely to improve product quality as these members are likely to be more in touch with current trends and demand thus this is likely to result in more effective means of matching customer demand to strategy
M&S also have access to clearly identifiable scapegoats in the form of former chief executives, as such M&S is able to apportion
2.4.3 Technology
In terms of technology M&S offer several services which enable them to gain a competitive advantage over smaller firms, the larger firms however implement similar systems. These systems are outlined below.
M&S have access to integrated systems provided by IBM that allow for statistical analysis of customer demands habits and trends allowing M&S to develop strategies in line with current trends.
Marksandspencer.com also provides online service though smaller firms may implement similar schemes M&S is able to provide multiple pictures of high resolution, as well as being able to provide professional photographs of its products and is able to exhibit all of its products whereas smaller firms commonly need to provide lower resolution pictures of poorly presented products as they have less web space and are unable to afford professional photography. Server reliability is far greater for marks and Spencer as they invest with high quality providers whereas small firms commonly do not. Online sales are also quicker as M&S have access to an intricate network of suppliers and promise to deliver within 3 days whereas it is common for smaller firms to take 28 days to deliver products.
Marks and Spencer online also offers 15% off if you reserve the summer collection in conjunction with free delivery. Such a move is an extremely intelligent ploy, as it will enable M&S to identify its popular and unpopular items, which will allow M&S to buy quantities of particular stock accordingly. Such a move cannot be iniated by smaller retailers as they have less bargaining power with suppliers and are unable to offer free delivery and discounts as they are likely to incur greater costs than M&S due to this.
The provision of professional catalogues also offer an advantage over small competitors, as catalogues are readily available and free. Whereas it is common for smaller firms to charge for catalogues, as they are unable to provide free catalogues without incurring significant costs
In addition Marks and Spencer has access to George Davies Open Accounts services outlined earlier which is exclusively available to Marks and Spencer and its suppliers.
3. Evaluate Marks and Spencer’s Strategic Fit
Section 2 illustrates that Generally Marks and Spencer focus on branding and cost competition and use their strategic resources to full-fill this aim. Section 1 suggests that product quality, price, product differentiation are primary aims thus. Outlined below is an evaluation of how M&S has managed to produce a good strategic fit. This relates the critical success factors to M&S key competences. The results are headed under the critical success factors, which in turn are subdivided into explanations on how the critical success factors link to M&S key competences
3.1 Product quality > Ability to account for current trends
Buying decisions, once dictated by the head office, are now set at individual stores and based on local tastes. This enables M&S to respond to local tastes and thus identify opportunities within the local sector. This not only allows M&S to stock products according to geographical demand an account for local taste it also enables M&S to identify local price elasticity and price products accordingly and thus maximise profitability however major price difference according to region are likely to be frowned upon by the government and may warrant investigation by the competition committee. Decentralisation of control also enables M&S to be more customer orientated and respond to demand this has been enabled by a change to a task culture,
Inability to adapt to different geographical trends was a prime reason for M&S failure within the foreign markets, as such M&S is attempting to ratify the situation by the use of a trade franchise this has enabled M&S to enter new markets such as India whilst placing the risk on the franchisee. Additionally this acts as a pilot scheme allowing M&S to identify whether entrance in to a particular market is feasible and allows them to accumulate knowledge of which products are of particular importance within this market
3.2 Price
In order to achieve low priced products M&S has slashed nearly 4,000 jobs, shuttered 38 money-losing stores in Europe, and spun off poor performers like clothing retailer Brooks Brothers and Kings Super Markets Inc. The decision to sever longstanding ties with British suppliers and shift three-quarters of all apparel production overseas has boosted clothing margins.
