Category: Marks & Spencer

Marks and Spencer group is classified among other large clothing retailers in the United Kingdom. Its known globally due to its expansion in retailing clothes. The operations of this business have been managed through the present and the upcoming opportunities. On the other hand, this business has been going through some threats as well.

Marks and Spencer has an opportunity of new markets due to offering high quality clothing and of great value globally (Bownley 18). This has placed this group on a very competitive edge among other clothing traders. The clothing offered by this group has a wide range of styles making it to meet the demands of different customers globally. The group has equipped itself with highly qualified personnel and effective machines that have made the work easier, usage of less cost hence maximizing profits.

Most of the Marks and Spencer clothing customers who are busy during the day can have the opportunity of shopping their desired products online. The introduction of online shopping has made this group to reach out to many customers, as it is also a way of advertising to different people who are Internet users (Perltsy 50). This group has strong advertising agents who have created awareness of these clothing globally, hence coming up with new customers and on the other hand retaining the old customers.

Marks and Spencer clothing retail has been compounded by several opportunities, such as it has a strong capital background making it to expand throughout the United Kingdom and in other countries (Bownley 31). This has made it to reach as many customers as possible hence increasing their sales. Marks and Spencer is advantaged to have a website where different fashions and styles of clothing are displayed.

Due to their large-scale production and economies of scale, their clothing is displayed at affordable prices placing it at a very competitive edge among other clothing retailers (Bownley 26). Most of the clothing found in their websites are exclusive and cannot easily be found in other high street stores. Marks and Spencer enjoys opportunities of new customers in different nations due to its famous brands which most of people globally have confidence and special liking in them.

Marks and Spencer has a clothing variety fitting different climates in various nations, such that they are able to market their products widely. In the nations with growing populations marks and Spencer is capable to enjoy the opportunity of creating new markets as their clothing ranges from kids wear to adult wears.

Their capabilities of producing womenswear and lingerie have made this group to enjoy the available market of women and new markets (Bownley 18). They have concentrated on one brand known as marks and Spencer per una range that is known all over and people have developed some trust in it due to its quality clothing. Moreover, they have a free mail order catalogue that any interested customer can request from their United Kingdom websites

Currently, there are several upcoming businesses of clothing that are offering their products at a relatively lower prices such threatening the presence of Marks and Spencer clothing business in the market. Customers currently have become interested with the new rivals that are favoring their pockets (Perltsy 51).

Competition in the sale of clothing globally has imposed a great threat to marks and Spencer, as there is clothing of high quality with relatively low prices. Marks and Spencer is already dominant thus failing to add new products so as to fit the new market segment that is retarding its growth. Other upcoming competitors are active in trying to appeal to the new market segments hence attracting more customers and becoming more competitive than this group.

Moreover, another major threat of Marks and Spencer clothing is challenge to its management team by its competitors management. Within the Marks and Spencer management, there is a blame game among some individuals, instead of joining together and finding the capable reasons for decreasing sales, the relevant personnel are placing blames on each other, thus making the situation worse.

Another threat is regular employees turnover that is slowing down the sales. Regular replacement of the experienced employees is a way of slowing down the sales of any business (Bownley 27). This group currently is marked by using a lot of finances to some issues that cannot give an equal outcome on sales. For instance, investing much money trying to spruce its image and not sure whether this in turn will increase the profits.

Due to the fact that marks and Spencer business is well known all over, it has relaxed on offering personal services, failing to provide dressing rooms or public washrooms (Bownley 13). This has contributed much to the show down of their image for a period of time. They also dont concentrate on decorating their stores to make them outstand, as they believe that their company is well known.

A bad reputation has weakened its strong customer base, loosing its customers to its competitors. This has made it infamous to the new customers and loosing their current ones, to the well-decorated and outstanding stores. For a business to move smoothly there must be a way of retaining the current customers and attracting more.

Works Cited

Bownley, Allan. Marketing: Five Principles of Marketing. 54.180 (2003): 7-39. Faculty of Economics, Belgrade.

Perltsy, Will. International Marketing, Marketing Globally. 3.11 (2007): 40-56. Versta, Bosnia.

Abstract

This case study takes aims at recommending the strategies for the internationalization of the operations of Marks and Spencer in the Chinese retail industry. The researcher aims at identifying these strategies by taking into account the analysis of the internal and external factors carried out by using various analytical tools for identifying business strategies. The use of different strategy evaluation models has helped the researcher to present important findings regarding the internationalization strategies of Marks and Spencer.

Introduction

Background to the Study

Retailing Industry is among the largest industries in the world, which provide necessary services to consumers and also a livelihood to many across the globe. The retail industry has progressed undoubtedly progressed at a very fast pace from basic household-based units selling their products to domestic consumers to large multinational corporations that aim at serving the consumers across the borders. As, Wal-Mart, a US-based retailer company has become the worlds largest retail business organization with total monetary reserves which amount to USD 312 billion. Wal-Mart competes with huge global retail businesses, which includes Carrefour from France, Metro AG from Germany and Tesco PLC from United Kingdom (Alon 2000; Govindarajan and Gupta 1999).

All these retail businesses have expanded their respective business operations by making entry into global markets to fulfill the needs and requirements of the across the world. This approach from retail giants attracted huge investments from all over the world in the retail sector and a huge number of retailers emerged globally seeking to globalize their operations, reach customers everywhere and to reduce their dependence on the revenue from local operations. Marks & Spencer from the UK also became a part of this globalization scheme, although the strategies of the company proved to be largely ineffective in this respect, particularly in the European region and also in China where they recently tried to implement their internationalization strategies (M&S 2009).

Marks & Spencer is a part of the UKs retail sector and like others, it has also faced jolts of the recent economic crisis (Alon 2000). The retail sector has been the most affected of all, due to the huge gap between demand and supply (Capell 2002). While the retail sector has struggled to maintain profit levels, the competition in the industry soared up as the retailers went for offering products at cheap rates to increase consumers spending level, which although comes along with reduced margins. Marks & Spencers reaction to this situation of intense competition was the closure of low earning or loss-making stores in the UK. As reported in the Annual Report 2009, value market share in womens wear fell from 11.3% to 11.1% in the face of tough competition on the high street, strong downward pressure on prices, and a slowdown in customer spending (M&S 2009). The increased competition acted as a catalyst for the development of internationalization strategies, which were aimed at diversifying the business risk. The internationalization plans were also justified while considering the global expansion of Tesco PLC, which has been Marks & Spencers major competitor in the UK.

