Learning Aims A and B – To explore the features of different businesses and what makes them successful
Task – To evaluate the reasons for the success of two contrasting businesses, reflecting on evidence gathered.
M&S Recent Performance
I am going to evaluate M&S’s performance since the year 2012 (5 years ago) and the most recent annual report (2017). I am going to look at Group revenue, Food revenue, Clothing & Home revenue, Group Profit before tax, number of UK stores, number of international stores and number of territories.
I will compare these between the year 2012 and now (2017). The group revenue of M&S in 2012 has been 9.9Billion pounds which was 2% higher than 2011, however 5 years later the group revenue of M&S is 10.6 Billion pounds which was 2.2% higher than 2016. From the group revenue I can see that M&S have been successful in increasing the revenue of its business by 0.7 Billion pounds which is a big improvement for M&S, for example, there was an increase of 7% over the 5-year period. This was also after a difficult time after the 2008/2009 recession.
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In 2012 the Food revenue of M&S was 4.7 Billion pounds with 3.9% up compared to 2011 where the food revenue was 5.6 Billion pounds up by 4.2% from 2016. This show me that the food revenue of M&S has increased as well with 0.9 Billion pounds which means that M&S have been successful in selling their food products. The Clothing & Home revenue of M&S was 4.2 Billion in 2012 which has gone down by 0.9% from 2011. However, compared to 2017 the revenue has gone down even more to 3.8 Billion pounds which is down by 2.8% from 2016 and this also resulted with losing 0.1 million customers in 2017.
As it has shown M&S needs to work on their Clothing & Home because the revenue has decreased from the last 5 years to now.
The group profit of M&S before tax in 2012 was 658 Million pounds, whereas compared to 2017 it was 176.4 Million pounds and this has gone down by 63.5% from the previous year which is disappointing. This shows me that the profit has decreased over the last 5 years which isn’t a good thing because M&S have earned less return in investment. However, M&S had to make substantial expenditure to revitalise the company and short-term costs should pay back in the long run.
At the moment M&S has 20.5 million customers in its Food firm which is 0.5% more than its previous year and 24.6 million customers in its Clothing & Home firm with 0.1% decrease of customers from its previous year.
In the UK The number of stores M&S currently (2017) has is 942 Food stores and 343 Clothes and Home stores and internationally there are 454 stores with 55 territories. However, compared to 2012 M&S had 731 stores in the UK and 387 stores internationally with 43 territories. This shows me that M&S have increased their number of stores and territories inside the UK and outside the UK, reflecting an overall growth.
In conclusion, I think the overall performance of how M&S have performed well over the last few years because from my investigation I can observe that M&S have done better in most of the aspects that I listed. However, the issues M&S have faced are their Clothing & Home segment and their group profit before tax. Their Clothing & Home firm has always (7 times in a row, so far) been going down and M&S couldn’t find a solution about this. It could have been that customers don’t like the brand or the variations being sold, but it is important to remember that the main customers of M&S are aged around 49 years or older, so they might not be able to afford the expensive priced clothes of M&S and choose to go to its competitor John Lewis.
Reasons for M&S Success
The reasons of M&S’s success and lack of success is because of M&S’s relationship and communication with their stakeholders and its organisational structure which I will evaluate below.
I will concentrate on the main 4 key stakeholders which I think are Shareholders, Employees, Customers and the Community and what sort of relationship and communication M&S had with each and of them and also how they have impacted on the success and lack of success of M&S
The share price of M&S at the 10th of March 2018 is currently at 277.60p and this is decreased by 0.90p which is 0.32%. From the share chart it shows a 1 year share price where it is shown that the share price has decreased since March 2017 (last year). This may put a strain on the relationship between M&S and its shareholders because from the data it shows that 1 share can be bought for 277.60p and it can be sold for 277.40p. This means that shares will be sold for a lower price than when bought which concludes that shareholders will make a loss of 0.60p per share and this may result in M&S having less shareholders that are willing to invest in the business.