3.3 Quality
To fix M&S, the 50-year-old Belgian executive has ushered in a younger and hipper management team, replacing all of its senior managers as well as board members, whose long tenure incited unfavourable
3.4 Innovation
Evidence suggests that in terms of iniative and innovation M&S has in the past lagged behind competitors and has continually followed market leaders. Illustrations of this are M&S reluctance to embrace technology prime examples being That M&S did not accept credit cards till 2000 almost a decade after the majority of the retail industry had embraced such a concept and they did not allow for internet retail until late 1999 in excess of a year after several rivals had instigated such an approach. The poaching of designer George Davies from Asda also illustrates M&S lack of originality. Though clearly unoriginal this move was inspired and many attribute M&S revival almost solely due to George Davies’s Per Una range. Previous experience of failure may also act as a benefit to M&S as it has enabled them to learn from their mistakes. The David Beckham link up and the use of George Davies open network are testament to the fact that M&S has learnt from the past and is now currently developing greater innovative ideas as opposed to just following the leader.
4. Propose changes that will Improve Marks and Spencer strategic fit carefully evaluating the feasibility, Suitability and acceptability of your proposed changes.
4.1 Introduction
Analysing the success of a firm can be of particular difficulty as success is generally based on past events and is unable to access the success of future iniatives, which are being implemented at the present time. The manner in which success is evaluated is also relative to the graders wants and expectations. Shareholders in particular indicate such differences as some shareholders are primarily concerned with dividends whereas others are primarily concerned with capital gains as such success is rated depending on a persons point of view.
4.2 Development Strategy
(Johnson, 1988) suggests that the most appropriate form of strategic option development is the use, of the following template:
- Practical outline, A overview of the planned strategy.
- The Generic strategy to be pursued, i.e. the basis on which the organisation will compete or sustain excellence e.g. Price based strategy.
- The alternative directions in which the organisation may choose to develop
- The alternative methods by which any direction of development might be achieved
These points are further summarised in figure 4.2 with the help of examples. This template will also be used in the formation of strategy in section
Figure 4.2 Development Strategy Model
Development strategies
What basis? Which direction ? How?
GENERIC ALTERNATIVE ALTERNATIVE
STRATEGIES DIRECTIONS METHODS
Price based “Do nothing” Internal development
Differentiation Withdrawl Acquisition
Focus Consolidation Joint development
Market Penetration
Product development
Diversification
Related
Unrelated
Source (Johnson, 1988)
4.3 Strategic Evaluation
Once strategic development Techniques have been employed it will be necessary to evaluate
- Suitability, i.e. how far strategies fit the situation identified in the strategic analysis.
- Feasibility i.e. How a strategy works in practice.
- Acceptability i.e. an assessment of whether preceding with a strategy are acceptable.
A summary of possible questions which may be asked under each heading is illustrated in table 4.3
Table 4.3 Example of questions which may be needed to be considered in each stage of the evaluation process
(Source Adapted from Johnson, 1988)
4.4 Synergy
Synergy is the estimation of any extra benefit which may arise by preceding with a particular development strategy. Synergy can play a pivotal role in the acceptance of development strategy, as a presence of a high level of synergy is likely to reap additional benefits. An illustration of how good synergy can benefit the firm is outlined in table 4.3.2
Table 4.4 The assessment of synergy for a grocery retailer
(Source Adapted from Johnson, 1988)
4.5 Strategic development overview
The internet article (Fortune, 2002, Is this where the economy is heading) and various other articles outlined within this report indicate that a global recession is likely to emerge within the next two years.
(Kester, L, 2002 Surviving A Recession 2002) indicates that M&S relaxed gradual strategy will reap dividends within the future recession bound environment as over investment in new areas has not occurred. As such M&S will have less cash tied up in long-term investments and thus will have greater cash to react to the recession environment.
The article also suggests that firms that commonly survive or achieve during a recession do so because they have a diverse of a range of products, Which allows firms to assess which products perform best within the recession environment, subsequently firms will place greater emphasis on good performers and reduce investment in areas which perform badly.
As such the proposed changes suggested within this report focus on diversification and tend to adopt a gradual approach to investment as overexpenditure within a recession environment can often lead to the downfall of a firm
4.6 Fashion Industry Overview
The fashion industry is notorious for erratic changes in customer demand and taste.
The meteoric rise in popularity of Shell suits, puffa jackets and loafers and their sudden demise are testament to the fact that at best customers demand can be described as fickle. As such accurately predicting future trends can be of particular difficulty, as consumer attitudes tend to exhibit irrational tendencies.
