Marks & Spencer is one of the UK's leading retailers of clothing, foods, homeware and financial services, serving 10 million customers a week in over 300 UK stores.
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E1
Business Report
Marks & Spencer is one of the UK's leading retailers of clothing, foods, homeware and financial services, serving 10 million customers a week in over 300 UK stores. The Company also trades in 30 countries world wide, and has a Group turnover in excess of £8 billion.
Marks and Spencer originated from Michael Marks and Tom Spencer in 1884
Since then Marks and Spencer has become a global retailer and each year has seen the company go from strength to strength. Although this can be said for most years Marks and Spencer has had its recessions from about 1998 - 2000 Marks and Spencer went through a bad spell not only in its customer relations but also in the press and media. Since 1920, Marks and Spencer has bought directly through the manufacture, using its trademark name "St Michael" and became a public company in 1926 with its first store opening in 1930 in London. Café bars were opened in the late 1930's, as were research labs to pioneer new fabrics to the M&S range.
Since then M&S has become Britains leading department store offering a wide range of products and services.
M&S has six executive directors, this is obviously a winning factor in M&S as it has shown an increase in sales every year. There are many strengths and weaknesses to this kind of structure. Marks and Spencer is a
Sole Trader
This is when an individual owns and operates their business their own way, although it can be done by more than one individual the sole trader makes the financial decisions. The sole trader is the only one who obtains any success but is liable to any burdens that may get in the way - I.e. bankruptcy. He or she will have unlimited liability.
Pros
- More capital
- Expansion
- Additional Skills
Cons
- Share profits
- Loss of control
- Unlimited liability
Marks and Spencer was once a sole trader when it first opened, but now is the complete opposite.
Public Limited Company. This is when the shares of a company can be floated then sold on the stock market, so therefore anyone who is interested in this organisation can have his/her share of the company. Were as some companies are Private limited companies M&S is a public limited company, this means a public limited company like M&S can raise capital from the general public whereas private limited companies cant, the share have to be sold or bought with the permission of directors of that company. Private limited companies have to have a capital of £50,000 upwards, whereas there is no requirement of capital for public.
Public limited companies like M&S spend Thousands each year providing accounts for their investors, this can raise interest into the business and help there annual capital. M&S have even made an independent website for its investors, providing accounts and reports. There are equally Pros and Cons to a public limited company like M&S.
Advantages
* It is generally easier to raise finance that it would be for a private limited company.
* There is less risk into investing into a public limited company, so M&S is likely to capitalise from smaller interest charges.
* Manufactures and suppliers are more
Disadvantages
? The cost of floating shares on the stock market can cost and some of the outlay is fixed and so falls heavy on small issues. As the company increases in size the cost gradually will fall.
? A public limited company must keep their investors informed and so therefore have to spend money in keeping the investors interested in the company. Marks and Spencer has spent thousands on their website informing investors about reports and share rates.
? This information can be very sensitive and competition can easily get their hands on it.
? It is very hard for on individual or group of people to get control of the business.
Although shareholders of a public limited company own a percentage of the business they don't have control over ...
This is a preview of the whole essay
? A public limited company must keep their investors informed and so therefore have to spend money in keeping the investors interested in the company. Marks and Spencer has spent thousands on their website informing investors about reports and share rates.
? This information can be very sensitive and competition can easily get their hands on it.
? It is very hard for on individual or group of people to get control of the business.
Although shareholders of a public limited company own a percentage of the business they don't have control over any of the day to day decision making. Directors are used to represent their interests and manage the organisation on the shareholders behalf.
AGM are held, but often poorly supported by shareholders and it is usually large institutional investors who dominate voting.
Liability
Limited liability
The liability of a firm's owners for no more capital than they have invested in the business. Essentially, the legal separation of ownership and liability means that a stockholder can lose no more than he or she has paid for the shares of ownership regardless of the firm's financial obligations. Limited liability is one of the major advantages of organising a business as a corporation.
Unlimited liability
The liability of the owner of a business for all the obligations of the business. An owner's personal assets can be seized if the business's assets are insufficient to satisfy claims against it. The placement of personal assets at risk is a great disadvantage of proprietorships and general partnerships. The ability to limit the amount of liability to which an owner is subject is a major reason for the formation of corporations and limited partnerships.
