Marks And Spencers Profit Has Decreased Commerce Essay

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Exports, investment, Government expenditureThe main reason for Marks and Spencers lost in profits are the tough economic condition and the double dip recession. Recession can lead to lower consumer confidence. This means that many consumers have stopped spending and have started saving for the future. The loss in demand means the aggregate demand in the economy has contracted which leads to businesses making less profits because loss of sales revenue. Subsequently, in this case small businesses are affected more than the larger companies, thus, small businesses make redundancies in order to cope with their costs. This causes unemployment to upsurge and wages go down, as many businesses cannot afford paying maximum wages. Furthermore, investment in the economy decreases due to accelerator effect. Therefore the Consumption and Investment decreases in the Aggregate Demand sum. The less consumption and more saving causes more leakages from the circular flow of income, hence, the amount of money going through the circular flow of income declines affecting the economy to shrink even further. This has a direct influence on high and luxurious brands and products as consumers prefer to buy cheaper goods and less of expensive/luxury goods. Moreover, clothing is considered to be an inferior good. Consequently, Marks & Spencer's clothing are considered to be luxury and expensive so it has affected them directly as consumers have decreased the consumption of inferior goods. Instead, consumers prefer to go to Marks and Spenser's competitors, i.e. Primark. Primark is considered to be cheaper than any other high street brands. Therefore, the idea of opportunity cost automatically makes consumers buy cheaper goods so they can maintain their standards of living without having to sacrifice too much.

Consumer spending of goods and services




Savings, Tax, Imports

Wages, income and dividence

Apple loses Samsung tablet patent appeal (By Matthew Sparkes, 18 Oct 2012) The telegraph

In early august, Apple filed a case on Samsung stating that they have copied the ipad design for their new Samsung tablet. After many hearings, Apple lost the case to Samsung as the judge's decision claimed that the Samsung tablet did not copy the iPad.

Apple has been the market leader in mobile phone and tablets market for the past few years. They had a monopoly over their rivals due to their unique and cool products and range of product portfolio. However, South Korean multinational company, Samsung's products are giving Apple tough competition as sales of Samsung products are constantly increasing. Samsung has sold more than 30 million Samsung galaxy 3, which is far more than any other of its rivals especially Apple as they have missed 5 million of sales for iPhone5. Both of the firm's product ranges are very good. This is the reason why Apple filed a case on Samsung as they did not want any other firm to go even near to its market power, brand image, and volume of sales. However other companies such as Microsoft, Google and Amazon have taken the same approach as Apple and launched their own tablets giving tough competition to Apple. In addition, Apple losing their case to Samsung has made them vulnerable as they cannot stop their rivals getting into the market and having the products similar to them. In business theory, the market structure in technology market has varied as there is very high competition. The demand conditions have changed as many consumers have various options to buy from. Hence, the market structure has changed to perfect competition. Therefore Apple has lost its unique selling point because their products are not differentiated anymore. This has obviously affected Apple's sales revenues and profit margins but, it gave Apple and other competitors a challenge to innovate and differentiate their products so they can operate in monopoly or oligopoly market.

Aerospace industry warns on technology and skills race (By Angela Monaghan, 27 Nov 2012) the telegraph

Aerospace companies such as BAE systems, Rolls-Royce and Townsend joined manufacturing organisation EEF to urge government to support the industry by significant investment in research and development, so they can compete with rivals such as China, India, Russia and Brazil.

D¹Due to the problems within the eurozone and austerity measures taken by the government has shaken the confidence in the market. Government is not giving attention to aerospace industry and therefore it is suffering from lack of innovation and skills required to improve the competitiveness of its supply chain. Aerospace industry supports 1.5m of jobs and contributes £70m to UK's GDP. However there is a global technological and skills race and if UK does not provide significant investment in to R&D, then in the long term potential output of the industry will decrease. This industry contributes a big part in UK's GDP. However, if government does not take action then not only UK will lose its competitive edge but also the total output of the economy will decrease and unemployment will rise significantly. In the long term, this affects the whole economy as the total GDP decreases causing demand curve to shift left from D¹ to D² causing a change in price from P¹ to P² as illustrated on the diagram below. This shows that total demand in the economy has dropped and equilibrium point has lowered, which can lead to lower investments. The lower price means that companies' profits will reduce so they are not happy to supply the goods and services at a new price p². Therefore, it can unstable the market forcing government to intervene and take action. Therefore, it is the government's responsibility to provide the investments and the support the industry which they need to compete.