Apart from the strategy of the company to strengthen its business in the UK, there has been a strong need felt for expanding its operations globally, which will place Marks & Spencer in a better position as the company would not be solely dependent on the revenue generated from UK business. The need for expanding its operations was also felt by other analysts, as the following statement was made in Business Week magazine, which suggested Marks & Spencer to internationalize its operations, With 85% of sales and 94% of profits coming from Britain, the company needs to diversify (Business Week 1998). This statement can be connected to the below-par performance of Marks & Spencer from the year 1997. From 1997 and onwards, the company found itself involved in a huge crisis in the form of poor performance relating to its business operations and continuous changes in the management of the company (Jackson and Sparks 2005). The new management of the company decided to change the companys strategies in 2001 and in doing so, the management of Marks & Spencer decided to put more emphasis on the deteriorating condition of the companys domestic operations and to let out the global outlets through franchising agreements. The decision to withdraw Marks & Spencer from the international retail market was based on the continuous loss suffered by the company due to the economic crisis in Asia in the late 90s. Marks & Spencers Hong Kong business was as a result offered for franchising (Jackson and Sparks 2005). A brief glimpse of different phases of progress and downfall of Marks & Spencer in the past, which also includes its internationalization efforts, has been shown in the following table as given below.

Table 1: Phases of Ups and Downs in International Operations of Marks & Spencer. Source: Press Reports, Marks & Spencer Annual Report 1996, (Jackson and Sparks 2005).

If M&S believes that its imported packets of egg fried rice or jars of black bean sauce are going to be a smash success in China, at London prices, then it is going to get a Shanghai surprise&& No one in Shanghai is going to make M&S a destination store when all that is on offer is a meager selection of frozen potatoes, fish pies, and pizza. On the clothing front, the displays looked an awful jumble (Moore 2008). However, notwithstanding what it has failed to achieve back in 2008, Marks & Spencer went for joint ventures with various franchising partners, particularly in Greece, Europe, and India, to speed up its internationalization mission (M&S, 2009). At present, Marks & Spencer is running 600 outlets in the UK and a total of 285 stores in 40 countries all over the world. In the financial year 2008-2009, the annual turnover of Marks & Spencer from international operations amounted to 7.9 percent of the total turnover in the year (M&S 2009).

However, keeping in view the unsuccessful internationalization campaigns of the company, it is important to consider and select those strategies for globalization which are not only effective but also implemented timely based on a careful analysis of the situational requirements of the organization itself and also of the region where it seeks to expand its business operations. This case study is aimed at exploring the theoretical basis for the process of internationalization in general and recommends strategies for Marks & Spencer to expand its business operations.

Research Objectives and Questions

To find out the ideal strategies for internationalization and to give suggestions on the existing strategies in this respect for Marks & Spencer, it is pertinent to sort out the reasons which are considered fundamental for entering into a particular market in a foreign country, the conditions prevailing in those identified markets which primarily include market competitiveness, cultural norms, domestic likings and disliking, perceptions, etc. and also the available opportunities for the new entrants in the market.

To do so, the researcher in this study has chosen to analyze China as the target foreign market for Marks & Spencer to enter in. The motivation for choosing China as the target foreign market has come from the fact that the strategies and plans made by Marks & Spencer about expand its business in China have been proved as ineffective. It is, therefore, a good opportunity to analyze the situation in this research work and propose suggestions and recommendations in this regard to improve the strategic moves made by Marks and Spencer in China.

In light of this motive, the research objectives and questions set for this study are given as follows:

• What are the reasons that make M&S enter the Chinese Market?
• Whats the situation like in the Chinese retail market?
• What are the suitable strategies for M&S to enter the Chinese market?
• If a joint venture is preferred, who are the potential partners that M&S can form into a joint venture with?

Project Aim

This research work is aimed at suggesting suitable strategies for Marks & Spencer to enter into the Chinese retail market in light of the internationalization process while considering the factors which are regarded as the main reasons for Marks and Spencer to enter into the retail sector of China. While suggesting a strategy in this study, the researcher disregards the presence of Marks and Spencer in China through a wholly-owned subsidiary in Shanghai. In addition to this, the study also suggests those companies which can be considered suitable as partners in a joint venture with Marks and Spencer, if a joint venture is preferred. Furthermore, the research work aims at linking the existing theories relating to the internationalization process with actual practices in particular markets and presents a more theoretical based view on the complex issue of internationalization.

Scope of the Research Work

This study, as mentioned earlier, is aimed at suggesting suitable strategies for Marks & Spencer to enter into the Chinese retail market in light of the internationalization process. In light of this objective, the researcher aims at linking the theories identified in the literature review to Marks and Spencers situation. In addition to this, the researcher studies the point of view of Marks and Spencer regarding the reasons as to why they want to enter the Chinese retail sector. In the last part of the analysis of this research work, the researcher aims at identifying the customs and norms prevailing in the Chinese retail sector to identify the strategy or a combination of strategies considered suitable for Marks and Spencer in China. The overall scope of the researcher is, therefore, limited to the ability of the researcher to collect useful information and then assemble it in such a way that meaningful outcome to the research can be achieved. Moreover, the scope of the research work is affected by the time allotted for completion of the report.

Literature Review

Introduction

This chapter of the study provides a review of the available literature on the subject in light of the theories related to the concept of internationalization of the organizations in the global market. The chapter discusses theories in this respect which are regarded as the most applied and followed theories while discussing and analyzing the concept of internationalization about business organizations. The chapter discusses two broad concepts concerning the internationalization of the businesses, which are The Incremental Stage Approach and The Born Global Approach. The incremental stage approach further takes into account the theory of product life cycle presented by Raymond Vernon (1966, 1971 and 1979) and the Uppsala Internationalization Model presented by Johanson and Wiedersheim-Paul (1975), Johanson and Vahlne (1977). Moreover, the chapter also presents the arguments and criticism related to the theories and models discussed to establish a balanced approach towards this study.