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E2
Marks and Spencer has Many business objectives, first of all is the mission statement.
"Vision
To be the standard against which others are measured
Mission
To make aspirational quality accessible to all
Values
Quality value, service, innovation and trust
Although this mission statement is short, it jumps strait into what they are about and is something any investor can understand.
Their objectives for competition are also simple and have not changed since the company started.
"By focussing on our customers and applying our unique fundamental strengths to formulate a strategy that has become the catalyst for Marks & Spencer's recovery. These strengths are:"
* 100% own brand
* Command of supply chain
* Scale and authority
* Focus on superior quality and innovation
* Assisted self selection
* Underpinned and executed through the talent and capability of our people
Luc Vandeveld, company chairman issued his annual report with 3 main objectives. These were simple cam clear, and have helped marks and Spencer achieve better results. M&S aims to increase its profits each year gradually. It does this by improving quality each year, as quality is a main factor to M&S. By asking what the consumer wants they are able to obtain good results. M&S provide services to the community, but not a great deal - every coat hanger that is returned or not wanted is disposed and all the money from that is given to charity - making M&S look like an Eco friendly business. All the card, plastic is recycled and any other waste is recycled and profits form that are given to charity. - Its ways of developing a skilled work force are taken very seriously - Training schemes and reports are undertaken, where each member of staff is put on review, under Punctuality, Attitude, customer help, and many other skills that the staff are required to have. Red being "bad" White being "mediocre" and "Green" being Good. Each employee at M&S always looks out at other employees to make sure they are doing their job - very much a role culture, and anything that isn't seen as acceptable at M&S is usually reported back to the line manager or someone higher up the hierarchy. Time keeping is very important at M&S, they dislike any employee arriving on time, and alternatively they prefer arriving times about 10 minutes before the start. This can be seen a discipline and another way of creating a devoted work force. Training programmes help employees to provide a better service, everything is covered, from how to serve someone to how to fold up clothes when sold - this is an excellent way of making sure the employees are up to standard and provide the right service that should be expected by the consumer.
The first was to focus on the heart of our business - our retail and financial services operations in the UK - and to get back to the fundamental strengths that had made Marks & Spencer great in the past.
Through this business report, it shows how he is trying to use the same strategies that were used when makers and Spencer was at its greatest. Marks and Spencer wants to stop all the products that are causing profit loss, i.e. in a store in Taunton Marks and Spencer has recently closed down Their bakery section because although its sales were reasonable, its produce was too high and more waste was being thrown away each day, causing more of a loss than profit. Marks and Spencer's downfall in the late 90's meant that recovery was vital, but it was in very harsh competitive marketplace. The report says that there has been a deadline in the company to see the changes take place.
Although the company started to make these changes almost a year ago, its objective now is to secure their stake in High street retailing. They now want to bring back the traditional products that customers used to have and still want this day.
Group turnover and operating profit
(continuing operations)
2002
2001
£m
£m
%
Turnover
7,619.4
7,342.6
3.8
Operating profit
629.1
480.9
30.8
(before exceptional items)
UK Retail turnover and operating profit
2002
2001
£m
£m
%
Turnover
6,575.2
6,293.0
4.5
Operating profit
505.2
334.8
50.9
(before exceptional items)
These figures show that their objectives have been met, but marks and Spencer are still looking to improve.
What next?
Over the next year marks and Spencer want to...
•
Regain our leadership in clothing and speciality food by translating our scale and authority into superior quality, value and appeal;
•
Build on our unique customer relationships through new products and services, particularly in Home and Financial Service;
•
Shape our store locations, formats and product offer to meet the changing needs of our customers;
•
Reassert our position as a leading socially responsible business.
Marks
E3
Finance
All finance is delt with in the main office of each store - employees who are temporally get paid on Tuesdays each week, where as employees who are permanent are paid monthly on Fridays.
Tills are emptied every night and refilled each morning for security reasons -
Production
Everything produced by M&S is from a company who make there items only for M&S, nothing that isn't made by them is sold in store, some people at M&S believe this is why M&S is so successful compered with other high street retailers. Every morning stock from the manufacture is brought in, and old stock is replaced by the new.