Oil nations asked to consider carbon tax on exports (John Vidal, Wednesday 21 November 2012) The guardian

The Organisation of Petroleum Exporting Countries (OPEC) has made a proposal that every barrel of oil exported to rich countries will have to pay 3-5% tax. The $40-60m raised through this tax will go to green climate fund which will help developing countries adapt to climate change.

Corporate social responsibilities have become very important to businesses especially to the large companies which operate across borders. Stake holders believe that it is businesses' responsibility to look after the community and environment where they operate as they can make a difference. Global warming and climate change have been a major issue over last two decades and many people and governments think it is important we reduce the carbon emission. Therefore OPEC's decision to impose a tax on oil export seems to be very good an idea as it will raise a sufficient amount of money which can be used to lower carbon emission. This idea has been liked by many multinational companies such as Shell, EDF energy, Unilever etc. as they think carbon pricing is the key to lower carbon emission and would offer regulatory certainty and would encourage developers for more investment and innovation in low carbon energy sources. If this tax were to impose and large companies accept it happily then it will bring enormous benefits to their brand image as it would be considered as socially responsible by the consumers and green organisations. On the other hand, the shareholders might want profit maximisation; therefore, the conflicting objectives between short term profitability versus growth can make it difficult for companies to fulfill their social responsibilities towards the environment. However, imposing this tax means multinational companies will have to change the way they operate, and support green organisations so this policy can have factual outcomes which OPEC is looking for.


Marks and Spencer profits fall 10pc

(By Graham Ruddick, 06 Nov 2012) The telegraph

Marks & Spencer has reported a 10pc fall in profits after a slump in clothing sales and warned recent trading has been "volatile".

M&S profits fall 10pc

Marc Bolland, chief executive, said recent trading has been "volatile" Photo: Alamy

The 128-year-old food and fashion retailer said profits fell 9.6pc to £290m in the six months to September 29.

This was on the back of a 4.3pc fall in like-for-like general merchandise sales in the half-year, which dragged down total UK like-for-like sales by 1.4pc.

Marc Bolland, chief executive, said recent trading has been "volatile".

He added: "This, coupled with continuing pressure on consumers' disposable incomes, makes us cautious about the outlook for the rest of this year. However, we are well set up for the Christmas trading period."

Despite the fall in profits, the results are likely to be well received by the stock market because the decline is slightly smaller than expected and sales improved in the second quarter of the year.

In the three months to June 30, M&S reported an eye-watering 6.8pc drop in like-for-like sales in general merchandise, which includes clothing, as it faced tough competition on the high street, a double-dip recession, and stock management problems that left it short of popular stock.

However, in the second quarter of its financial year to September 29, which included the Olympics and Paralympics in London, the decline in sales was cut to 1.8pc.

M&S's food business continued to grow during the half-year with like-for-like sales of 1.1pc. International sales rose by 3.6pc.

Mr Bolland added: "We are pleased to report a better performance across the business in the second quarter.

"We took steps to address the short term merchandising issues in general merchandise and as a result, we delivered an improved performance. Food outperformed the market on a like-for-like basis.

"As we approach the all important Christmas period, we have better than ever Christmas products, to help our customers enjoy a special Christmas at home."

The improvement in sales is likely to ease pressure on Mr Bolland that emerged following the sharp drop in clothing sales earlier in the year.

The problems in the clothing business led to Kate Bostock leaving M&S as head of general merchandise, with Mr Bolland moving John Dixon from the head of the food business to replace Ms Bostock and bringing in former Debenhams boss Belinda Earl as director of style.

The Dutchman joined M&S in 2010 from supermarket group Morrisons. He is pressing ahead with a £2.4bn plan to modernise M&S into an international multi-channel retailer.

This plan includes opening new shops abroad - including in Paris - and investing in a new website and ecommerce technology.

"Eighteen months in, we are making strong progress with our plan to transform M&S into an international multi-channel retailer," he said.

"Our new International stores are performing well, and our multi-channel business is delivering strong growth."

However, Lord Myners, former chairman of M&S, attacked the performance of the retailer under Mr Bolland.