The Incremental Stage Approach

In light of the stage approach, business enterprises usually follow a step by step approach towards their development. At first, a business organization tends to operate in its country of origin and then gradually it starts to expand its operations and activities on the international stage. There are two major models developed in the past that are based on this approach. These models include the Product Life Cycle Theory introduced by Raymond Vernon (1966, 1971, and 1979) and the Uppsala Internationalization Model introduced by Johanson and Wiedersheim-Paul (1975), Johanson and Vahlne (1977). These models are discussed as under:

The Product Life Cycle Theory

Vernon (1966, 1971 and 1979) states that the process of internationalization of an organization is based on the theory of product life cycle. This phenomenon was particularly identified by Vernon (1966, 1971, and 1979) in which he stated that organizations followed an approach that included different phases of production. In the first phase, organizations produced their products in the United States and exported them to other parts of the world. After they achieved stability in this phase, they developed production facilities in other advanced regions and produced their products to fulfill the demand of their products in that respective region. This phase was then followed by the entry of those organizations into markets that were comparatively less advanced in terms of technology and other infrastructural requirements. However, as the organizations developed their skills to produce their products, these advancement gaps were removed. These observations can be specifically formulated as three different stages for a products production which is as follows:

New Product: Development Phase

As identified by Vernon (1966, 1971, and 1979), the organizations in the United States tend to produce those products domestically which are intended to satisfy the demands of the consumers, who are placed in high-income base (Vernon 1966). The reason behind this is that the income level of consumers in the United States is comparatively higher than other countries markets. Apart from this, Vernon (1966, 1971, and 1979) also states that the required facilities for producing goods will be found in the United States, even though a majority of the organizations hold other production factors in other regions which are more cost-effective.

Organizations in this phase consider factors other than those related to costs (Vernon 1966). These factors include the communication infrastructure and external economies. While taking into account the needs and requirements for the organizations in this first stage, due to the non-standardization of the products being produced, it is more viable for organizations to become more flexible rather than searching for cost-reducing techniques. This approach would allow them to develop their products and production techniques further and attain the desired standardization of their products (Vernon 1966).

Growing Product: Maturing Phase

The increase in the demand of the consumers is expected to determine the standardization of the product to some extent and then consequently there is a decreased requirement for flexibility on the organizations part (Vernon 1966). In this phase, organizations tend to focus on economies of scale using increasing their output levels. On the other hand, the demand for the goods produced by the organizations locally also begins to increase in regions that are regarded as advanced and developed countries or regions.

As a result, the business enterprises explore the emerging and new markets for their products and find out ways to make entry and erect their production lines to fulfill the demand of their products in the new market. If production in the new markets turns out to be cost-effective, the organizations may think of reducing their levels of production back in home and export the products produced in foreign lands to home for fulfilling the local demand (Vernon 1966).

Standard Product: Standardization Phase

When the organizations achieve advancement in their production techniques and can produce their products in a standardized manner, they tend to shift their production facilities to regions that are comparatively less advanced and are underdeveloped (Vernon 1966). The primary motive behind this move is to produce goods at reduced costs. However, the possibility of doing so rests on the preconditions that the organizations intending to relocate their production facilities in new underdeveloped regions are indigenous in terms of their production needs and requirements and are well aware of the market conditions and the related information (Vernon 1966). Once established; these new arenas serve as the major production locations for the organizations, which not only fulfill the local demand in the region of operation but also satiate the needs of other markets in which the organizations have their share (Vernon 1966).

However, while keeping aside the theoretical assumptions being mentioned in the life cycle of the product, there are many elements which are not taken into account and Vernon (1979) has also shown his agreement in this respect by saying that some of the starting assumptions of the product cycle hypothesis are clearly in question (Vernon 1979). The business enterprises in the fast-changing world of today may not be ready to wait for these phases to elapse before entering into new markets and there may be various products launched in various markets at a time without having regard to the factors identified in the first two phases of the life cycle. This approach has become a trend due to the fruits of globalization; the geographical and cultural differences have been washed away with the wave of globalization and henceforth the existing businesses find themselves more able to reach geographically dispersed regions.

As, the enterprises dealing with the production of electronic items have such a huge customer base, that producing at home or some other single isolated place is neither economical nor justifiable (Vernon 1979). Keeping in view these global changes in mind and the significance of his model, Vernon (1979) summed up the situation by saying that although the applicability and practicality of the product life cycle model has been undermined by the prevailing circumstances, the significance and the relativity of the theory still holds its position by way of guiding particular business concerns. In addition to this, he also suggested that the model presented by him could still be adopted by small and medium enterprises that have not yet made their entrance on the international stage through establishing production facilities for their products in regions other than the place of their origination (Vernon 1979).

The Uppsala Internationalization Model

Johanson and Vahlne (1977, 1990 and 2006) presented the Uppsala Internationalization Model. The model presented states that enterprise gradually increases its international involvement (Johanson and Vahlne 1990). It is argued in the model that the perceived gaps by the investors and organizations serve as the major hindrance in the process of internationalization of the business operations. These gaps are shaped by the variances in the languages spoken in different parts of the world, the cultural differences, differences in political setups in different countries and various other factors.

These gaps tend to create virtually a much larger distance than the actual geographical distances between the organizations and the markets where they have not yet marked their entry, although these are only perceived (Johanson and Wiedersheim-Paul 1975). However, when an organization initiates its international operations in those markets where it perceives that the identified factors creating the gap are comparatively less forceful. Eventually, as the organizations operations increase in the international settings, the acquisition of knowledge and increased commitment towards internationalization of operations allow the organization to make its entry into new markets which were previously conceived to be at greater distances (Johanson and Wiedersheim-Paul 1975). The overall idea of the model may be depicted in the following figure:

Figure 1: Uppsala Internationalization Model: Theoretical and Operational Levels.