Evidence exposing the whims complexities and contradictions of the modern clothes buyers were exposed in the BBC online article Watchdog exposes customer whims,
April 5, 2001. The report provided an interesting evaluation of customer preferences by asking people to grade clothing by various designers. Originally those surveyed rated all clothes in the absence of designer labelling. Then another sample group was asked to rate the clothes with the labels visible. The original results suggested that consumer grading of each product was extremely similar. Whereas in the presence of the labels grading varied immensely.
The results clearly illustrated the importance of branding as concerns the success of a particular label. One would argue thus that M&S should build up its brand with a reputation of prestige and Quality. Such a belief is clearly valid. However unfortunately history seems to indicate that once a brand has been associated with poor performance it will continue to suffer from low customer demand. A prime example of this is indicated by Skoda who over the past 5 years have begun to produce cars of quality and exceptionally good value though due to its past association of being an inferior brand has been unable to shake off its association with low quality.
A top gear article summarises Skoda plight perfectly by reviewing its model the Octavia the article concludes the car is of top quality though the interviewer wouldn’t be seen dead in one. (Topgear,2002 Skoda Octavia review,)
Such Evidence would suggest that M&S might suffer problems investing in brand improvement due to its previous association with poor quality ranges. However the introduction of the Per Una range has drastically enabled M&S revival illustrating that its key demographic area (those upwards of 30 Johnson 1988) have returned to the retailer. This suggests that M&S have been able to reverse the tide of criticism received during the 90s.
4.7 Boutiques Practical Outline
An outline of the use of boutiques is available below. This outline will then be expanded upon in section 4.8 - 4.12
One area in which investment may be considered is to the brand sensitive age group of 15-30. Evidence suggests that this age group our more likely to shop for big-name brands which occupy the £60+ groups. This area has clearly not been earmarked by M&S as an area to investigate. Complications will arise if M&S was to stock such designer brands within its current stores as the presence of designer labels alongside M&S current clothing range may effectively devalue its present stock as a direct comparison can be made between the two products. Additionally the brand sensitive group are reluctant to shop in M&S stores as they see the brand as an inferior product. Such a problem existed with Toyota when they planned to launch a luxury car range however Toyota were able to ratify this problem by creating a seemingly independent brand when it launched the Lexus range. M&S could deploy a similar strategy by launching small designer boutiques under a different name these boutiques would be separated from marks and Spencer stores in order to reduce the boutiques association with M&S. Such venture viability can be identified by local management, as within certain geographical areas demand for such a product may be low.
As mentioned before implementation of any investment should be gradual, as recession appears to be looming as such retention of available funds should be a goal of M&S. As such I suggest M&S introduces these boutiques slowly and in small numbers initially. Financing of such a venture should be restrained as such M&S should introduce stores individually and only allow creation of new stores once a shop has proven to be profitable. Though this strategy will reduce M&S bargaining power as concerns purchase of products this should not be of primary concern as major brand names such as Armani are reluctant to allow bulk buying of products as they are concerned this will be transferred in price reductions which they believe significantly hinders the value of the brand.
One may argue if recession is looming investment in an upmarket clothes store should be avoided, as consumers will become more price sensitive during this period, it is important to remember that such investment is catered towards a niche market of customers who are unlikely to be seriously affected by recession.
Perhaps the words of Clive Vaughan, head of consultancy at retail analyst group Corporate Intelligence summarises the attitude of this target group best when in the
BBC news article Business: The Company File Fashion swings in stores he stated that snobbery never goes out of fashion.
As discussed in section 2 Porters generic strategies suggested attempting to differentiate, cost lead and focus simultaneously is undesirable and destined to failure as cost leaders or differentiators or focus will be better placed to compete in each segment. However the work of Kay Stopford and baden-fuller rejects porter assumption and points to Toyota cars and Benetton clothing both of which are differentiated yet have low costs (lynch 2000). Indeed as mentioned above not only do Toyota brand and price differentiate the use of the Lexus brand also enables them to focus on the upper class niche market.
