The ability to track inventory inside and outside of the store is also an advantage as it reduces staff theft and shop lifting (Hingley 2007)
This efficient technology optimizes inventory management; improved order forecasts and eases distribution for a massive 350 million garments, which are moved into the Mark & Spencer stores, each year.
Retailers also believe that RFID will bring huge benefits speed and efficiency in store operations, better tracking of products throughout the supply change and also enhance forecasting (Jones et al. 2005).
Research has proven that RFID technology would bring definite financial benefits. For example, in a research by Karkkainen in (2003) in Sainsbury reported that an estimated benefit of about £8.5millions per year will be realized if RFID was to be use. Karkkainen also stated that the potential benefits are not only restricted to retailers but also to suppliers through operational synergy and the potential to reduce the out of stock rate of their products. Another potential financial benefit is the use of the smart tag which can be used in the prevention of the product being lost, stolen or wasted. (Mayfield 2002)
Before the RFID technology, barcodes were quite dominant in the retail business and had been around and established for more than 25 years. RFID technology offers an instant advantage over the barcode technology by reducing human involvement and hence saving time. Barcodes have been quite dominant in the retail business for more than 25 years. Using barcodes products will have to be manually scanned and read individually. The bar codes have to be seen to be scanned and if the barcode is damaged or tampered with it is impossible to read. The information in a barcode is very limit. The RFID technology can read a whole cage or trolley of products at the same time (Mayfield 2002 Hingley (2007).
It also must be noted that the RFID technology is still relatively more expensive compared to the barcode technology despite of the fact that the technology is indeed getting cheaper, every passing day.
According to the German retail Metro AG (Blau 2004), RFID will eventually replace barcodes in about 15 years (Blau 2004) For RFID to be a viable alternative to barcodes the unit cost of a RFID tag will need to drop to €0.01 (Blau 2004).
The induction of the RFID technology however has a lot of advantages compared to the barcodes. However it is an expensive technology and barcode technology still offers three distinct advantages; cost, established technology and reliability. Hence Barcode technology still offers a greater advantage for lower priced goods of large volumes. RFID technology would take time to get established. It is important to note that when barcodes were first introduced similar problems were experienced to those currently experienced with RFID (Hingley 2007).
However, it must be noted that Marks & Spencer has already been spending over the RFIF technology, That is because they are mindful of the fact that RFID technology would, in the future become a source of competitive advantage for them. Other major players in the retail industry also realize that fact. Wal-Mart in the USA has asked all its major suppliers to induct RFID tags on all pallets and cases. It has been estimated that for the suppliers to comply with Wal-Mart request is costing each $500.000 (Hingley 2007).
In the UK, some retailers have not made any decision as to who will be responsible for the implementation in the supply chain (Hingley 2007). As mentioned earlier the RFID technology would change the retail industry scenario and in it is predicted that it would give the larger players in the industry, huge benefits. Firstly, the amount of investment required to implement the RFID technology could only be afforded by the larger retailers and secondly RFID would provide them with greater ease of ‘transfer of information’; hence making their supply-chain faster and smoother.
Q)2
As today’s business environment has gotten more complex due to the challenges put forth by economical recession, globalisation and Industry consolidation. Additionally, there exist a stark deficit of trust among the pubic; a sentiment that was triggered due to the unveiling of several accounting scandals and ethical misconducts by leading business organisations. The agency problem (conflict of interest between management and shareholders) is still viewed as a problematic issue. This makes it even more important for the organisations to balance the needs of its stakeholders. Anyone who has an interest in what a business does or is influenced by it, can be considered as a stakeholder. Stakeholders can be categorized as external and internal stakeholders. Internal stakeholders would include shareholders, suppliers and the employees of an organisation. External stakeholder usually comprise of customers, local communities, various interest groups, government and opinion formers. Aligning the interest of all stakeholders is indeed a very daunting task as there is always some level of friction between the interests of stakeholders. The parameter of success in this case is to minimize the friction. Completely eradicating all sort of conflict might not be a very realistic task. It is up to the leader to balance the act between all the pertinent stakeholders. Meeting the "conflicting demands of different stakeholders," (Loo, 2002) is the responsibility of a firm's leadership. This can be achieved by applying good leadership qualities and management principles.
The Council on Library and Information Resources (2005) states that because external environmental factors and management's tone affect the organisation's ability to meet its objectives, it is important that management understand the importance of these elements (Managing Business Risk). For aligning the interests of the internal and external stakeholders, the organisation must possess ample leadership skills. It would be important to state that an organisation should have an independent board of director to boast transparent and potent leadership (Loo, 2002).
The communication skills of the decision-makers (leaders) must be strong so that the demand of all stakeholders could both be understood and communicated, well enough.
Organisations are increasingly working on placing their image differently in the customer’s minds. For that, they have to keep in view the customer’s stakes for that is the only lasting way of developing customer loyalty. Many organisations are striving to model themselves upon ethical grounds to achieve that. One way of achieving that is to become more socially responsible. Customer’s, these days are not only concerned about getting ‘value for their money’ but are also touchy about societal issues like pollution and global warming.
