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Change is thing of worry/concern to managers. It is something which is permanent. The organizations have to bring desired changes into their system with time. Change in technology, in process, frequent change in attitude to manage are essential/necessary for an organization to be successful. We can see number of examples. Say while moving around in malls or supermarkets is also a new concept in developing countries. This is the change in time. As more people are working now a days so due to short of time they prefer to go for shopping at a place where they can get all the required things under one roof. This is convenient to them.
According to Lewin whenever a change comes it has some restraining forces too which can be minimised by taking proper measures. Another researcher John Kotter, from Harvard Business School, has developed a new model leading change . this model offers valuable tool. He worked for many years and consulted many organizations to make this change model.
The first step of the model is, "defrost the status quo," It means leaders must work to establish a sense of urgency. The objective behind it should be good to do something different. An individual first needs to examine market or competitive realities. The next step is to identify urgent need in terms of a existing crisis, a potential crisis or a great opportunity. This is necessary to jolt people out of complacency. As per the given situation it happens that the audit group is always worried or scared of the change of leadership. This is something very common /usual now days. People come and go from an organization but this does not give a meaning that it is happening due to fear of job. Those who get better opportunity may resign and look for other jobs.
Retirement of the President/ professor is a pre-decided decision. It is term based. Thinking that the new President will come up with a new top management team is just an assumption. There is no proof to these talks. Therefore basing decision on them would not be an intelligent decision. According to Kotter, 50 percent of change efforts failed right here. He suggests that if more than 75 percent people of the work force accept the urgency then only the overall effort to change would succeed. Here it is only one department of 5 people.
Step Two: Form a Powerful Coalition
The next step of the change is to make/form a guiding coalition. It has been said that change cannot be directed through the hierarchy already existing. It should be cared/nurtured and supported by those people who are dedicated group of influential leaders in the organization. The group may be big or small. It does not include the complete corporate leadership due to reluctance in buying it. It should be influential for bringing the change. It is not possible to apply this cannot be applied to the given situation.
Step Three: Create a Vision for Change
The third step speaks of creating a vision by the leaders. Once the people have accepted that the change is urgent then they are keen to know about the direction in which they will move. They want a clear direction to a better future. The vision must be clear and concise. Kotter is of the opinion that leaders should be able to communicate the vision in five minutes and elicit understanding and interest.
Drivers of change are given below
Needs of people/customers
Customers becoming quality conscious
Make products available to the customers at every point of time to satisfy him
Growing competition in the market
Strengths and weaknesses of bureaucratic
The strength of bureaucratic organization is that they have laid down all policies, procedures, rules and regulations. The weakness is that they are very rigid in their approach and are forced to refer to the written policies. The problem comes when the changes in the environment are fast and the policies become outdated in short span of time. They need to be revised to take decisions on further issues. This slows down the process of working in bureaucratic organizations.
The selected organization for study is Mark and Spencer
The evolution of 'Marks and Spencer' started by Michael Marks in the year 1880 as a penny bazaar. Marks do the partnership with Spencer and joint efforts of both lead to a constant expansion of the 'Marks and Spencer' business. This business was made and grew around a close-knit family atmosphere which offered good pay packages to its staff until the 1970's. In late 1990's the company comes in the line of the UK's top successful, well renowned and profitable businesses but then it was affected by a rapid crisis which plunged and it take too many years for its recovery. After that several strategically decisions taken with care and rigorous thought process lead to make market again and has a total profit of 751.4m pounds (Ross 2006).
The major British retailer, Marks and Spencer has completed 125 years of business this year. There were good times when the firm was enjoying a leadership position and was among the first UK firm to cross the 1 billion pound figure as pre-tax profit. However, for the past few years it has not been able to regain the best of its times in the marketplace. There have been changes in the top management team which is full set to make the right changes, shareholders have been convinced that the company will be back. The financial results of this year definitely show a positive sign in terms of revenues, but the overall results are not impressive. At the same time the market conditions especially in the UK are not really on an upswing, hence not much can be gathered from these figures. The company has now very well differentiated its strengths and weaknesses. Even the e- commerce business is doing quite well. There is focus on every aspect: core businesses expansion, innovation, quality, corporate citizenship and the information system of the organization.