M&S could additionally offer these boutiques as a franchise this will enable M&S to transfer risk to the franchisee however a franchisee may be reluctant to invest in a franchise, which has yet to establish itself.
4.8 Boutiques Development Strategy
The preceding part of section 4.8 are concerned with strategic development and evaluation of fashion boutiques
4.8.1 Generic strategy
Developing boutiques within the upmarket sector targeted towards a different demographic (15-30 age group) means that the competitive scope is within the narrow area of porters 5 forces. The demand for high quality and good service ideals of the targeted demographic group coupled with their expectancy of paying higher prices will mean generic strategy should focus on differentiation. Thus strategy will occupy 3b differentiation focus of Porters strategy. In addition perceived added value should be high with high price thus focussed differentiation of Bowmans clock is also applicable
4.8.2Alternative directions
Boutiques will represent the product development range of the Ansoff matrix this is characteristically of lower risk than market development and diversification though returns are likely to be less as well
4.8.3 Alternative methods
Acquisitions represent a viable and workable alternative, as acquiring boutiques will benefit M&S as they will inherit staff with previous experience and knowledge, in addition good reputation, and supplier relations may also be inherited.
However the threat of recession should deter such a purchase as it is recommended M&S keep ample reserves.
Acquisition may be considered however during economic recession as traditionally boutiques are small chains localised in localised areas. As such their bargaining power is quite low and their ability to exploit bulk buying is also low. This may mean many will encounter economic hardship during recession and may be excellent acquisition targets as they have reduced bargaining power. This will allow M&S to acquire at low cost and benefit from greater gains i.e. Increased buyer power and economies of scale.
4.9 Suitabillity
Structured below is a question and answer layout in order to evaluate Suitability
4.9.1 How far does it overcome the difficulties identified in the strategic analysis(resource weaknesses and environmental threats?)
It enables further diversification into other areas, which is desirable during periods of recession. (Kester, L, 2002 Surviving A Recession)
Reputation within the 18-30 age group is likely to improve.
Average collection period for this product is likely to be
Improved as purchases are unlikely to be made on long credit terms
Return on capital employed is likely to be improved
4.9.2 Does it fit in with the organisations objectives, For example would the strategy be likely to achieve profit targets, achieve growth expectations or retain control for an owner manager
Yes it enables access to new areas of the market where the use of Multi national power has not been well utilised.
Increased buyer power and formation of relationships with other suppliers will enable further cost savings along all clothing lines resulting in greater profit.
The plan to allocate regional managers the task is likely to offer greater managemnt motivation from the use of work and finacncial related incentives.
The plan also works well with Vandevelde company culture. “Buying decisions, once dictated by the head office, are now set at individual stores and based on local tastes.” source
4.10 Feasibility
Structured below is a question and answer layout in order to evaluate feasibility
4.10.1 Can the strategy be funded?
Yes the scheme will be instigated gradually at rather low cost, If we assume M&S start with 5 localised stores confirmed to one geographical region(allows saving in distribution) E.g. Essex Yearly cost should be as follows
Table 4.10 illustrating the yearly cost of establishing a boutique
(Figures provided by telephone by Zagger management a local boutique)
The boutiques can be funded by retained profit thus interest payments are not required. Profit margins were not disclosed though I suspect stores will be able to break even within 9 months
4.10.2 Is the organisation capable of performing to the required level e.g quality level, service level)?
Yes M&S will be able to use its previous experience and knowledge to its advantage and Should be able to take advantage of internal resources such as marketing, strong buying power and relationships with suppliers to its advantage.
4.10.3 How will the organisation ensure that the required skills at both managerial and operative level are available
Deployment of localised feasibility analysis will be instigated by regional managers. Store management can be appointed within the organisation or from outside. M&S can use its internal appointment resources for this procedure, and its reputation as good employer with good opportunities will likely result in response from a large number of potential candidates with the required skills.
Will the technology (both product and process) to compete effectively be available
Yes M&S will be able to utilise its current technology such as smart chip clothes, open accounts and loyalty cards. In Addition the present accounting system and distribution network can be used or manipulated.
