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Based in the UK, Marks and Spencer Group (M&S) is a leading retailer of clothing, home ware and food items in the UK and worldwide. Having presence in over 40 countries around the world, the Group operates over 600 stores in the UK alone, with more than 300 stores being operated in other countries(Johnson et al.2011). Marks & Spencer was established in 1958 and has since become an icon of quality and style. Initially trading under the St. Michael name, the first store operated in a John Little store. The St. Michael name was officially changed to Marks & Spencer in 1994. Marks & Spencer offers a range of Men's and Women's fashion, lingerie, frozen ready meals, confectionaries, fine wines, beauty products, and toiletries. With the group emerging from a rebranding in the recent years, the brand has emerged with a strong identity and is a market leader in its segments. This case study is about why one of the world's most famous retails, It operates through both wholly-owned stores and franchise stores. Marks & Spencer, ran into trouble at the end of the 1990s and how it attempted to manage a program of change to overcome those problems it explores issues concerned with organizational strategic choice and management to change.
In large corporations, managers may find their range of strategic choice limited because some choices are made at a higher level or in another country. With a strong culture for many years Mark & Spencer's mission has been to offer consumers quality, value, and service by trying to resist market changes. In recent years, the company has suffered a series of misfortunes, both at home (Britain) and abroad. For years, M&S' marketing philosophy was simple: produce high quality products under a recognized brand name St. Michael most of its products at affordable (but not cheap) prices, advertise through word-of-mouth and Supporting local (British) industry. Over the years M & S developed a cooperate culture around the way it did things and how it built upon its competences together with a degree of certainty even arrogance in so doing, using a traditional way that the company did business and did not encourage innovation and idea generation amongst managers and employees. The strategy used by M&S became outdated domestic and international competition intensified both from specialty retailers such as such as Top Shop, Jigsaw, Oasis, and Gap offering more fashionable designs and trendier labels and mega merchandisers, such as Wal-Mart, Tesco and Waitrose who used cost leadership as their business strategy .M&S was being challenged in every single business segment it competes It appears that no one saw the need for any change.
By 2000 it was reported that almost all Marks and Spencer's managers were promoted internally meaning that no fresh ideas were brought into the company strategic drift which went unnoticed.
Cooperate culture that was embedded took a turn for the worst, in 2004 Marks & Spencer's market share dropped to 11% from 0.2% (Annual Report 2004).
Marks and Spencer fell terribly short in revising its strengths within their wider environment, and this short-sightedness contributed to their slump.
The competitive advantage of M&S was based on the Brand it carried, well experienced retailers, High quality products and Decades in operation.
M & S realise transferring their business formula almost unchanged from the United Kingdom was not a good idea a new business strategy was needed to stay in business.
Changes were made in areas of strategic business units (SBU) in where a more comprehensive model was needed. Three main issue of concern in the business unit was the macro environment, Industry and product/market.
Macro environmental level can be analysed by using a PESTEL which underlines the ever changing environment. The change in the environment was not even in M & S cards until the ship was sinking they manage to look out of the window. As competition intensified and loosing market share M & S undertook to give more discretion to managers in SBU's. and the rules of the came was changed. The internationalization policy undertook by M & S was a tool of diversification good move as they realize that the current domestic market was saturated but insisted that they carry only the St Michael brand( another setback) as only importers who knew the St Michael brand were interested to form partnership and franchises agreement.
As underlines by Porter's (1980) model the industry is the driving force for a business to stay in the competition looking back at history of M&S there was no method put in place to compete in the market until it was almost to late. AS M & S did not own any manufacturing outlet this became as problem as more cost leadership players entered the market, their patriotic approach to use local manufactures had to change. Using Porter's (1980) generic strategies in where cost leadership, differentiation and focus would have been a good model. The case of Marks & Spencer's core products (food and clothing), it implements a focus generic strategy as it concentrates on a narrow segment (a particular buyer group (executives), market segment (high-end), product feature (freshness) and within that chosen segment Mark & Spencer attempts to achieve differentiation from Tesco's Asda, BHS, Top Shop etc. The premise is that the needs of the group can be better serviced by focusing entirely on it. As Porter's (1980) disagree to use two strategies in an industry but was proven otherwise. The pressure was too high from the industry within, that a radical change was needed, for the first time in its history, Marks & Spencer outsourced non-core services, new partnership was formed with suppliers to address Strategic lock-in (where users become dependent on a supplier and are unable to use another supplier without substantial switching costs).
This saw the restructuring of the supply chain where stores were stocked based on demographic patterns. The new technological driver the internet that promotes globalization was put into full use. Ethics and social responsibility being passionate about people as well as processes was a strategy choice that Marks & Spencer always adhere to a culture that was carried on till this very day. This strategy played an important role when Marks & Spencer went into mergers, acquisition and alliances. Cooperating with rivals Improved costs or benefits and reduces entry threat.
The competitive advantage was to maintain Product and Market. Share. As SUB's were empowered to make decision based on their demographic location based on local competitors As globalization was all about cost using cost lead ship strategy ( lower input cost, economies of scale and changes to product process and design) was the best way to go. The differentiation strategy adopted by Marks & Spencer was based on the customer on whose needs the differentiation is based, Key competitors and who are the rivals and who may become a rival. The retailers were able to identify what types of services to offer and in which markets, what resources and capabilities are needed to support these services and how to acquire or build these resources.
The strategy applied by Marks & Spencer is covering wider market share only among the rich people so it should follow low cost competitive strategy. The industry in which Marks & Spencer operate is mature and market is likely to be stable so it is more difficult to gain market share. Using the strategy clock model, the hybrid strategy is the best option for Marks & Spencer to achieve differentiation and a price lower than its competitors. By using various promotional tools and technologies Marks & Spencer should provide innovative services to the customers by using latest technologies in the business sector through e-commerce and e-business. It needs to extend its business all over the world; especially Asian countries like Nepal, India or China. In this approaches company expand the product into different geographical areas. Marks & Spencer should design fashionable clothes and then try to increase its investment in advertising in order to build its brand image on the values of fashion. Marks & Spencer needs to Goods are tangible whereas services are intangible which provides satisfaction to the human beings hiring perfect, innovative, enthusiastic, punctual, honest, and trustworthy personnel will be an added asset. Having a vision to be the leading company in the ever growing competitive global markets forever is good but implementing it is no easy task. To date Marks & Spencer products are now manufactured around the world.