1. Strategic Corporate Development History: Research, describe and give a succinct account of the strategic development history of the company you choose set within the context or the industry to which it belongs over the past 5 to 25 years, choosing the duration of time for the study most appropriate for understanding the recent strategic development of the company. In particular identify the strategy(ies) that the company has been pursuing and any apparent changes in strategy that the company has made during the period under consideration. (1300 words)
Introduction: Marks and Spencer has begun entering into market with innovation and affordable prices. Historically Marks and Spencer’s relationships with its customers and suppliers was admired worldwide as the UK leading retailers of food , men’s, women’s and children’s fashion(whitehead 1994). Marks and Spencer was initially very successful because it has formed some fundamental principles on which it was operated. All the business activities were guided by these principles. The period chosen for the study is 1985 – 2006
Succinct account of strategic development history of Marks and Spencer
As per Marks & Spencer Plc – History of the retail company url. The following historical development of the company is indicative:
1985 : The Marks & Spencer Charge card was launched nationally.
1986 : Marks & Spencer opened its first edge of town store at the Metro Centre in Gateshead. The introduction of furniture was supported by the launch of the Home Furnishing catalogue.
1988 : The company acquired Brooks Brothers, an American clothing company and Kings Super Markets, a US food chain. The first Marks & Spencer stores were opened in Hong Kong, also in this year.
1999 : The company published its own code of practice Global Sourcing Principles as a minimum standard for all suppliers in an effort to improve conditions for workers overseas.
1999 : Online shopping was launched on the Marks & Spencer website.
2000 : 12 items were awarded Millennium Product status, the highest number of awards made to any single company.
2000 : The ‘Count On Us’ range of food products was launched.
2000 : £15 million was raised via the Marks & Spencer Children’s Promise Millennium appeal.
2001 : Machine Washable suits for men and the Bioform Bra were launched.
2001 : The Portrait of the Nation – commissioned on behalf of Marks & Spencer as sponsors of the self portrait zone at the Millennium Dome – began a tour of the country. The 15 panels displaying 250,000 photographs were created by artist David Mach R.A
Strategies company has been following
Competitive strategy that M&S has used is the focus generic strategy as it has narrow segment of a particular group of buyers namely the executives. It has high end market segment and the product feature that it followed is freshness.
The marketing mix that M&S used is as follows:
PRICE – M&S has used differentiation strategy and charged premium prices.
PRODUCT – Its products are reliable and of superior quality.
PLACE – Sales were done with ample of outlets. Lately they have introduced online shopping too.
PROMOTION – Various means of communication like advertising, TV, national newspapers and magazines and website are used.
To understand the market entry strategy the application of Ansoff’s matrix is recommended.
Market penetration: M&S has done its market penetration with heavy advertising through TV, news papers, magazines and website. Marketing promotions were done basically to Differentiate, Remind, Inform, Persuade the customer into using its products.
Market development: It has begun its operations in the UK market and followed the strategy of market development which involved expansion into new markets with the existing products.
The company’s started its internationalisation through exporting. It has maintained a close and controlling relationship with suppliers due to which it was able to export its private label brand: St Micheal to countries like Canada – its first international country of operation. In 1975, through a joint venture approach to market penetration with Cortifel : a retailer and manufacturer in Spain ,the company subsequently moved into a number of European markets(Briggs 1992). In 1988 the company moved to US and Hong Kong markets.
Add value to all business units: M&S has a strategy of adding value to the different business units which include food and clothing units. One of their fundamental principles is, “To offer customers a selective range of high quality, well designed and attractive merchandise at reasonable prices under the brand name St.Michael.” Tse(1982).
Meet the expectation of stakeholders: They have made the stakeholders happy by providing them with good returns. Stakeholders felt happy to be part of the M&S brand. The Children’s Promise Millennium appeal of Mark’s & Spencer raised £ 15 million in 2000. In the same year 12 items of the company were awarded Millennium Product status.
They have taken precautions to ensure quality. This was made possible because of their other fundamental principles noted by Tse(1982) as follows:
1. To encourage suppliers to use the most modern and efficient production techniques.
2. To work with suppliers to ensure the highest standards of quality control.
As a part of the business strategy they have launched M&S Charge Card nationally in 1985.
In line with the above principles the company opened its first town store in 1986 at the Metro Centre in Gateshead. In 1999 the company started its online operations in shopping on the Marks & Spencer website.
The goods of Marks and Spencer were given to the stores from a central buying office with instructions on merchandise, store design and layout. This is to ensure quality control at the source. Their success is evident from the increase of profits and rise in the share price. Speaking in regard with the success the then CEO of Marks and Spencer said, “I ran the business with the aid of my colleagues based upon the very long standing, and proven ways of running it.”(Radio 4, August 2000).
Changes in the strategy of M&S
M&S has made some significant strategic changes in its operations.
The Company decided to sell its own brand to ensure quality is guaranteed.
Strategy for Clothing
The company has planned for restructuring the prices and not compromising with the quality and convey the same to the customers.
Food, Beauty and Home
The company has been doing well in this area. They have implemented the strategy of market development by concentrating on new markets and innovative ways of reaching the new customers.
The company planned to refurbish stores which will benefit the customers more and establish better relationships.
Reallocation for clothing
More space is reallocated to the clothing and home as they are bringing in more revenue.
Developing customer oriented tasks
The company started keeping some stores open 24 hours per day. Stores are made more attractive and an atmosphere of easy shopping is created.
Closed loss making businesses
The company closed down loss making businesses in continental Europe. They continued the businesses in the Republic of Ireland were the business was good.
Sold Brooks Brothers and Kings Super Markets in the US
The company felt that Brooks Brothers and Kings Super Markets in the US are cash cows and sold them for a huge profit.
Cut in costs and improve capital structure
The company took precautions to cut costs of investment and improved the capital structure.
Research about the company revealed that it had a very strong beginning and lasted almost unchallenged till late nineties after which their deterioration has started. Towards the end of the study period of the case there is improvement. If the company can turn the weaknesses into strengths and threats into opportunities the possibility of rejuvenation is in the near sight.
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