Marks & Spencer (M&S) is a major retailer, of U.K. with eight fourty running shops in nearly more than thirty countries accross the world, over six hundred national and two eighty five international stores. Mark Spencer is into retail just like other retail giants Wal-Mart, Pantaloons etc. They deal into a variety of products like women wear, children wear, men wear, peruna, home ware, lunch wear, technology, wine etc.
Spencer's Retail is expecting a good growth in near future. It ventures to contribute between 15-20 per cent of its total turnover. Recently, it had formed a distribution arrangement with the UK-based chain Woolworths. Other joint ventures in the pipeline are in the area of fashion wear for children and men. As it is more of a food intensive retailer, Spencer's Retail has planned to ramp up its apparel portfolio with future plans in mind. They are thinking of spinning off independent fashion stores as a part of specialty retailing initiatives. They have also launched independent electronics outlets and there is a possibility of having a fashion format in the future.
Organization development is a planned effort by the organization in order to increase its effectiveness and viability. One of the researcher Warren Bennis refers to OD as a response to remove a difficult strategies with an intention to change the beliefs, values and structure of an company. This will help in adapting to new / latest technologies face new marketing challenges etc. OD is a specific type of change in processes which is make to get desired result. It can also involve interventions in the organizations process by taking behavioural knowledge. This idea of OD was given by Kurt Lewin. The term in also used in the place of organizational effectiveness within an organization.
The company development culture is a practitioner-driven intervention-oriented approach which affects organization change via individual change, with an objective to increase result . It is done by implementing a model of problem-solving. It mainly emphasises on survey-based problem diagnosis and subordinates the peoples to a bright vision of future.
Weisboard has presented a six step model to understand OD. The six steps are
Purpose- the members must know about organizational goals, objectives, mission etc and accept it.
Structure- this mainly refers to division of work in the organization
Relationship- the kind of relations between units/ departments to do work as per organizational goals.
Rewards - the people must be clear of the reward and punishments.
Helpful mechanism-it is the supporting system which helps in organizations survival.[
There is a number of plans that take place to create change in an company. These can be, work groups, individuals or the entire company workers. Few mostly used Organization Development strategies in retail areas under:
Future ,Goal, target and development of values
company redesign and restructure
Adapting to new and reliable ways of managing
Communication and teamwork skills
Commitment to new programs
clarification of new and old Roles and negotiation
Redesign of jobs
Development of management peoples and Giving Trainings
Serving as a sounding board for decisions
Technical skills training
Administrative skills training
Project planning and implementation
Individual observation and feedback
Individual skill coaching
Decision making and problem solving
The firm has since some time back not been performing to the satisfaction level of its stakeholders: shareholders, customers, employees. There were profit issues, management related problems, and market related concerns etc. which have brought the company under a lot of criticism and comments by all and sundry. Share prices have been falling considerably. The company has done a lot of strategic review and has promised the shareholders and investors that it shall regain its superiority in the retail space. Presently it is under the leadership of Sir Stuart Rose who became the chief executive in May 2004 and was then elevated to the position of executive chairman in March 2008. Marks and Spencer has to work under a long-term plan under its top management and put a Plan A at the core of its operations.
As per analysis and interpretation of the same, it shows that certain areas which still need attention:
Clear information and communications strategy which will help in dealing with customers and well as prevent mis-management in the organization.
Creativity in designs so as to increase choices for customers
Management of the value chain and most importantly;
Succession management, as investors are still in a fix about whom is the company grooming to take over the position of Chief Executive after Sir Stuart Rose
The top management is trying its best along with the 60,000 employee members, and they constantly remind the external stakeholders: the investors, the shareholders and the customers to extend the full support in their mission to re-energize and revitalize the company from its roots.