The CEO of M&S was Marc Bolland for 6 years from 2010 to April 2016. Mr Bolland chose to retire and informed the board about this in 2015. He had some good sales and a few bad ones before he left. An example are the Christmas sales, with the Food sales M&S were up with 0.4% in the third quarter and they made a record sale in the Christmas week which was 17%. M&S also had a 20% increase in online sales in that quarter. However, a problem which M&S was having for multiple years is their General Merchandising sales such as Clothing as they fell by 5.8% in the third quarter. In April 2016 Marc Bolland chose to resign and the new CEO Steve Rowe came in his place from being in the Food department for a couple of years.
M&S has many ways to communicate with its shareholders. Firstly, the main shareholders who bought shares off the business have a right to discuss new points and let their voice be known. M&S makes it possible for these shareholders to discuss their point by having an Annual General Meeting (AGM) which is a meeting where shareholders can come together and vote and discuss their point of view about the business. At the 2016 AGM almost all shareholders attended, the resolutions and plans that M&S had set were agreed by 90.53% of the attended shareholders. This showed that many shareholders are agreeing on the new set goals of M&S. M&S also produce an annual report every year for the shareholders to show the statistics of the previous year and their plans for the next upcoming year. M&S also provided webcasts live for shareholders that couldn’t make it to the meeting so that they still know what is happening.
M&S also have Institutional investors who are also shareholders such as banks who provide big amount of money to invest in the business. M&S communicates with them by holding an annual governance event where director’s debate with some of the largest investors in the business. The members of their senior management also held 406 meetings with 245 different institutions during the year of 2016. These big investors also communicate with the business by sending an independent report from Makinson Cowell with their views on M&S’s management and performance.
Lastly there are shareholders known as private investors. M&S used a new communication method since 2016 called Shareholder Panel and this is where private investors are invited to have a one to one discussion with members of the board and senior management. Lastly M&S write out an annual business performance overview where they show and talk about the performance of the previous year.
These communication methods are very successful because this helps the shareholders to understand more about the plans of M&S and know what to expect, and if necessary offer recommendations.
In conclusion, I feel that the shareholders’ relationship has had an important role in M&S’s success, because from these meeting and events M&S were able to understand more clearly what the shareholders wanted from them, so M&S knew what to do and the same thing happened for the shareholders as they knew the statistics every year it was clear for them whether to keep investing in the business would be a good idea as M&S didn’t hide any losses away. Such is the relationship between M&S and shareholders is that the shareholders accept the tough times to re-establish Clothing & Home at present, but are confident the profit will improve in the future.
From the last 5 years (2012 – 2017) the number of employees have increase from 81,000 to 85,209 and I can conclude from this that M&S have been making acceptable sales and were able to open stores to offer 4,000+ jobs.
Communication between employees and the board of M&S is very vital in order to keep a good relationship with the employees which will keep them motivated and happy working for the business. M&S use multiple ways of communication to help employees understand the plans of the business. Firstly, the business allows employees from all levels to have discussions with directors of the business, so everything is clear for them. Colleagues share their views on customer focused question with the employees to make them aware of what customers want. M&S also provided a survey for the employees to take part and it was seen that 3% more employees took part in it which means that employees are more willing to share their opinions and views about future plans of the business.
Employees are able to see the quarterly CEO/CFO trading update which is sent to every store manager, so that employees are updated with trading updates. Another way M&S also communicates through social media by updating CEO updates to around 50,000 employees every month.
Lastly the biggest influence on employees has been B.I.G. which stands for Business Involvement Group and this is used to engage more with the employees by making them feel part of the business instead of just working for the business. Every store has a (B.I.G.) representative who is a person that informs all employees about new changes but employees can also talk with the representative about their views and opinions about the business.
In my opinion, I find B.I.G. very successful because it creates a stronger and improved relationship with the business and its employees. It also makes it easy to share ideas and opinions to each other.
In conclusion, in my opinion the role of employees was important to help the business succeed because with the communication opportunities employees can speak about their opinions and views of certain plans and by having these opportunities customers feel more to be a part of the business. This motivates them more to work harder and better such as to have a better mentality towards customers and work more organised which will help the business more as it becomes more satisfying to the customers.
