Marks And Spencers Case Study Commerce Essay

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Marks and Spencer operates in the retail industry, selling retail items such as adult and children apparel, food and toiletries. This company, along with others in the industry, has a number of stake holders who are either directly or indirectly affected by their actions. In the past business leaders refused to recognize the importance of stakeholders and concluded that the goal of a business is solely to create profit (Friedman, 1970). However this concept has changed and management theorists maintain that profit is a mean rather than an end, according to Handy, "the desirable outcome for an organization's pursuits is the continued survival of the business in order to maintain its contract with its various stakeholders, including the wider community".

In this question we will identify those stakeholders and find out how retailers can meet their needs. Stakeholders in the retail industry include:

Employees: It has been argued that employees are the primary stakeholders of a company, as Michelin (2006)stated, "Few stake holders are as vital in a business as its workers. A worldwide company has to invest a great deal to respect all staff interests. Staff has big interest in the success of the company (p.1). Employees are the foundation blocks of a company; they are the most important resource since they act on behalf of and represent the name of a company(Crane &Matten, 2004, p.224). In turn, employees are also affected by the operations of a company they work in, as they have invested their time and expertise in the company, built personal relationships and are directly dependent on it for their income. It is important for companies to treat their employees fairly because of the reasons mentioned above; hence companies should have reasonable remuneration policies, incentive schemes and employee appreciation initiatives.

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Customers: These are directly affected and in turn directly affect the company, as they are responsible for establishing the company's name and marketing it to others. Companies should identify and understand customer needs and develop high quality products that meet those needs. Retailers should ensure that they have fair return policies and should avoid "tricking" the customers through their prices and policies.

Shareholders: A company basically operates on behalf of its shareholders; therefore it has a direct obligation to satisfy shareholder needs, through providing them with a fair return on their investment. A company must also ensure that it does not participate in illegal or immoral activities as this will tarnish its name along with the name of its shareholders.

Suppliers: Suppliers are directly affected by the success or failure of its customer, especially if the customer accounts for a major part of its sales. It is important to maintain good relations with one's supplier so as to ensure quality products, timely delivery and credit purchases. Retail companies can satisfy the requirements of their suppliers by placing their orders well in time, ensuring payment is made on the promised date and positively marketing the supplier's products.

Local Community: The local community is the responsibility of every citizen and corporation. Retail companies can positively contribute towards their community through participating in charity initiatives such as sponsoring a charity event or donating part of their profits to a charity or promoting a cause through their branches.

Current issues affecting the Market Sector 

The global financial crisis has affected almost every industry; the retail industry was one of them. There are a number of issues facing the retail industry, some of them are:

Slow Growth Rate: The retail industry is facing sluggish growth rate ever since coupled with rising unemployment rates and increasing commodity prices. Consumers are less willing to buy non essential items because of their decreased income, and suppliers are charging more for their products because of the rising transportation and storage costs. If the retailers increase the price of their products then purchases will decrease, however if retailers maintain the current prices, they will make a loss.

Online Shopping: An increasing number of customers prefer to shop online, while this is advantageous to large retailers who can afford to have shops online, it is bad news for smaller retailers who cannot afford to go into online shopping. Therefore one issue facing smaller retailers is how to attract customers to their stores.

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Excessive information: Given the advanced technology, consumers now have data about almost all the products and can identify where to get the best bargain. Hence retailers should figure out how they can use this information to their advantage and source customers to their side

Social Media: Large retailers should embrace social media, they should get on twitter and Facebook and have a presence in the social media world. Advertising via social media is the marketing trend for 2013 and retailers should figure out how get the most out of this media without creating a negative image

PESTLE Analysis for Marks & Spencer

Political: Marks and Spencer is an international company operating on globalized level with 1010 stores as of 2010 all over the world. Marks and Spencer's performance in its international locations is greatly influenced by the political and legislative conditions of the countries it operates in. For example local authorities of its international branches would encourage it to hire more local employees despite their experience and skills. Marks and Spencer should be aware of these legislations and develop strategies that balance the company's goals with the goals of the local authority, and this is what it is doing, it is hiring local employees and training them according to their own standards, despite high cost of training.

Economical: Marks and Spencer is directly affected by economic factors as they influence demand, costs, prices and profits. Given the current market situation, the company is affected by high unemployment levels which in turn translate to low revenues and the pressure to keep prices low. Marks and Spencer has to devise marketing and pricing strategies that counter the adverse effects of the environment

Social and Cultural Factor: social and cultural factors influence the way in which consumers shop and it also influences their expectations. A recent trend among consumers is that they want to be able to get everything within one roof, hence Marks & Spencer started offering food and decoration items as well as clothing and toiletries. The Company also adjusted the nature of goods that it was offering according to social and cultural trends.

Technological: Technology has shaped the way in which Marks & Spencer operates and reaches out to its customers. Technology has enables it to stock and retrieve goods more quickly and offer self-checkout services as well. Store assistants are able to provide better service and this has shown in the customer surveys

Environmental Factors: As the environment is a major stakeholder of any company, Marks and Spencer has done and is doing its bit in contributing towards the environment. It launched an initiative in 2010 known as plan 'A', which focuses on increasing the sustainability of the business within 5 years. The plan covers five initiatives including; climate change, waste, sustainable raw materials, fair partnership and health. This plan is expected to cost the Company £ 200Million

Legislative: Government legislation has affected many of Marks and Spencer's operation, such as the labor laws, consumer laws and competition laws. Because of lax market entry laws, Marks and Spencer has to maintain its share and compete with new entrants, hence it engages in promotion strategies which cause short term losses.