By this idea, it is pertinent to differentiate between two types of knowledge gained by the organizations going through the internationalization of their operations. This differentiation shall be made based on objective knowledge and experimental knowledge. The objective knowledge is generally taught rather than acquired, whereas the experimental knowledge is acquired through experiences gained through expanding operations. Out of these two types of knowledge, the experimental knowledge holds a significant position in reducing the perceived gaps and distances (Johanson and Vahlne 1990). While reviewing their ideas in the model presented by them, Johanson and Vahlne (2006, p. 175) emphasized that learning and commitment building is more about discovering and constructing opportunities [&] involving other firms in the network (Johanson and Vahlne 2006). This confers that the opportunities and the new openings being identified by the organization at a specific period is largely dependent on the level of knowledge gained and commitment shown by the organization.

Apart from the efforts shown in the Uppsala Internationalization Model to add further explanations to the Vernons Product Life Cycle, various critics have made their criticism in this respect by considering the development of the organization in its own environmental set up to develop a further explanation of the process of internationalization. As Chetty et al. (2004) concluded his opinions on the model by stating that the Uppsala Model is highly deterministic, the stages identified by the model are often neglected by the organizations while moving towards internationalization, the model has dealt with a highly complex situation in a manner which is unnecessarily simplified and the model also does not take into account the acquisitions and the effects posed by the factors which are outside the environment in which the organization operates (Chetty and Campbell-Hunt 2004). Apart from these issues highlighted by Chetty et al. (2004), there are three major weaknesses or areas of concerns highlighted by the critics generally:

• Keeping in view the External Validity of the model, it is argued that is there any reason to believe that the Uppsala Model, which was developed while considering the internationalization process of various organizations in Sweden back in the 70s, is still applicable and relevant in the modern world of today (Doclib 2011).
• On the other hand, a much more important shortcoming identified, concerning the operational level of the Model, is the presentation of the internationalization process as a deterministic and irreversible process in the discussion related to the experimental knowledge (Doclib 2011).
• Lastly, it is a general argument that the model lacks the required theoretical power due to the consideration of explanatory variables in a limited number. Moreover, the idea presented that the commitment and acquiring knowledge comes after one another, but the model fails to explain that what comes first in this process; commitment or gaining knowledge? (Doclib 2011).

While considering the approaches followed by the two models, it can be established that when these models are taken into account in isolation, it may not be possible to address and understand the internationalization processes of the originations operating in the modern and global market settings (Andersson, Gabrielsson and Wictor 2004). In consequence of this, a new approach has been developed to fill this space. The approach is called The Born Global Approach.

The Born Global Approach

Several small and medium-sized enterprises (SMEs) are not seen to be following the Incremental stage Approach they initiate their international operations right from their inception. These types of organizations tend to mark their entry on the international stage early on in their life and also enter into various new markets at the same time. In light of this, these types of organizations are often termed as Born Global (Doclib 2011).

The terminology and idea of Born Global organizations was initially presented through a survey conducted for the Australian Manufacturing Council by Mckinsey consultants. It was stated in the survey report that these types of organizations compete successfully with other companies especially with MNCs (Multinational Companies) through their vast geographical spread and reach. Moreover, the report also stated that the born global organizations are found everywhere, in every industry and sector and are taking part in the competition with other giants quite successfully (Doclib 2011). Their success is based on the following attributes:

• They can fulfill the demands of the consumers which are new;
• They tend to earn benefits out of the opportunities available due to advancements in technology and cost reduction techniques.
• Advancement in information technology and other communication means allow these organizations to spread their operations in areas which are geographically dispersed.
• Moreover, being small in size, they have the advantage of being able to adapt to the changes in the environment surrounding them and display much more flexibility in their actions (Doclib 2011).

This approach is also followed in the study conducted by Oviatt and McDougall (1994). In this study, the authors named the SMEs as International New Ventures. The International New Ventures are defined by Oviatt and McDougall (1994) as business organization that from inception, seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries (Oviatt and McDougall 1994). These new ventures are characterized as originating as international organizations, in which the resources are inducted from international platforms. This approach distinguishes them from organizations that follow the incremental stage approach, i.e. those organizations which tend to initially develop themselves locally and then subsequently go for internationalization with a careful analysis of the environmental conditions and their relative competitiveness (Oviatt and McDougall 1994).

Oviatt and McDougall (1994) presented an analysis of the organizations which fall under the scope of New International Ventures. This analysis categorized the new ventures into three classes (Oviatt and McDougall 1994).

New International Market Makers

These are the organizations which focus on generating income by moving goods from nations where they are to nations where they are demanded. These organizations make use of the conditions prevailing in different regions and build new markets (Rasmussen and Madsen 2002).

Geographically Focused Start-ups

This type of new venture aims at utilizing the production resources, which belong to those regions which are external to them, to fulfill the requirements of their product in a specific area of operation. Competitive advantage is found in the coordination of multiple chain activities, such as technological development, human resources, and production (Rasmussen and Madsen 2002).

Global Start-up

These organizations tend to attain significant competitive advantage from extensive coordination among multiple organizational activities, the locations of which are geographically unlimited. These types of organizations ensure their global presence by way of adopting strategies that are proactive in obtaining resources for production from everywhere in the world and then making available their products in every part of the world. Although these organizations may have to face initially some disadvantages in the form of lower production skills and coordinating skills in geographically dispersed regions, but when these shortcomings are eliminated these organizations enjoy such competitive advantages which are unmatched and unsurpassed, primarily due to the strengthening in their operational activities through increase knowledge and the formation of strategic alliances with other players in the market (Rasmussen and Madsen 2002).

Factors Having Impact on the Choice of the Global Approach

The following are the major factors or determinants which make the organizations to choose a particular approach while going for the internationalization of the business operations.

Uncertainty in the Environment of the Organization

Due to the continuous variations in the surrounding environment of the organizations, the concept of Born Global has held its place (Laanti, Gabrielsson and Gabrielsson 2007, Rasmussen and Madsen 2002, Oviatt and McDougall 2000). In light of the conclusions reached by Madsen and Servais (1997), it is possible to categorize the changes into three major portions which are brought by the organizations in response to the changes in the surrounding environment (Madsen and Servais 1997). These changes are as follows:

• Greater specialization in the production techniques and therefore more intermingling of markets;
• Sourcing of factors of production at global level, which in turn causes many business sectors to diffuse;
• The internationalization of the capital and financial markets (Madsen and Servais 1997).