"The absence of clear momentum is disappointing," he was quoted as saying on Tuesday.

M&S held its interim dividend at 6.2pc. The dividend is worth £99m in total and will be paid on January 11, 2013.

Apple loses Samsung tablet patent appeal (By Matthew Sparkes, 18 Oct 2012) The telegraph

Apple lost its patent case against Samsung in London's Court of Appeal this morning after a judge ruled that the Galaxy tablet does not copy the iPad's design.

Apple CEO Tim Cook introduces the new iPad during an event in San Francisco

The new iPad features a high-definition retina display, five mega-pixel camera and voice recognition software Photo: AP

The court upheld a previous decision that said Samsung's Galaxy tablet did not infringe upon Apple's patents. It said there were similarities between the two devices but that Samsung had not infringed Apple's design, in part because its products were "not as cool".

The US company was instructed to run newspaper and online adverts admitting that the Korean company did not copy the iPad. The judge said these notices must be in a font size no smaller than Arial 14.

Apple had argued that, in finding Samsung had not infringed its design, the trial judge had place too much emphasis on differences between the design of the back of Galaxy Tab range and the back of the iPad.

Whereas the back of the iPad is almost featureless, Galaxy Tabs have a separate, different coloured section along one edge that contains the camera and flash. The trial judge found these "unusual details" would mean people would not confuse the designs and that Apple's minimalist design was "cooler". Apple could now take its appeal to the Supreme Court.

The two technology giants are currently battling each other in a series of patent lawsuits around the world, including a case revolving around mobile phones in the US. The British case is part of a complex global battle that pits Apple against Samsung in intellectual property courts in Europe, the US, South Korea and Australia.

Apple believes its main rival "slavishly" ripped off designs and technologies from both the iPad and iPhone in its Android smartphones and tablets and scored the biggest victory so far with a £664m damages award in California.

Apple is expected to launch a new iPad mini later this month, including a 7.85in screen. The company has sent out media invitations to an event on October 23 which is widely thought to be the product's launch.

Aerospace industry warns on technology and skills race (By Angela Monaghan, 27 Nov 2012) the telegraph

Leaders in British aerospace and defence have warned that Britain must act now if it wants to seriously compete in the "global technology and skills race" and not fall behind new emerging powers.

Aerospace industry warns on technology and skills race

Britain's aerospace industry has called on government to translate principles into action Photo: swisshippo - Fotolia

Companies including BAE Systems, Rolls-Royce, Siemens and Turner & Townsend have joined forces with aerospace and defence body ADS and the manufacturers' organisation EEF to urge the Government to provide the support needed by industry to compete.

They said that although there had been significant action from ministers already, with the establishment of the Aerospace Growth Partnership earlier this year to promote the industry, it was now time to put principles into action.

"It now has to be translated into action meaningful to industry," said Graham Chisnall, deputy chief executive of ADS.

Mr Chisnall said industry would like to see new policies announced in the Autumn Statement on December 5, but said a working group of 80 senior industry executives would "plough on" regardless.

"The Government has definitely moved a long way in the right direction and is showing real commitment to our sector - it is a real step change for some of the UK's most significant aerospace employers," he added.

"What is now critical is that the UK aerospace industry and the Government implement the AGP strategy, involving significant investment in research and technology [and] improving the competitiveness of its supply chain."

The AGP is jointly chaired by business minister Michael Fallon and Marcus Bryson, chief executive of GKN Aerospace, and was established as a partnership between industry and Government to create a vision for British aerospace over the next 15 years and beyond.

"There is a global skills and technology race - and if we don't act quickly we will lose that race. We need a solid blue print for growth that will ensure the sector is strong not just for the next five years but the next 15 years too," said Juergen Maier, managing director of Siemens Industry.

The industry group said new technologies and boosting skills and the sector's supply chain were needed not just to retain the UK's market capability but to strengthen it in the face of "fierce competition" from economies including Brazil, Russia, India and China.

Meanwhile, a separate report by Remark and NetJets Europe suggested that European deal makers are getting increasingly frustrated with austerity measures. Fifty-five per cent called on governments to abandon austerity plans and introduce spending measures to revitalise mergers and acquisitions and IPO markets in 2013.

Deal makers questioned lowered their predictions for deals compared with last year's report by €300bn (£243bn).

