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Case Study on Marks and Spencer

Introduction Marks and Spencer became a household name, first in its country of origin, the UK, and later internationally. However, the late 1990s saw a reversal of fortune for this company. In this case study, we look at the relevant issues surrounding this decline and the initiative to turn this problem around. The topics that will be discussed the business environment of Marks and Spencer. Business Environment The environment summarized many different influences. The difficulty is to make sense of this diversity. Identifying very many environmental influences may be possible, but it may not be of much use because no overall picture emerges of the really important influences on the organisation. Furthermore, there is the issue of the speed of change. Managers typically feel that the pace of technological change and the speed of global communications mean more and faster change now than ever before. There is also the issue of complexity. Managers like other normal individuals try to simplify what is happening by focusing on those few aspects of the environment which have been important historically. The strategy of an organisation is therefore, the result of decisions made about the positioning and repositioning of the organisation in terms of its strengths in relation to its markets and the forces affecting it in its wider environment. We find that Marks and Spencer fell terribly short in revising its strengths within their wider environment, and this short-sightedness contributed to their collapse. A changing and unpredictable environment will generate a diversity of ideas and innovations because it will demand responses from organizations and they will vary. An organisation that seeks to ensure that its people are in contact with and responsive to that change is likely to generate a greater diversity of ideas and more innovation than one that does not. On the other hand, one that tries to insulate itself from its environment, like Marks and Spencer, by trying to resist market changes or rely on a particular way of doing or seeing things sometimes known as strong culture will generate less ideas and innovation. We see that Marks and Spencer relied heavily on the traditional way that the company did business and did not encourage innovation and idea generation amongst managers and employees. In reality, these employees feared to show thought patterns that would anger the senior management. It is clear that the market that Marks and Spencer were in was complex, dynamic and unpredictable and encouragement of ideas and innovation would have probably saved them from the fate they endured. Similarly, high degrees of control and strict hierarchy are likely to encourage conformity and reduce variety, so innovation is less likely the more elaborate and bureaucratic the top-own control. We see that Marks and Spencer typically was a company of this description. If we look at the PESTEL Framework (Political, Economic, Socio-cultural, Technological, Environmental and Legal), we see that Economic, Socio-cultural, Environmental and Technological factors are relevant to Marks and Spencers problem.

Economic Marks and Spencer had the notion of that they did not and should not have to reduce prices, either at end of range or during seasonal periods like Christmas. We see that although this strategy worked initially for them, in time, the public realized that with other stores in the market, they could not only purchase the same items that Marks and Spencer stored at lower prices, but also receive discounts from these other stores at times as mentioned above. Marks and Spencer once again did not pay attention to this sentiment of the public. Socio-Cultural In terms of socio-cultural factors that affected Marks and Spencer, we see that the public became more fashion conscious in the 90s than they had ever been in terms of what Marks and Spencer provided them with, i.e. classic, wearable fashions. Hence people decided to shop for clothing in trendier places. As a result we see that they employed George Davies (founder of Next) and other haute couture fashion designers to design clothing exclusively for Marks and Spencer. Environmental In terms of the market environment, Marks and Spencer did not keep pace with the tremendous changes taking place in the retail market. While our competitors strengthened, we were busy developing new stores. So when markets tightened in the second half of the year, we were hit by falling sales, loss of market share and declining profitability. This quote, by the then CEO of Marks & Spencer sums up the lack of focus, direction and foresight that existed at senior management level in terms of the environment. Technological A factor that haunted Marks and Spencer was their inability to keep up with technology. Simple schemes like buying cards for customers were not in place. This coupled with the close on to extinction EDI system that controlled communication between Marks and Spencer and their suppliers made sure they stayed at the back of the pack. However, in 1999, Marks and Spencer announced the integration of a new information system called BizTalk. There were three reasons for using BizTalk. Firstly and most importantly, the principles behind the BizTalk framework, industry standard XML, and the opportunity to avoid writing custom interfaces between each of our applications. Secondly, the BizTalk server product architecture, and its use of core products, such as MSMQ, SQL Server and MTS. And thirdly, its seamless integration into our strategic architecture based on Microsoft Windows and IBM System 390. Marks and Spencer recognized that they needed a global supply chain to compete, and radical changes in the way they use information throughout the company. To create this, they would have to manage new richer information more quickly, optimize our stock management, and be more responsive to our retail business. Firstly, in terms of managing information, they needed to maximize the availability of our information throughout their business. The variety, volume and frequency of that information were increasing. Using BizTalk, they were changing the way that sales information was being delivered to central systems. Rather than aggregating sales and transferring these back to the centre overnight, they would pass sales as they happen to the central systems that could act upon them. They would use the same technology to transfer event-driven information out to their stores, such as short-term promotions or red alerts. On the Internet side, they would use BizTalk to link their customer web sales into their existing back-end systems, and ultimately through to their suppliers. Secondly, in terms of optimizing stock management, they would improve their product availability, at the same time as reducing costs by passing sales information in near real-time to their suppliers, so that they could change what they manufacture and what they distribute. BizTalk would, over time, replace their existing batch EDI links to their 500-plus supply chain.

Thirdly, regarding being more responsive to their business, internally they leveraged their existing application developments by using BizTalk to enable true application cooperation and business process integration. It is evident from the above that Marks and Spencer finally came to the realization that changing just slightly enough to try to keep up with the market was no way of doing business. They needed radical change if they wanted to survive. As will be seen later in this paper, thankfully for them, this change did take place. Culture Although strategy is decided in terms of processes and decisions, it is only through people that it is implemented. The way in which they behave cannot be predicted or controlled. Therefore, an organisation needs to consider their cultural dimensions while planning their strategy. As we have seen in many cases, an organizations strategy is doomed to fail if the right atmosphere and culture are not present. From the beginning, we see that a very strong, autocratic culture prevailed at Marks & Spencer: There was a feeling of camaraderie and close-knit family atmosphere within the stores, and this was compounded by employing staff whom the managers believed would fit in and become part of that family. The staff were also treated better and paid more than sales assistants in other organisations. The family nature of this firm dominated top management too: until the late 1970s the board was made up of family members only. We can see that Marks and Spencer had always focused on their culture. Although it was autocratic and hierarchy-based, was also strong and close-knit. The family atmosphere that prevailed would always be a winner with their customers since most of the people that frequented their stores shared these same family values and beliefs. Looking back at this case in hindsight, many attribute Marks & Spencers failure during the 90s to a problem of culture. The problem may not have been that they had the wrong culture indeed it had done wonders for them throughout the years but rather the fact that they were unwilling to adapt their culture and management style to the world that was changing around them.