Case study: Marks & Spencer

Résumé du document

For over a century now, Marks & Spencer (M&S) has been one of the best-known British retailers. Since 1884, M&S has developed a traditional brand image of quality. However, since the end of the familial reign, M&S's results have declined little by little because of, among other things, successions and management difficulties. Due to poor management decisions, global strategies adopted by M&S have not worked as well as it did in the past.

To understand the reasons behind M&S's decline, we will analyze its environment, resources and capabilities, followed by an outline of the possible strategies that M&S could undertake.

M&S is a retailer as it does not manufacture the goods that they sell. Indeed it buys them from suppliers with whom the firm has worked for years (for example Northen Foods is M&S's biggest food supplier). Its objective is then to sell these goods directly to households through its numerous stores. Therefore suppliers play an important role for M&S's business and are one of the key stakeholders. A stakeholder can be described as any individual or group that has an interest in the successful performance of an organization.

As far as M&S is concerned, it is not just the lenders who play a crucial role in the organization. There are key stakeholders who are powerful, have high levels of unpredictability and are interested in strategic developments. For M&S, these refer to the management team, the shareholders, the employees, the suppliers and the customers. Indeed, the management team has the operational power meaning that it has the right and ability to direct and run day-to-day operations. We understand that they play a central role as they are the ones to take decisions regarding the company. For example, if there is a problem in the organization, the management team can involve the highest level of management (the Chief Executive Officer or CEO) to improve the situation.

Extraits

[...] In 1995 Robert Grant made a resource analysis (after making in 1991 a resource based approach to strategy analysis) that helped understand how organisations created value. This analysis can be described as follow (Grant, 1995): The figure shows the relationship among resources, capabilities, and competitive advantage. We understand that organisational capabilities are essential to set up a strategy and from the strategy we can define the key success factors (that deal with competitors, customers and corporate resources). Also, there are three principal types of resource: tangible, intangible and human resources. In the case of their intangible resources are first of all technological. [...]

[...] The problem that M&S faces is that the way things are done has not changed since its creation. For example, they use internal promotion which means that managers are all shaped in a certain way following M&S values so the way they manage people and the company implement certain beliefs amongst employees. In the article (Has Marks lost its Sparks?), we can see that internal promotion has not always been a good thing for M&S. Although with this process promoted for employees the knowledge of the company and the awareness of difficulties, new ideas cannot enter the company and it caused M&S problems after the succession of Greenbury. [...]

[...] Nevertheless they have understood and tried to improve the situation with for example the implementation of a real Marketing department. Moreover, the different core competences to have in a company are an architecture network of relationships), a reputation (corporate image), and an innovative ability (ease of innovation and culture). M&S's core competence is its ability to produce a range of high quality products (innovative ability and corporate image) thanks to strong and well-managed supplier relationships, but also their ability to create knowledge and their good structure and systems (architecture). [...]

[...] Nowadays there are more than 219 franchise stores (and 21 owned) in 34 territories and their growth is important, with an operating profit of million in 2006 and 2007. However in the 90's when Greenbury decided to open new stores in Europe and Asia, it was a disaster as very poor profit was made in food sales. In fact, one should know that customers' behaviours vary from one country to another. M&S's strategy is based on the British market and values, but it was not adapted to foreign markets at the beginning. [...]

[...] It also shows the competitive advantages at each level. However at some levels, no competitive advantages are outlined. It is important not to mix up the concept of the value chain with this of the costs occurring throughout the activities. Thanks to this figure we can focus on the main competitive advantages of M&S given by the value chain. First of all regarding the firm infrastructure, M&S have a clever positioning. However it is not a sustainable competitive advantage as they were not aware of the positioning development of their competitors. [...]