4.10.4 Can the necessary materials and services be obtained
Yes M&S will be able to use previous suppliers and negotiate new ones. In addition distribution networks can be reorganised.
4.10.5 Can competitive reactions be coped with?
Yes M&S for the most part will be in opposition with much smaller retailers who will be unable to attack M&S in terms of price and will also have smaller mark ups due to lower buying power as such retailers will only be able to compete in terms of survice, of which M&S will likely be able to imitate and improve.
4.11. Acceptability
Structured below is a question and answer layout in order to evaluate acceptability
4.11.2 What will be the financial performance of the company in profitability terms?
The allocation of five stores is likely to break even within 9 months profits from then are likely to improve due to increased awareness after 9 months further investment into more store will be likely increasing buying power and reputation. Within 5 years up-wards of 100 boutiques may be operating each generating substantial profit
What will be the effect on capital structure( e.g. gearing or share ownership)?
The initial outlay will be rather small and can be made out of retained profit
4.11.3 How will the financial risk
(e.g liquidity change)?
Financial risk is likely to be low though liquidity will be reduced as initial finaning will be made from retained earnings
Will any proposed changes be acceptable to the general expectations within the organisation( e.g. attitudes to greater levels of risk)?
Risk will generally be low reflecting the change of the environment ideals and impending recession. This may disgruntle some shareholders as ROCE, has been low in the past due to risk aversive ploys however economic uncertainty should justfy such an approach
4.11.4 Will the function of any department, group or individual change significantly?
Minor changes will be required such as recruitment of new staff, though management deployment can be coordinated allowing for minor disruption, new suppliers may be required and relationships with old suppliers changed slightly
Will the organisations relationship with outside stakeholders e.g. suppliers, government, unions, customers) need to change
One would expect that M&S will use different suppliers for their brand products such as Armani. M&S may decide to launch its own premium label alongside its luxurious counterpart in which case M&S will need to direct suppliers as to the nature and quality of its new products, different materials of greater expense may be required.
Will the strategy be acceptable in the organisations environment)e.g will the local community accept higher levels of noise)?
Yes off the high street locations are seldom subject to public concern as they are located in areas away from residents.
4.11.5 Will the proposed strategy fit existing systems or will it require major changes?
Minor changes will be required such as recruitment of new staff, though management deployment can be coordinated allowing for minor disruption
4.12 Management style
The decentralisation of power to allocate shops to purchase according to customer demand is an effective motivation and productive tool as it allocates responsibility and a degree of control to local management. It also enables M&S to identify its most effective management members. This acts as an extreme motivator as workers in line for promotion can be identified easier and appraised appropriately. Conversely failure and needs for improvement can also be identified.
However M&S must ensure that a decentralisation in power does not result in a major rise in bureaucracy, as this will increase the time needed to make decisions.
Effective training regimes and recruitment measures need also be deployed in order to ensure that those management workers who have been given this responsibility are confident and competent enough to perform the tasks required effectively
4.13 Corporate responsibility
M&S continual resourcing and investment in corporate responsibilities is commendable though in the past M&S Relationship with Suppliers and employees can be described as poor. Such poor practice coincided with a period of decline sales for M&S. One may assume that M&S new stance, as concerned corporate responsibility is a reaction to the adverse publicity it has gained in the past and that M&S has attributed it past relationships with Suppliers and employees as a reason for a decline in sales.
Evidence to support such a stance is currently unavailable. Whereas the success of Tesco despite their exploitative relationship with suppliers appears to suggest that corporate responsibility iniatives may not positively affect the profitability of a company. As such M&S should consider a review of its success of its corporate responsibility iniatives and should abandon their current approach if it is proven not to affect profitability. Unfortunately figures concerning the amount spent
Within this area are unknown so a review of its iniatives is difficult.
4.14 Cost cutting
A potential area of cost cutting is present in the use of labour within the third world though such practices have been highly criticised in the past due to workers being exploited in the form of long hours and low wages. The use of a code of practice, in addition to providing relatively high wages (though below the wages provided in other countries) would still allow M&S to lower cost. Though it would probably take a very charismatic character to explain such a process is of common good to the third world and thus M&S are unlikely to adopt such an approach as M&S appear to be placing great emphasis on corporate responsibility and are unlikely to jeopardise their current programme with the introduction of such a controversial method.