The above-mentioned trends have been established due to fundamental technological changes taking place all over the world. As, improved and advanced production techniques have enabled the organizations striving for internationalization to exploit new markets, to access the world with greater ease, reliability and lower costs due to developments in the communication and transportation means and also due to advancements in information technology.

Rasmussen and Madsen (2002) have added their opinion in this respect by saying that these changes in the environments surrounding the organizations tend to create conducive conditions for the organizations and the businesses in general using

• Reducing the barriers in global trade,
• Improving or changing stiff regulations and allow privatization of the organizations.
• Enabling local markets to become more mature,
• Swift flow of information from market to market,
• Improvement in the communication and transport channels,
• High use of technology,
• Increased competition,
• Free flow of factors of production from one region to another and so on (Rasmussen and Madsen 2002).

The Domestic Market

The role played by the domestic markets has been taken into account by various researchers, as, Gabrielsson et al. (2008) and Madsen and Servais (1997). A local market that is thought to be not so able to attain the internationalization process is one of the most important determinants of the internationalization process (Madsen and Servais 1997, Gabrielsson, et al. 2008). As a result, it is observed that these types of organizations are present in large numbers, particularly in those market environments which are of a small size and have developed themselves (Oviatt and McDougall 1994).

Industry and Segment

Few researchers have argued that the particular features and characteristics have a huge impact on the operations and prospects of the new ventures and therefore these factors determine the Born Global feature of these organizations (Fernhaber, McDougall and Oviatt 2007).

Knowledge Availability

The new ventures are faced with the problems of lack of resources related to production which may be tangible or intangible. It is due to these reasons that the organizations are now focusing on gaining prior knowledge of the market in which they intend to enter in. This prior knowledge allows these organizations to pre-empt the shortcomings associated with the market in consideration (Autio, Sapienza and Almeida 2000).

Entrepreneur and Management Previous Experience

The past researchers have argued that the skills acquired by the entrepreneurs, through their continuous operations globally and interaction with global forces play a significant role in promoting the internationalization of the organizations to which they belong. It is further argued that those organizations which have leaders and managers having prior experience in the international context tend to become and adopt the Born Global approach more easily as compared to those organizations which lack these types of individuals (Madsen and Servais 1997).

The Organizations Innovativeness

The innovative skills of an organization account for the ability of the organizations to put forward new techniques and ideas related to improving the growth of its operations and activities and to develop further its products and services (Karlsen 2007). In the context of born global approach, the level of innovative skills developed by an organization is dependent upon the level of globalization.

Network Links

It is a fact that networks, whatever they may be of, and cooperation play a significant role in making the internationalization of the new ventures a success (Chetty and Campbell-Hunt 2004, Madsen and Servais 1997).

The process of internationalization of the organization allows an organization to establish relationship and connection in different regions and markets by way of:

• Making new relationship,
• Developing further the already existing relations, or
• Creating networks for establishing new and maintaining the existing relationships using its existing relationships (Madsen and Servais 1997).

Summary

This chapter has discussed the existing theories and models on the subject of internationalization of the organizations. The chapter takes into account the two major broad approaches; the incremental stage approach and the born-global approach to review the literature on the subject of this study. The two approaches are further reviewed in light of the principles on which they are based. The discussion of the theories also takes into account the arguments and criticisms made by various authors in the past on the identified theories and models in this chapter.

Research Methodology

Introduction

This chapter of the study discusses the research methodology adopted by the author while formulating and recommending the internationalization strategies for Marks and Spencer. While keeping in view the research objectives and questions in mind, the author in this case study of Marks and Spencer has made use of the previous studies in developing an initial understanding of the methodology to be adopted in this study. Moreover, this chapter discusses the techniques and methods which are employed by the researcher to recommend the internationalization strategies for Marks and Spencer. The chapter also presents the justification of research methodology being employed in this study.

Adopted Research Methodology

The researcher in this study adopts the case study approach to recommend a strategy for the internationalization of Marks and Spencer. Apart from the fact that the case study is criticized based on the methodology adopted while collecting data and other information, the importance and significance of using them are also recognized, particularly where detailed explanation and understanding of a particular individual or scenario is required. While considering the qualitative and quantitative aspects of the research works, the researcher follows a mixed approach in analyzing the data collected and discussing the trends and analyses found therein.

Case Study Approach

The definition of case study approach followed in a research work is given by Yin (1984) as follows:

An empirical inquiry that investigates a contemporary phenomenon within its real-life context; when the boundaries between phenomenon and context are not evident; and in which multiple sources of evidence are used. (Yin 1984)

Furthermore, Yin (1984) has categorized case studies into three main classes, which are discussed as follows:

Exploratory Case Studies: These case studies are aimed at exploring any kind of relationship in the available data and information which suits the objectives of the researcher. This type of case study requires the researcher to carry out some groundwork and preliminary data collection before identifying the questions to be answered based on the research work (Zainal 2007).

Descriptive Case Studies: These case studies are aimed at describing what is at hand. As the researcher in this type of case study comments and describes the data which has been collected for the research work. To lay down strong foundations on which the discussion is based, the researcher is first required to put up a convincing theoretical background, which serves as the basis of the discussion in the research work (Zainal 2007).

Explanatory Case Studies: In this type of case study, the researcher conducts a careful in-depth examination of the data and other information collected and presents an explanation in respect of the identified relationships and phenomenon in the data and other supportive information. An explanatory approach is also used in such case studies which aim at correlating certain variables (Zainal 2007).

The present case study is explanatory. Keeping in view the objectives and research questions of this study, the researcher aims at presenting and explaining the available information related to Marks and Spencer. This aim is best achieved by using the explanatory case study approach and based on the explanation of the identified facts and other related information; the researcher can present recommendations regarding the internationalization strategies for Marks and Spencer.

Strategic Tools Used

The researcher in this research work uses various strategic tools to analyze the conditions in which Marks and Spencer are operating and to find out the available strategic options for internationalizing its business activities. The strategic tools which are being used by the researcher are SWOT Analysis and Porters Five Forces Model. The selection of these tools is made based on the expected outcomes of using them. An overview of these tools is presented as under.