On the long run, developing and retaining customer loyalty takes the precedence over meeting financial targets. Companies which are committed towards the well-being of local communities will be the ones winning customer loyalty.
That is where effective ‘customer relationship management’ comes into play. Effective CRM helps the decision makers balance the act between customers and the organisation. It helps the leadership balance the weight associated with stakeholder’s needs and minimizing the friction between them. It is important that the leadership of the organisation understand that there is value in investing in the interests and relationships of the stakeholders (Maak & Pless, 2006).
Similarly, there are ways to reduce the friction between the internal stakeholders. The friction between the management and the shareholders could be reduced by giving more incentives to the management, especially in form of stock options. Involving the employees in decision-making also reduces the conflicts of interests amongst themselves and the shareholders. For it must be acknowledged that today’s workforce generally constitutes of more educated employees than in the past. It is the leader’s responsibility to make them the part of the team and win their loyalty. Also, important is the surety that these employees work in good and healthy working conditions and have competitive terms of employment.
Hence before making any important decision an organisation must create a delicate balance between all stakeholders by:
- Assessing the economical outcome of the decision ( For shareholders, specifically)
- Reckon the social implications for the customers and management.
- Access the long-term consequences (especially keeping in view customer’s views)
Q)3
We know that Marks & Spencer is one of the leading retailers in the UK and it employees more than 77,864 people. It has generated revenue in access of 9,062.1 million, with a clientele over millions.
One emerging issue with Marks & Spencer is pertinent to ‘environment’, which happens to be a hot issue, presently. There are around three major areas of operational activities which Marks & Spencer should consider if they desire to adopt a persistent environment friendly scheme of operations.
These three elements are:
Energy consumption for their stores, distribution centres, warehouses etc.
Fuel consumption used in their supply-chain, for the distribution of products
Waste material collected from their offices, warehouses and stores.
Firstly, Marks & Spencer would have to rigorously work for the identification and implementation of certain operational changes in order to minimize the environmental impact created by their business. The implementation of such measures would stem from the understanding of responsibility to work towards a more environmental- friendly world. Marks & Spencer had announced to spend around £200m on an “eco-plan”, in the year 2007. The time-span of the plan was planned to be 5 years. That proves that Marks & Spencer indeed has a stark realization of this particular emerging issue.
They must try to minimize their carbon footprint by reducing energy consumption and making smart choices in term of selection of energy sources. Interestingly, they should indulge in certain environment protection activities, some of which are the following:
Energy & fuel consumption:
Marks & Spencer should spend over employee awareness programs to counter this problem. The employees could make a huge difference by acting responsibly and reducing energy consumption, when it isn’t needed. Turning off the lights when not needed, turning off the computers when not needed and setting up photocopiers to consume double sides of the paper, are all acts of an environment-friendly team. Furthermore Marks & Spencer could use green energy to power up their UK based buildings. They could also try to minimize the use to paper to support plantation and use of trees.
Specific employees could be used to ensure the implementation of such practices. Employees should be compensated to keep them motivated for acting responsibly towards the cause. Similarly, vehicles that consume less energy and are proven to be more environmental-friendly should be preferred for distribution. They could ensure that their transportation vehicles use at least 60% bio-diesel.
Climate Change:
Climate change is a serious universal issue. Carbon emission and proper waste-management have increasingly become important issues as they contribute to global warming.
Marks & Spencer should investigate and report the degree of carbon dioxide (CO2) emissions associated with their stores, distribution centres and offices
Packaging, distribution and disposal of waste material:
Reduction of use of plastic should also be ensures and brought down to 20% of the total consumption so that recycling process is reduced and the health-hazardous plastic usage is limited. The plastic bags that are used should be converted into recycled form and a campaign should be run to discourage the customers from usage of bags, especially plastic bags. Additionally, they should also run a campaign to encourage the customers to consumer healthy food.
‘Social responsibility’ effect to the current credit-crunch situation:
Another issue that Marks & Spencer should be looking to handle revolve around the ‘social responsibility’, especially in effect to the current credit-crunch situation. According to Shortland (1998), “Companies that embrace the principles’ of Social Responsibility and pro-active ethical conduct are the companies of the future-the firms that will survive and prosper.”
Support the Suppliers:
Recently, some of the retail giants are known to exploit suppliers, since they have a stronghold on them. Marks & Spencer must try to distinguish itself in that regard and promote ‘fair-play’ conducts. They should try to support the suppliers through the supplier exchange program. One recommendation would be to work with the local UK farmers.
Improving compensation schemes:
In 2001, Marks & Spencer cut a sizeable 4390 jobs when they tried to restructure their business. They had to confront a lot of criticism for not considering the ethical implications of their decision and prompted a very negative image of the organization. Now, if they desire to salvage any pride, they would have to conjure the image of a very responsible retailer. They must try to introduce competitive compensation schemes for their employees and also provide them with latest training and skill-developing programs.
The aim of all those activates is to acquire a corporate image that is ethically clean and also win long-term loyalty both from customers and suppliers. It ought to be recognized that the cost incurred over all these activities would not go in vain, as it would definitely earn a great deal of customer loyalty and general acceptance among the public and the government. This amount could well be viewed as worthy investment, rather than expenditures.