Additionally exploitative programmes to increase creditor collection period and reduce debtor collection period are unlikely to be pursued as M&S has had to rebuild a damaged image in the past and current spending on corporate responsibility indicates this is not an area in which M&S wants to find itself once more.
4.15 Franchising and food only stores
The use of franchised store is another intelligent ploy implemented by M&S as it has allowed M&S to enter new markets whilst placing the risk on the franchisee. This will allow M&S to discover areas of potential and identify which products are of interest and which are not.
The introduction of Food only stores was identified in the article
(Financial times, Dazzling times on way back for M&S; Shares hit two-year high)
As a potential area of future investment for M&S indeed M&S has opened two food only outlets in Scotland. The implementation of such investment has been in line with M&S gradual approach as M&S are currently monitoring the success of these stores and have yet to decide whether to continue with such a venture until they have ascertained whether these stores will experience long-term profitability. This approach is probably the best due to the looming recession
4.16 Vertical integration
The acquisition of suppliers is likely to enable greater cost cutting and will enable M&S to gain exclusive access to products. However such an acquisition may be considered risky as though M&S have experience of the clothing retail. They are unlikely to have equal knowledge of manufacturing procedures and processes. Adapting to such a change will initially be very costly as will the acquisition of the supplier. Though I believe in the long-term such an acquisition will benefit the firm.
The impending recession means such an acquisition cannot be justified as such expenditure is likely to hinder cash flow and reserves, which may be of vital importance in a recession environment. As such supplier acquisition is a definite investment that should be considered though such acquisition must be utilised during a period where economic prosperity is likely to continue to rise not when an imminent fall is likely.
Though during a recession period some acquisitions may be favourable as many firms may be undervalued in which case a constant review of possible targets should be instigated and where undervalued firms exist and can be utilised acquisition should be considered
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Internet articles
BBC news, Americans back attack on Iraq Americans back attack on Iraq [WWW] http://news.bbc.co.uk/1/hi/world/americas/2206164.stm (25th August)
BBC news, Beckham in talks to promote M&S [WWW] http://news.bbc.co.uk/hi/english/business/newsid_1833000/1833454.stm (12th April 2002)
BBC news, Budget 2002: The experts' view, [WWW]
http://news.bbc.co.uk/hi/english/business/newsid_2002000/2002189.stm (12th
April 2002)
BBC news, BBC News | BUSINESS | Discount shopping takes off [WWW] http://news.bbc.co.uk/hi/english/business/newsid_1972000/1972114.stm (12th April 2002)
BBC news, Business: The Company File Fashion swings in stores, http://news.bbc.co.uk/hi/english/business/newsid_1832000/1832114.stm (12th April 2002)
BBC news, Business: The Company File M&S 'turning its back on Britain' [WWW] http://news.bbc.co.uk/hi/english/business/the_company_file/newsid_501000/501306.stm (12th April 2002)
BBC news, [WWW] Business: The Company File M&S becomes Internet retailer http://news.bbc.co.uk/hi/english/business/the_company_file/newsid_403000/403461.stm (12th April 2002)
BBC news, Business Marks and Spencer - Your views and suggestions [WWW] http://news.bbc.co.uk/hi/english/business/newsid_348000/348567.stm (12th April 2002)
BBC news, BBC NEWS | Business | US may already be in recession [WWW]
http://news.bbc.co.uk/1/hi/business/1407245.stm (23rd August)
BBC news, BBC NEWS | Business | What caused Japan's recession? [WWW]