"The survey results show that there is lingering uncertainty in the market in the coming year with confidence shaken due to austerity measures and problems in the eurozone," said Matthew Albert, research director at Remark.

Oil nations asked to consider carbon tax on exports(John Vidal, Wednesday 21 November 2012) The guardian

Proposal could break deadlock at climate talks over raising finances for poorer countries to adapt to global warming

Barrels of oil

The Ecuador-led initiative, submitted to the Organisation of Petroleum Exporting Countries, could see a 3-5% tax levied on every barrel of oil exported to rich countries. Photograph: Corbis/Barbara Davidson

The world's largest oil-exporting countries have been asked to consider imposing a small carbon tax on oil as a way to break the deadlock over finance for poorer countries in the UN climate talks.

The Ecuador-led initiative, submitted to the Organisation of Petroleum Exporting Countries (Opec), could see a 3-5% tax levied on every barrel of oil exported to rich countries. This could potentially raise $40-60bn a year for the green climate fund, what is expected to be the principle route of funding for developing countries to adapt to climate change.

The Ecuadorean president, Rafael Correa, proposed a carbon tax at a summit of Arab and South American countries in October in Peru which included the heads of state and energy ministers of nine of Opec's 12 countries. The Guardian understands the proposal was taken seriously and not dismissed out of hand. The idea was first mooted in 2001 by former World Bank chief economist Herman Daly - leading it to be dubbed the "Daly-Correa tax" - and will be further discussed by Opec countries at the UN climate talks which open on Monday in Doha.

"The first global tax on carbon emissions would achieve the most efficient and just way to do what [the] Kyoto [protocol] has failed to do: make carbon emitters internalise the effects of their actions and pay for the pollution they create," Correa told the summit.

Although rich countries have formally agreed to provide poor countries $100bn a year for adaptation by 2020, little progress has been made on deciding how the money should be raised. Ideas considered by a high-level advisory group on climate change financing, set up by the UN secretary general Ban Ki-moon and co-chaired by the former UK prime minister Gordon Brown, included a tax on global shipping and aviation as well as on financial transactions. The group considered carbon taxing but not from oil imports.

"The beauty of the 'Daly-Correa' carbon tax idea is that it would raise substantial amounts of money, it would be relatively easy to administer, and all the money would go to poor countries to adapt to climate change and develop renewable energies. We are working on the principle of the polluter pays", said a source in the Ecuadorean foreign ministry in Quito.

It is understood that Opec, which supplies about 40% of the world's oil and includes Venezuela, Iran, Iraq, Saudi Arabia, the United Arab Emirates, Nigeria, Ecuador, Gabon and Angola, could unilaterally impose the tax but this would almost certainly meet strong resistance from Europe, the US and Japan, which between them import around one third of the world's oil imports. To be successful, the proposal would need to be copied by other major oil-exporting countries such as Russia.

But support for a carbon tax to help developing countries adapt to climate change has come from Norway. Last month it proposed to nearly double its carbon tax on offshore oil companies and fishing fleets allowing it to plough an extra £1bn into its funds for climate change mitigation, renewable energy, food security in developing countries and conversion to low-carbon energy sources.

And, in a clear signal that global business is becoming frustrated by the lack of political action in the UN climate talks, support for a global carbon price came on Monday from 100 multinationals including Shell, Unilever, Cathay Pacific, EDF Energy, Braskem, Statoil, Swiss Re, Ricoh and Skanska.

The companies have called on governments to introduce a the price to "drive the investment" needed to deliver substantial reductions in greenhouse gas emissions. "A price on CO2 can open the door to increased ambition. Putting a clear, transparent and unambiguous price on carbon must be a core policy objective," said the companies who signed up to a declaration by the Carbon Price Communiqué, an initiative co-ordinated by the Prince of Wales's corporate leaders group on climate change.


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Sparkes.M (2012) "Apple loses Samsung tablet patent appeal" The telegraph, 18 october.[Online].Available at:

Monaghan.A (2012) "Aerospace industry warns on technology and skills race" The telegraph, 27 November. [Online]. Available at :

Vidal.J (2012) "Oil nations asked to consider carbon tax on exports" The telegraph, 21 November. [Online]. Available at:

BusinessGreen sustainable thinking (2012) Business leaders demand global carbon price at Doha. Available at: (Accessed: November 2012)

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