Spend over charity:
They should try to spend in direct charitable donations. They are currently making donations for the cause of against breast cancer. Furthermore they donate the unsold food to the Fare Share, which is a community for food re-distribution. They also donate returned clothing to the birth defects foundation. They could further extend the sphere of donations to other charitable causes.
Invest more pre-tax profits in community projects:
Currently Marks & Spencer are investing around 1% of their pre-tax profits into community and society welfare projects, yearly. They would have to increase that percentage to better their image in the society.
Conclusion:
We live in an ever-changing world and the rate of change is perhaps quicker than ever witnessed by humanity. Under the circumstances organizations must always have a potent pre-emptive strategy to timely understand and deal with such issues
Appendix
Appendix .1
PEST Analysis
Political
The UK political system has been consistently stable hence encouraging capitalism. However it must be noted that anti-monopolistic regulations, employment laws and taxation policies are affecting the retail industry. Acquisitions are looked up rather skeptically and investigated thoroughly. The trade unions are relatively strong. All retail players in the market including Marks & Spencer have to find other ways to cut down cost (BBC.com).
Economic
UK’s economy too, has felt the ill-effects of the current global recession. The current rate of inflation is 3.2% while the GDP growth is 3.2%, while unemployment is 7.8%. The economy has shrunk in quarter 3 of the year 2009 by 0.2%. Under the circumstances, the consumers have become more price-sensitive and less likely to consume expensive products due to lack of disposable income.
Socio-cultural
Bulk-buying patterns have definitely on the rise for the last decade or so especially when it comes to food-consumption. The demand for convenient food has also increased over the years. Another important point to be made is that, these days consumers are better-informed than ever before which means that all the retailers including Marks & Spencer cannot afford to lag behind, in terms of latest trends and fashion.
Appendix 2
SWOT Analysis
STRENGTHS
- Marks & Spencer gives a fairly wide variety of clothing.
- Marks & Spencer earns a fairly high amount of sales because of ‘impulse buying’
- The fashion trends in clothing industry keeps changing and UK has a strong fashion and design industry.
- The costs of production of clothing are falling as the manufacturing is outsourced to other parts of the world.
WEAKNESSES
- Competition within the industry is very tough. Consequently, the total profit margin is constantly being reduced.
- The leading European companies have greater productivity than the local UL clothing industry. Consequently, the local industry is in a constant threat from the low-cost foreign companies.
- The major branks within the UK industry are being emulated by competitors.
- The fashion and clothing industry is a very high-paced industry, which means that the changes in the fashion industry could render the items useless, rather quickly.
- Internet selling hasn’t historically been as big a success as it was predicted, once. People like to try feel the quality of the clothing before trying it.
- Major part of sales is seasonal, with major chunk of buying done around Christmas.
- The current economical slump could adversely affect the industry as most of the buyers become very price-sensitive in such times.
OPPORTUNITIES
- Women spend a lot more on clothing than men, which means that this segment of the market could still be targeted.
- There is ample room for market growth and consolidation.
- There is potential for expansion internationally, especially in the new EU countries.
- As the number of working women increase, they would get more power to purchase new clothing.
- The industry does encourage a niche, teenager market for 8 to 12 years old kids.
THREATS
- Many other clothing chains have arrived at the shores of UK and are successfully capturing the market.
- Marks & Spencer is in dire threat of losing out market share to aggressive campaigns of organizations like Arcadia.
- Manufacturing and retailing both are labour-intensive fields, which means that they have to comply to the compensation rules ( especially minimum wages and working conditions and hours) for the workers.
- Both manufacturing and retailing are labour-intensive and are affected by legislation regarding minimum wages and working hours.
- The grocery multiples are increasingly getting involved in clothing retailing which gives the market a further low-price capacity.
- The current economical conditions could adversely affect sales, especially from men.
References
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Blau, J.(2008, May 30) RFID: the price must be right. .com, retrieved February 22, 2008, from
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Griffith& S.Wall (2006), Economics for Business and Management, A Student Text, Pearson Education
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Hingley, M, Taylor, S. Ellis, Charllotte(2007)Radio frequency identification tagging: supplier attitudes to implementation in the grocery retail sector. International Journal of Retail and Distribution Management. 35(10) 803-830
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Jones, P et al (2004) Radio frequency identification in retailing and privacy and public policy issues. Management Research News .27(8/9) 46-56.
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Jones, P et al(2005) Radio frequency identification and food retailing in the UK. British food Journal. 107(6) 356-360
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Jones, P et al(2005) The benefits, challenges and impacts of radio frequency technology(RFID) for retailers in the UK. Marketing Intelligence and Planning .23(4) 395-402.
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Karkkainen,M(2003). Increasing efficiency in the supply chain for short shelf life goods using RFID tagging. International Journal of Retail and Distribution Management. 31(10) 529-536.
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Loo, R. (2002). The Delphi method: A powerful tool for strategic management. Policing, 25(4), 762-770.
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Maak, T. & Pless, N. M. (2006). Responsible leadership in a stakeholder society: A Relational perspective. Journal of Business Ethics, 66, 99-115.
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