Another important issue is to bring changes in clothing. It has to be made innovative. Although the sales of Marks and Spencer clothing are down by 6 %, volume of clothing being sold is quite high. Therefore Marks and Spencer is selling more but at lower prices. The clothing market was overall down the last year. The economic scenario is encouraging people to buy only on needs basis-especially by the older generation which Marks and Spencer generally targets. They have five brand values running through the 125 years of excellence, worth, service, novelty and faith. Since the turn of the century they have strived to enhance the focus on core UK businesses. The direct business was also something that they did not ignore, and consequently it is now reaping the profits. The environmental stance of the company was also strengthened with Plan A which is their 'eco plan' for sustainable growth. In the clothing business Marks and Spencer decided to sell only its own brand so as to maintain the quality. For this the relationship with the suppliers was also revitalized so that they could have a greater grasp of their supply chain. This was to create innovative designs of supreme quality in terms of style and fit and also priced competitively. They paid attention to segmentation too, to attract the right customers to the right kind of clothing. Another focus area was more intensive use of space to maximize more returns per square foot. The capital expenditure was reduced to £652m in this financial year from over £1bn in the previous one. This was due to more effective use of space, better coordination with the suppliers and also higher productivity.
They have invested hugely in Information Technology (IT) to improve logistics and online operational enhancements. This year Marks and Spencer announced that in the coming financial year 2009- 2010 it would also spend the £400 million in its Information Technology and supply chain infra. Such changes are intended to speed up transactions to improve customer service, and to ease out the store staff from administrative tasks so that they can spend more time on the shop floor. Another purpose is that the goods would now be delivered directly to the international stores without routing them through UK.
All the parts of clothing businesses of Marks and Spencer are now under one single management team which will add certain advantages like: cost efficiency, consistency in pricing and riddance of duplication. The stores are getting more attractive, modernized and customer friendly who should find an easy to shop environment.
The model generally practised by the companies to facilitate change is
The group revenue has increased by 0.4 % to 9.1 billion pounds, however this also commanded a lot of controversies as it was pointed out that this was reached by slashing staff bonuses since they could not meet their targets. Important point is that the international sales are up by nearly 26 % (they had opened 34 new stores internationally) but the UK slaes are down by 1.7 %. Operating profit was down by 29.4 % and was 768.9 million pounds. They have broadly divided their UK business between general merchandise (home and clothing) and foods. The general merchandise business in UK recorded sales of 3.9 billion pounds which has decreased by 3.5 %. The market share is 10.7 % by value and 11.2 % by volume. They are UK's top most clothing retailer, since they enjoy the biggest market share in terms of both value and volume. Marks and Spencer has increased its direct business by nearly 26 % and has generated sales revenues of 900 million. The dividend was reduced by 20.9 % citing two main reasons: economic downturn which is not showing any stable signs of improvement and secondly, because of the requirement "to retain economic strength and flexibility"; i.e. a strong capital base. The annual report reflects a stronger cash flow since the net debt has reduced.
For the first quarter beginning from April 2009, Reuters have reported:
"Marks & Spencer had a lesser than anticipated fall in first-quarter original revenues, increasing its shares as a Chairperson Stuart Rose explained he was not worried by line over the sequence. Britain's principal garments retailer, said revenues at United Kingdom stores unwrap in a year chop 1.4 percent in the 91 days to June 27 following the 4th-one fourth plummet of 4.2 5age. so as to the 17th quarterly descend in revenues in a line, but as well the most excellent show since the 2nd quarter of its 2007-08 financial year as innovative goods and advertisements troop market share increase. Organization Analysts predicted a drop of 1.8-3.5 %. Shares in Marks and Spencer were increased 4.6 % at only 320.2 pence, evaluating the trade at around 5.1 billion pounds. The stock has after the DJ Stoxx European trade index by nine percentage in the last years but increased about fifty percentage this year on revival hopes.
"They're (the Q1 numbers) better than expected. But the weather's been good, the comps (according to the figures last years) softer and they cut the prices of items lot. So Pali a analyist Nick Bubb which has a "sell" score on the shares think that now it is difficult to give credit much.