SWOT Analysis

SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. SWOT Analysis technique was developed by Albert Humphrey. This strategic tool helps in identifying the areas where a business organization is strong and weak as compared to its competitors. Whereas, the analysis also reveals the available opportunities for the business concern and the threats it may face in any identified situation (Menon 1999). In short, the significance of identifying Strengths, Weaknesses, Opportunities, and Threats in this analysis is described as follows:

• Strengths: the features of the organization in consideration which enables that organization to have some advantages as compared to other competitors in the market.
• Weaknesses: the features of the organization which presents disadvantages to the business in comparison with other rivals in the market.
• Opportunities: these are the opportunities for the business concerning a particular market or in case of a general scenario for achieving higher sales and profit targets.
• Threats: these are the factors in the environment in which a business organization operates which poses certain threats concerning the activities of the organization or the future strategies developed by it (Menon 1999).

Porters Five Forces Model

The Porters Five Forces Model helps develop strategies for business organizations. The model was presented by Michael E Porter in the year 1979. In his model, Porter (1979) identified five major forces that play a deterministic role in a business organizations entry into a new market. Out of the five forces identified by Porter (1979), three forces relate to external factors, whereas the rest of the two forces are internally driven (Porter 2008). The five forces identified by Porter (1979) are as follows:

• The threat of new competitors entry in the market,
• The threat that substitute products or services are introduced,
• The power with which customers bargain,
• The power with which suppliers bargain and
• The level of competitive rivalry in the industry (Porter 2008).

Justification

The adopted research methodology for this research work is justified on the basis that the case study approach allows the research to conduct an examination of the information at hand within the scope of the research work (Yin 1984). The case study approach also enables the researcher to analyze the data collected in qualitative and quantitative terms. Moreover, the carrying out of qualitative analysis in detail allows explains scenarios as observed in the real-life, which might not be highlighted while using other approaches. Apart from this, the nature of this research work requires the researcher to adopt the case study approach in designing strategies for internationalization of Marks and Spencer. Also, the use of strategic tools in this research work is justified on the premise that these identified tools assist in designing the strategies for businesses in general and Marks and Spencer in particular.

Data Sources

As discussed earlier that this research work follows a mixed approach; encompassing qualitative and quantitative approaches in conducting the analysis, therefore the researcher makes use of various data sources for collecting the information required for the analysis of the situation in this study. In this regard, the researcher has made use of financial and non-financial information about Marks and Spencer through the website of the company and annual reports. Moreover, the information relating to the company has also been obtained from research papers, journals, articles, websites, books, and newspapers. Also, the researcher focuses on reviewing the past studies conducted on the internationalization strategies of Marks and Spencer to develop an understanding of the views presented by other researchers.

Summary

This chapter lays down the basis on which the researcher analyzes this research work. The chapter explains the research methodology followed in this study. The researcher adopts an explanatory case study approach together with a mixed approach to quantitative and qualitative analysis. Moreover, the strategic tools such as SWOT Analysis and Porters Five Forces Model, are also used by the researcher to help in identifying and recommending the strategies available to be applied and followed by Marks and Spencer. The chapter also discusses the justification for the selected research methodology and the sources used by the researcher to collect the required data for analysis.

Findings and Analysis

Introduction

This chapter aims at finding out the basis for developing and recommending strategies for Marks and Spencer to internationalize its business operations in the context of market conditions, competitiveness in the environment, potential for expansion, the strengths and weaknesses of the company and other relevant factors. In this chapter, the researcher addresses the areas where Marks and Spencer is strong and those areas in which it is weak. Furthermore, the opportunities and threats for Marks and Spencer have also been analyzed.

This analysis has been carried out by using SWOT analysis. Apart from this, the external factors have been analyzed by using Porters Five Forces Model. Based on the findings from these analytical tools, the researcher presents a discussion that takes into account the research questions and objectives of this study. The main research question, i.e. recommending the strategies for Marks and Spencer to enter in the Chinese retail market through internationalizing the business operations, has also been discussed in the discussion part of the chapter. The strategies recommended in this chapter are not only based on the findings of the analysis in this chapter but also takes into consideration the theories and models discussed in the chapter Literature Review while laying the foundations for Marks and Spencers approach towards internationalization.

Analysis of Internal and External Conditions

To analyze the internal and conditions for Marks and Spencer, SWOT Analysis and Porters Five Forces Model is used respectively. These analytical tools present an in-depth analysis, which helps determine the strategies for Marks and Spencer to internationalize its operations in the Chinese retail market. Following are the analysis in light of the identified analytical tools:

SWOT Analysis

This analysis attempts to present a comprehensive analytical review of the internal conditions of the company Marks and Spencer. As embedded in the acronym SWOT, the analysis aims at analyzing the strengths and weaknesses possessed by Marks and Spencer indigenously and in contrast to its competitors. Moreover, the analysis also focuses on the available opportunities for the company to excel and expand its operations internationally and the threats or challenges that are to be encountered while doing so. This analysis is presented below with a detailed discussion on each of the above-mentioned areas about Marks and Spencer.

Strengths

The major strengths or areas where Marks and Spencer is comparatively at a better position include maintenance of high quality in the products developed by the company, maintenance of friendly relationship with customers, making available a good environment for customers to shop and the managers training facilities at Marks and Spencer. These strengths are individually discussed as under:

Quality Products

The success of Marks and Spencer has been the outcome of the quality of the products offered by it. The products in which Marks and Spencer deal are of high quality and this fact is evidenced while considering the customers preference to buy Marks and Spencers products as compared to the products offered by other competitors of the company (CIAO 2002).

Customer Service and Relationship

Marks and Spencer are regarded as one of the most efficient companies in maintaining good customer relationships and the provision of services whether it is after-sale or in the outlets of the company. This advantage gives Marks and Spencer an edge over its rivals and establishes goodwill in the eyes of the existing and potential customers (Christie 2002).

Shopping Environment

The shopping environment at Marks and Spencers outlets is full of comfort and convenience for the customers. The state of the art designing and decorating techniques employed by the company is in itself an attraction for the buyers (Rungfapaisarn 2001).