M&S has made huge improvements and growth in the last few years and at the moment they have 32 Million customers who like to shop at M&S very often. In my opinion I find that the current relationship between M&S and its customers is strong and good because they have a CIU which stands for Customer Insight Unit and this gathers feedback through surveys, reviews and focus groups, so that M&S knows and understands the customer wants and needs in order to make the business a success by for example adding new products which customers like. The CIU is very useful as it helps M&S achieve its goals by showing them what customers want in order to keep them happy. An example of how M&S has communicated with its customers is by engaging and listening to them by creating the 2016 Christmas in Love campaign because thousands of customers asked for it. M&S also send Spark cards to £5.6+ million customers who receive lots of offers but also have a chance to engage and be part of a Plan A charity partner. The business has already raised £2+ million. However, lots of customers didn’t like the website and M&S has tried to make it easier and better to access. However, despite increased weekly visits, sales fail to take-off.
In conclusion, I find that customers have been a key factor to M&S’s mixed success because with their communication by letting know what they want from M&S it was possible to listen to the customer’s and make them happy which encouraged them to come to the business and do their shopping. However, in my opinion, M&S still have much to do on improving their online sales, particularly in Clothing & Home.
M&S communicates with the community by listening to them and making sure to understand their wants and needs in order to help them with things such as improving their health and wellbeing, helping their unemployment and poverty issues.
Plan A has contributed in many ways because M&S made sure that 1000’s of disadvantaged people got the training, work placement and employment to reduce unemployment. Plan A also has a global community programme where the lives of 40,000 people have been made better across the global supply chain and lastly, in 2015 and 2016 there were around 4,000 employee and customers volunteers who helped over 240 community projects across over 12 cities.
The plans that M&S have to improve their relationship and communications with the community is to keep listening to the community and making sure unemployment, poverty and wellbeing are made better and also helping people with more problems to get a chances to work, so they still can get a job and be paid.
In conclusion, I find that the community has played an important role in M&S’s overall success because they helped and created more goals for M&S in order to establish themselves in the business (profits) but also the people in the community (jobs, poverty) and by doing this M&S was and still is able to be a more successful business as they help out the people in need but also earn their profits at the same time.
M&S’s organisational structure has contributed to their success because with this structure the employees are put in functional areas and section so they know what to do and this helps the business as employees are able to make decisions and carry them out for themselves. With this structure the job roles are clear and lines of responsibility are high for everyone. With the roles being clear the objectives can be achieved easily, so that won’t be a problem for the business. The structure is in the right place to improve any weaknesses such as Clothing because the former CEO didn’t understand the customer needs properly, so Steve Rowe doesn’t need to introduce new aspect into the business. M&S has functions in the four key areas (Food, Clothing & Home, Online and International), which, I believe ensures M&S are rightly positioned to improve profits over the next few years.
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In conclusion, I find that the organisational structure has played an important role in M&S’s success because as M&S is a huge business there are lots of different levels in the structure with different roles and this means that everyone has a specific task to carry out, so if everyone is told what task they should focus on it would ensure M&S succeed as everyone is doing their task right.
NSPCC’s recent performance
NSPCC have grown a lot in the last 5 years since 2010/11 to 2015/16 as seen from the annual reports. NSPCC have taken action in order to prevent problems with children and worked hard doing this.
For example, they have been going to schools to make children understand how to be safer and what can be done if they feel unsafe and this helped children to be not bullied or abused in their lives. They also had lots of advertisements done such as on the television and use email and direct mail where they explained what could be done if children need help or feel unsafe and asked for donation in order to help the children that are already being helped by the NSPCC. From the annual report of 2010/2011 it shows that their total income resources were £128.3 million and donations and legacies were £116.9 million (91.1%), however compared to the 2015/2016 annual report it states that the total income was £128.9 million with £106.9 million (82.9%) being from donations and legacies and this concludes that within the last 5 years the NSPCC has been receiving less income from people compared to the 2010/2011 period.
From these annual report it was also shown how much money was used to help the children. In 2010/2011 £128.3 million was expended in total, however £111.6 million was charitable expenditure, so towards children and families, child protection consultancies etc. Compared to 2015/2016 there was a total expenditure of £124 million and £98.2 million went towards charitable expenditure. The expenditure is lower in 2015/2016 than 2010/1011 but that is mainly because the income was more in the older annual report than now.
In conclusion, I think that the NSPCC is still performing on a high level, however the fundraising with donations for example has been less compared to 5 years ago but this might have been because of these times of austerity. Also real incomes have been falling since the 2008/2009 recession and charities are finding it more difficult to increase their funds.