Women wear which was not generating enough attention has quite stabilized within Marks and Spencer as they have segmented various women customers and now offer products accordingly through: Classic, Portfolio, per una, autograph, limited collection, Indigo. In the downturn, they are back to fashion in favour of safe, classic choices. They started the campaign, 'Dress for Less' to illustrate the mantra of affordability and style. The process of placing orders, picking them up or getting them delivered is also being made smoother to reach out to customers closer. They work closely with the Women's Institute to garner feedback so that customers' tastes serves as an input in designing. They enjoy a strong place in lingerie business and 1 out of every 4 piece is brought from Marks and Spencer. The lead time has reduced to just eight weeks and they continuously refresh these lines. Cellulite-busting tights and a memory foam bra were 2 new items added this year. There was negative publicity about their policy to ask for more for large-sized bras, but they soon determined to cut the prices. Its "we boobed" movement have turn in to over a millions of bras are sold in its 7 days and lingerie marketplace share to twenty six percent from twenty five percent.
Menswear also comes in variously differentiated lines: Autograph, Blue Harbour, North Coast, Collezione etc. among the new designs they have launched water repellent 'StormwearTM' and miracle no-crease linen. In kids wear though they can't boast of the number position, the sales showed some positive signs. The three ranges are: 'Everyday casual wear, Autograph, and Limited.
They think that though they have a broad customer base, their core shoppers are the slightly older people. This stance of theirs has often been criticized by some. A report by Credit Suisse team feels that for the sustenance of any business it is critical to appeal to the younger generation, who in time have to replace the older customers, and apparently Marks and Spencer is not making any significant movement in this front. The same report also suggests that expenditure on store formats has been more than necessary and it should rather spend the money of infrastructure.
Marks and Spencer is also realizing the importance of corporate citizenship. The retailer's perception in the minds of the customer holds importance and therefore can be enticed positively. They feel right if they think they are contributing to the environmental causes and in reducing the carbon footprint by making a purchase from a specific brand. The Plan A which is a 5 year plan launched in 2007, the key features are: reducing our packaging and waste, improving energy efficiency, increasing the usage of renewable electricity, recycling waste, using sustainable raw materials, emphasis on workers' rights, partnership with noble cause etc.
In general this is what the company has to say for itself:
"We will have focal point on five key aspects:
By introducing new products and new services like cards grow more and more business in UK retail shops..
Strengthen our national property portfolio.
Drive our Mark & Spencer Direct business.
Expand our business in other countries.
Incorporate Plan A (our 'eco plan') into each aspect of how do we do trade, so we nurture in a stable road"
The company needs to take care of following key points:-
Not just availability of clothes and making their display better, the basic features about a clothing line which will get more customers are style, fit and creativity. New designs segmented with the right target market have to come up. They need to create more excitement and buzz in the fashion world. Choices must be enhanced for every age group and gender. Customer reviews and feedback must be given an input and need to be taken seriously.
Customer loyalty depends a lot on how the retailer is connecting to him / her. None of the customer group segments which Marks and Spencer targets-demographically/ geographically can afford to be left ignored. They need to differentiate what they are offering, how they are doing that and what they stand for overall. Highlighting the 'Plan A' initiatives in its marketing strategies will also act positive. The firm recently took a great initiative under which its Oxfam Clothes exchange, customers can recycle their old clothes in exchange of Marks and Spencer discounts over new ones. The customers also feel nice when they think that they are doing something rightly, contributing positively somewhere somehow. They also need to accentuate the quality aspect of their clothes so that the customer feels that it is value based pricing. They must endorse their 'fashion with quality' mantra which will appeal to all generations and demography.
Supply Chain Issues:
Internationally Walmart is still the number one retailer brand and world's major retailer, as per to the 2008 Global Powers of Retail report, from Deloitte Touche Tohmatsu, together with STORES magazine. In the same survey Marks and Spencer is number 43 (Deloitte 2008)
The company will have good outcomes after implementing suggested changes. They shall be increasing their sales with customers getting variety of products under one roof. The customers will be happy due to smooth communication and availability of product on the shelf. Finally it would build the image of the company which can be encashed for a longer time period.