Management Training

Marks and Spencer has a very strong and well-established management training system in place. The management training system offers learning with work side by side (Retail Technology 1999).

Weaknesses

The weaknesses which are found in the operations and activities of Marks and Spencer include lack of segmentation in the clothing, inefficient management of stocks and inefficient usage of outlet space. These weaknesses are discussed individually as under:

Lack of Segmentation in Clothing Line

Marks and Spencer lacks segmentation and innovation in its clothing lines. The available stocks need to be updated while keeping in mind the demands and requirements of the customers. The modern customer looks for branded items. The available clothing options at Marks and Spencer lack famous brands. This might be the result of the companys failure to understand the emotional appeal of the brands for the customers (Jobber 2001).

Inefficiencies in Stock Management

There have been instances where customers have faced inconvenience, due to unavailability of stock, while shopping at Marks and Spencer through the internet. This problem not only reduces the confidence and trust of the customers but also affects the overall goodwill of the company.

Wastage of Space in Outlets

It has been observed that Marks and Spencer have faced many problems in managing its space in the outlets. There has been a consistent increase in the outlet space but the increase in the sales was not reported to be that much. Henceforth, it is required that Marks and Spencer shall focus on developing new product lines (Stewart 2000).

Opportunities

There are several opportunities for Marks and Spencer to cash. Out of these opportunities, usage of e-commerce, investment in healthy food items and internationalization are major ones. These are discussed as under:

Usage of e-commerce

The modern world of today requires the companies to equip themselves with the available technological developments. By doing this organizations can achieve competitive advantage over their rivals. Marks and Spencers nature of operations require the company to develop internet portals for facilitating customers to shop online which will allow the customers to access the outlets of Marks and Spencer from different parts of the world. This will not only improve the sales volume of the company but will also help in introducing the company and its products in regions where there is low or no customer base of Marks and Spencer.

Investment in Healthy Eating Food Items

Todays consumers are more aware of their health and diet than ever before. This awareness is consistently increasing by the passage of time. The health and diet awareness in consumers have shifted their spending on food items significantly and has offered many opportunities for the existing providers of food items. In light of these developments, Marks and Spencer have the opportunity to invest in those food items which are considered healthy and offer complete nutritional requirements. This can be extremely favorable for the company while considering the Chinese retail market. The huge population of China offers great attraction in this respect to Marks and Spencer (Sung, et al. 2002).

Market Expansion: Internationalization

The globalization trends all across the world have motivated business entities to go international. Keeping in view the market conditions of the Chinese retail market, which is undoubtedly the worlds largest retail market, it can be said that there is a great opportunity and potential for Marks and Spencer to internationalize its operations in China and open up new arenas for its products and services. These opportunities for Marks and Spencer in the Chinese retail market are further enhanced and justified by the fact that China after entering into the World Trade Agreement (WTO) in 2001 agreed to open up its markets for foreign investors. Although the retail sector in China is still dominated by the local players and there is a very small percentage of foreign companies, but the scope for new foreign entrants has been widened by the policy shifts in China (Sung, et al. 2002).

Threats

Besides the available opportunities for Marks and Spencer in the Chinese retail market, there are some threats for the company. The major threat comes from the existing competitors in the retail market of China. The competitors for Marks and Spencer in China have established themselves well enough to survive in the market. Although, Marks and Spencer are not new to China but still the spread of its operations has not been too wide, which presents a tough situation for the company to deal with. However, Marks and Spencer can overcome this challenge by moving towards joint ventures which will reduce its direct exposure to the market and allow the company to gain the knowledge and experience of the market conditions practically (Sung, et al. 2002).

Porters Five Forces Model

Porters Five Forces Model is applied to analyze the external factors which may influence Marks and Spencer while entering in the Chinese retail market. The analysis carried out while using this model discusses the threats related to new entrants, substitute products, competition from rivals and the powers of suppliers and buyers. The detailed analysis of the five forces identified by Porter is presented as under:

Threat of New Entrants

Chinese retail market has traditionally remained under the strict regulatory control of the government and consequently, there were strict barriers for other entities to enter the market. However, as the government of China decided to bring reforms in the regulatory frameworks governing the retail market of China in the 90s, the situation was significantly changed. The reforms brought an end to the strict control of government over the market and changes were observed in the following areas:

• The conditions imposed by the government on the market players to deal with specific types of products and also control over the operations and activities of the companies in the market were either relaxed or abolished (Li 1998).
• There was a significant decrease in the governmental price control activities in the retail sector (Li 1998).
• The government allowed the retail markets to flourish and grow based on market forces of demand and supply.
• New investors were encouraged by the government to enter into the retail market (Zhao 1996).

These initiatives on the part of the government opened up the market and a competitive environment developed in the market. For Marks and Spencer, entering the Chinese retail market may not be a big issue. But remaining competitive in the market is a key to the survival, as new entrants are encouraged to step into the market (Zhuang, Herndon and Zhou 2003).

Threat of Substitutes

There are several retailers in the Chinese retail market offering the same line of products as offered by Marks and Spencer. As Chinas retail market is the largest retail market in the world, there are a huge number of rivals and competitors for Marks and Spencer. Henceforth, the threat of substitutes is always present (Zhuang, Herndon and Zhou 2003).

Bargaining Power of Suppliers

The Chinese retail sector had been influenced by the suppliers power in the past due to market imperfections caused by governmental control. But since the economic development in the late 70s and the governmental reforms in the early 90s, things started to improve and the retail market saw a shift of powers from suppliers to buyers. Due to the increased number of suppliers in the market, the more products were available than demanded, which ultimately resulted in competition between the market players (Domestic Trade Ministry of China 1997). This competition benefited the buyer who found more options in the same market and thus had the power to negotiate on his terms. In our case, Marks and Spencer shall also take into account the fact that the Chinese retail market offers only little bargaining power to the supplier (Zhuang, Herndon and Zhou 2003).

Bargaining Power of Buyers

As discussed in the section above, the bargaining power of buyers increased significantly since the economic reforms in the country. In contrast to the past, the prevailing market conditions are favorable for buyers. The buyers have a variety of options to choose from and their choices are no more influenced by the decisions of the suppliers. In light of this situation, Marks and Spencer shall consider establishing its business in a way that offers more to the customers and takes into account the demands and requirements of the customers (Domestic Trade Ministry of China 1997).