http://news.bbc.co.uk/1/hi/business/2193853.stm (23rd August)
BBC news, Cross-channel underwear war [WWW] http://news.bbc.co.uk/1/hi/business/1881342.stm (23rd August 2002)
BBC news, Marks and Spencer boycotts Indian leather [WWW] http://news.bbc.co.uk/hi/english/world/south_asia/newsid_1400000/1400981.stm (12th April 2002)
BBC news, BBC News Marks & Spencer enters Indian market, [WWW] http://news.bbc.co.uk/hi/english/world/south_asia/newsid_1706000/1706256.stm(12th April 2002)
BBC news, Marks & Spencer sells Spanish stores [WWW] http://news.bbc.co.uk/hi/english/business/newsid_1634000/1634305.stm (12th April 2002)
BBC news, M&S close to supermarket deal [WWW]
http://news.bbc.co.uk/1/hi/business/2021722.stm (23rd August 2002)
BBC news, M&S fights compensation claim [WWW] http://news.bbc.co.uk/hi/english/uk/northern_ireland/newsid_796000/796908.stm (12th April 2002)
BBC news, M&S Turns corner as profits soar [WWW]
http://news.bbc.co.uk/1/hi/business/1999559.stm (1st June 2002)
BBC news, M&S unveils new look
[WWW] http://news.bbc.co.uk/hi/english/business/newsid_686000/686710.stm (12th April 2002)
BBC news, Q&A is Marks and Spencer back in fashion? [WWW]
http://news.bbc.co.uk/1/hi/business/2119606.stm (28th July 2002)
BBC news, Supermarkets code 'too weak', [WWW]
http://news.bbc.co.uk/hi/english/business/newsid_196000/1963463.stm (12th April 2002)
BBC news, Survey Finds Resistance to Online Clothes Shopping [WWW] http://www.techexchange.com/tekguru/thelibrary/e-apparel/tsld009.htm (12th April 2002)
BBC news, Timetable of A merger, [WWW]
http://news.bbc.co.uk/1/hi/business/562640.stm, (5th august 200)
BBC news, UK must consider attack on Iraq [WWW]
http://news.bbc.co.uk/1/hi/programmes/hardtalk/2209496.stm (25th August)
BBC news, UK support on Iraq 'is assumed' [WWW]http://news.bbc.co.uk/1/hi/uk_politics/2204825.stm (25th August)
BBC news, Watchdog exposes customer whims, [WWW] http://news.bbc.co.uk/hi/english/uk/northern_ireland/newsid_814000/814138.stm (12th April 2002)
Buisness week, A Sigh of Relief at Marks & Sparks, [WWW] http://www.businessweek.com/magazine/content/02_03/b3766139.htm
(12th April 2002)
Calvery, J, Why do we have recessions, [WWW] http://www.1stannex.com/theory/recession_two.htm (7th April 2002)
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Financial times, Dazzling times on way back for M&S ;Shares hit two-year high[WWW] http://globalarchive.ft.com/globalarchive/article.html?id=020411011843&query=Per+Una+ (12th April 2002)
Financial times, In & Out [WWW] http://globalarchive.ft.com/globalarchive/article.html?id=020411011843&query=Per+Una+ (12th April 2002)
Fortune.com, Global Most Admired Companies: Marks & Spencer P.L.C.
[WWW] http://www.fortune.com/lists/globaladmired/snap_829.html, (34th August 2002)
IBM, Marks and Spencer fashions new strategy with IBM business intelligence, [WWW] http://www-7.ibm.com/e-business/au/case_studies/mark_and_spencer.html (12th April 2002)
Kester, L, Surviving A Recession, [WWW]
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Microsoft, Marks & Spencer Uses Windows 2000 Server To Gain Market Advantage Over Competitors, [WWW] http://www.microsoft.com/business/casestudies/marksspencer.asp(12th April 2002)
SI games, Three year sponsorship deal for leagues newest club, [WWW]
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Topgear, Skoda Octavia, [WWW]
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Wright, R, A Guide to the Harvard referencing system: 2.9 & 3.4 Internet articles,
[WWW] http://www.studentshout.com (8th April 2002)
Yahoo! Finance, M&S's new chief puts faith in technology [WWW]
http://uk.news.yahoo.com/020823/4/d826l.html (23rd August 2002)
Yahoo news, Business leaders discuss the future of corporate responsibility [WWW] http://uk.biz.yahoo.com/020501/250/cy0w4.html (12th April 2002)
Newspaper articles
Spittles, D, 2002, Underneath The Arches, The evening Standard, Pg 58,