Reasons for NSPCC’s success
I will concentrate and investigate the NSPCC’s relation and communication of 4 key stakeholders which are the trustees, employees (full time), donors and children helped by the NSPCC. I will also comment on the role these stakeholders have played in the success of the NSPCC.
The trustees have a responsibility of overall control and strategy direction of the charity. The way that the trustees communicate is with meetings which are held 6 times a year where they review the areas of policies and agree upon. One of these meetings between the 15 Trustees take place over an evening and the whole of the next day where the trustees review the performances such as board performances of the last year and then they discuss and agree on new key objectives for the next upcoming year. Trustees also receive presentations informing them about the work of the society and the newest development in the charity sector, so the trustees have a strong and important relation with the board of the NSPCC as they are partly responsible in setting key objectives for each year. The NSPCC’s five goals ‘for 5 years to make 5 million children safer’ has been approved by the Trustee Board.
2) Full time employees
Full time employees are a huge part of the business as they help to run it, so the NSPCC wants to update them and train them to be the best at what they are doing. The NSPCC finds it very important that the communication is at top, so they have team development sessions every 6 weeks, so that each team meets together. The employees regularly have meeting to discuss their work, practise and development. Next to these meeting the employees get set tasks and objectives to complete on a daily or weekly basis, so that the overall business objective will be achieved in the long term. Community Union plays an important role in representing the NSPCC employees, ensuring that they work under acceptable conditions and are adequately paid.
The relation between the NSPCC and donors is very important because they are the main reason why children are helped out because they make it possible by donating money or gifts to the charity. The NSPCC usually communicates with the donors through commercials or billboards where they explain their plans and what they will do with the donated money from the donators. I feel donors to the NSPCC are highly loyal to the NSPCC, keen to help children who find themselves in threatening situations through no fault of their own.
4) Children helped by the NSPCC
The NSPCC is all about helping the children who go through problems such as abuse or bullying and so the relation between those children that are getting helped and are helped is very strong. During the process of providing help to these children, the children will build up a special relation with the NSPCC because they trust them and this is their aim to make people feel safe and calm. After these children are helped, the NSPCC communicates with them by contacting them by phone every month for example in order to make sure they are still doing good and feel safe.
In conclusion, I find that these stakeholders have played a very important role for the NSPCC because they helped and are still helping the NSPCC to achieve their objectives. The trustees make sure the right objectives are set, so the business is doing the right thing, the employees make sure the business runs and with the help of the employees, children are able to contact Child Line 24/7. The most important people are the donors as they make sure there is money to help these children because without their money those children couldn’t and can’t be helped and lastly the children who are helped by the NSPCC have helped their success because the NSPCC is all about helping these children be safe and not het abused.
In my opinion, I find that the organisational structure has contributed towards the success of the NSPCC because the structure has different functions which are all related, so all workers know where to go to for help and next to that all workers have very clear and specified tasks of what to do which means if they follow their tasks correctly the business will succeed and achieve their objectives. Indeed, the NSPCC allows employees to have their say about their views, so that the employees will feel more part of the business and stay motivated.
In conclusion, I find that the NSPCC’s organisational structure plays an important role in their success, because lots of people are helped and lots of donations have been made over the last few years which show that people are listening and helping the business, the ‘Fundraising’ function alongside the ‘Celebrity management’ function have continued to generate funds. The structure also helped with their success because everything was organised in the business as all staff knew their role and tasks to do.
In my opinion, the main reason for M&S’s success is from the moment that they changed CEO’s from Marc Bolland to Steve Rowe in 2016. I find this the reason because when Steve came in it was shown that their biggest weakness (Clothing) was going up again compared to Marc when clothing sales were performing poorly. There is still a lot of competition within their clothing department and other competitors but the number are going up again. The other departments Food and Home are still up in sales. On the positive side, M&S’s international sales are improving and if the European Market declines after Brexit, India (in particular) and China offer great opportunities.
In my opinion, the success of the NSPCC is mainly because of their strong and powerful promotion that they do always on television and written communication but also in newspapers for the elderly which are very eye-catching. The NSPCC also hold events, so that people donate money such as charity runs and cycling. By doing all these things they get people to donate which allows them to help people in need and that makes them successful.
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