Stock control
At Marks and Spencer all the goods that arrive are all from companies that specifically are in conjunction with M&S. This not only cuts cost, but also means here is a good relationship with their supplier. Every morning stock for all departments of the store comes in from across the UK. Weather it is food, clothes or gifts it is all checked. This ensures a quality control and stock control. If there is too much of one good, then it will be sent back. Employees of M&S are used to find out what stock is needed and then an order will be placed, this can safe marks and Spencer thousands in product loss.
Training
Every employee is trained over three days to M&S standard. The day usually starts at 8.30 am and finishes at 5.30. The training covers every aspect of the business. From till training to customer complaints. Because marks and Spencer employs around 200 staff in Taunton, it has its own training room, and staff who are mainly there to train people up. This not only saves marks and Spencer in money each year but also can mean that they can train the new employee to the type of business culture that that particular store has.
Store maintenance
M&S employs specialist cleaners, who work each morning to clean the store before it opens, usually at 5am to 9 am and make sure that there isn't any fire hazards or anything that may void health and safety. Because there is a big risk of fire in M&S "fire teams" have jobs of making sure all the emergency exits are safe and that nothing will stop people from escaping in case of fire. Even if an object in front of an emergency exit door, it could mean that M&S would close down, if a fire inspection was to take place, and that's how important their jobs are.
Research and Development
M&S have been pioneering materials since the 60's and many high street competitors have used the same material made by M&S. Over the UK there are laboratories looking on to new types of materials that customers would like to buy, this is M&S satisfying the consumer.
Marks and Spencer aims to achieve its objectives by bring the business back to what it used to be. While expanding the business and opening new stores, its competitors were strengthening and this came as a surprise for M&S. They want to give there shareholders something back, and give greater value to the shareholders. M&S need to measure more accurately exactly what is being sold and what isn't, and invest into more research of new styles that there competition doesn't have. No necessarily a radical change but something fresh to the business. M&S are constantly changing the stores around and trying out new designs, this is good because in the past stores have looked dated and put people off M&S, but the changes have to be simple and nothing too over the top, ie keep the mens clothing on the same floor.
E4
M&S have many different managers in each store. For each section of the store there are different roles each manager should take. "line managers" are what each section would have. Most line managers use the Y theory, opposed to the X theory. This is were...
X theory
* Employees dislike work and will avoid it if they can.
* Employees will prefer to be pointed in the direction of work
* Want to avoid responsibility
* Employees need to be controlled
Y theory
* Putting some effort into work is natural
* Employees want responsibility
* Employees are creative
The managers In M&S have adapted to a more team leadership style and the approach would be to delegate authority to meet objectives. Workers are told what to do by a supervisor. In this kind of team management the supervisors are there to help employees meet their objectives. Much trust is put in the employee at M&S because there isn't someone watching what the employee is doing and they are told a task and left to get on with it. There is an effort at M&S to remove the distinction between managers and employees, this is evident because line managers do the same work and same tasks as most employees and everyone helps out to make the business as prosperous as possible. The only way there is a difference is the salary that they are getting paid and the uniform they wear. Terms and conditions apply to all the staff, and everyone is treated equally. This gives the employees a sense that they too are as important as the managers do and believe that there job is an aspect of the business. A single status is applied, where employees get the same number of breaks, eat in the same rooms and get given the same benefits. All in all it builds the team sprit up for the employees and makes them think that there job is worthwhile keeping.
Culture within the business
Role culture is the most widely used type of culture in M&S.
It is when work of the organisation follows rules and procedures, anything unusual will be referred up to the hierarchy. People's jobs will be tightly defined and the individuals will have little or no discretion. The work given to the employee will be broken down into tasks then monitored this will also make the employee expected to have high authority for the members up the hierarchy.
E5
The Role of communication
M&S uses communication in a variety of ways. Without it employees wouldn't know what to do, and would be useless to the business. Good communication enables...
* Feedback from the employee
* Shows the roles and responsibilities
* Motivates and sets goals
* Gives good co-ordination
With good communication, staff are able to set there goals and achieve what the managers want.