Competitive Rivalry in the Market

As discussed in the section Threat of Substitutes, the Chinese retail market of today offers a very competitive environment for the retailers operating in the market. The retail market in China consists of retail businesses that are owned by private enterprises, government, joint ventures, sole proprietors, public enterprises and foreign-based enterprises (State Statistical Bureau of China 2000). Since the reforms took place in the retail sector in China, the concentration of the government-owned businesses in the retail market reduced significantly and as result, new enterprises with different ownership structures entered in the market and thus an upsurge in the retail market competition and rivalry was observed. Keeping in view these trends in the market and the fact that the forces of demand and supply are the determining factors of the market, Marks and Spencer will have to face strong competition from its rivals in the Chinese retail market (Zhuang, Herndon and Zhou 2003).

Discussion and Recommendations

Marks and Spencer in the Chinese Retail Market

This section aims at presenting a discussion based on the findings and the theories and models discussed in the literature review. Moreover, the researcher also recommends the strategies which suit Marks and Spencer for the internationalization of its operations in the Chinese retail market.

Why Marks and Spencer shall enter the Chinese Market?

As discussed in the background of Marks and Spencer in the first chapter that the company faced torrid times not only domestically but also in its international operations, it is pertinent that Marks and Spencer shall find ways to solidify its position in the market and revive the financial stability. To do this, the company requires some extraordinary measures to be taken. Internationalization is one major option in this respect which is expected to boost the performance of the company furthermore and bring financial strength. In this regard, Marks and Spencer need to step into a market that offers greater exposure to the company and what it is offering and provides all the necessary constituents for operating smoothly. These requirements are fulfilled by the Chinese retail market, as it has everything to offer. Chinas retail sector is regarded as the largest in the world and has continuously and consistently changed itself over the years from a state-controlled sector to a free, competitive and investor-friendly market place (China Business Review 2010).

Chinese Retail Market

The retail market of China is considered amongst the fastest-growing retail markets all over the globe. Apart from the recent economic crisis, the Chinese retail market showed a turnover of USD 1.8 trillion in the year 2009. This figure represented an increase of more than 15 percent from the previous year. The consistent increase in the turnover of the retail market of China is primarily due to consistency in the increase in the general publics income. As, the per capita income in China was reported to be USD 2,125, which was approximately three times higher than the per capita income of Chinese ten years ago. This income level moves upward further when considering more developed cities of the country like Beijing and Shanghai (China Business Review 2010).

Due to the higher per capita income level of the citizens of China, consumer spending has now moved on from basic demands to luxury, which has in itself created a huge opportunity for retailers to step into the Chinese retail market. It is estimated that from the year 2001 to 2008, the trends of consumer spending on food items has decreased significantly, whereas spending on other products such as clothing, health care, transportation and communication services has almost doubled. These trends show that the general consumers cash resources have significantly increased which favors the potential retailers to step in (China Business Review 2010).

Apart from these lucrative conditions prevailing in the retail market of China, the retailers have to face a reality that Chinas retail market is not as open to foreign retailers as retail markets in other parts of the world are. The total percentage of foreign retailers in China comes out to be 5 percent only. However, since the signing of World Trade Agreement (WTO) by China in 2001, it is expected that the foreign investors will be allowed gradually to step into the Chinese market in light of the agreement to remove barriers for investors coming into China from abroad (China Business Review 2010).

The structure of the Chinese retail market is full of variations due to regional differences, income level differences, differences in buying power and variations in the demand of a single product in different areas of the country. The retail market of China comprises of many segments in the form of small and medium level retail businesses. Due to the presence of these small and medium-sized retail businesses in large numbers, the retail market is not dominated by any particular big retail businesses and henceforth the competition in the market is prevalent. However, there are different levels of competition in certain retail sectors in the market. Particularly, the supermarkets and other big stores are dominated by a few big retail market players. These big players include Wal-Mart and Carrefour (China Business Review 2010).

The most flourishing sector in the retail market includes automotive businesses and spare parts. The importance and success of these businesses in the Chinese retail market is justified by the fact that these sectors contributed 39% of the total revenue generation in China in the year 2008. On the other hand, other businesses such as food chains, clothing, furniture business, and health care and medical instrument businesses face strong competition in the Chinese retail market (China Business Review 2010).

Suitable Strategies for Marks and Spencer to enter Chinese market

Our experience illustrates that to succeed internationally when entering mature markets; you must adapt your store formats to the competitive realities of these markets. (M&S annual report 2001)

While considering the factors and determinants of the Chinese retail market, Marks and Spencer shall realize that the factors which are required for internationalization in the retail sector are expected to influence the overall business plan and strategies of the company which are planned to be followed in foreign market conditions. Keeping in view the available resources and capabilities of Marks and Spencer while considering the competitiveness in the Chinese retail market, the company has to form a decision as to what level its strategies are going to be standardized and adapted, especially those relating to the marketing and operating strategies.

The standardized strategies or approach towards internationalization in the retail sector refers to the situation where an organization seeks to expand internationally while maintaining its standards of operations. As, while following a standardized approach the organization tends to expand internationally but with strict compliance with its already established sets of principles for carrying on business. These principles include the standard policy for the quality of the products, price levels, store environment, services, etc. On the other hand, the organizations may go for an adapted approach in which the business operations are made to run in such a flexible manner that the organization can adapt the changes in the environment in which it operates instantly. As, a products quality, design, manufacturing, price, marketing, etc. are adjusted by the needs and requirements of the retail sector in which an organization operates. Furthermore, these adjustments are also influenced by the competitors in the market.

Keeping in view the prevailing conditions in the Chinese retail market, particularly the high degree of competition in the clothing and other sectors, it is favorable for Marks and Spencer to follow a mixed set of approach towards expanding its operations in Chinas retail sector. The mixed approach shall take into account standardized and adapted strategies for internationalization. The core reason behind this recommendation is that the standardized strategy will help Marks and Spencer to maintain its standards in terms of quality, pricing and other areas, which will, in turn, ensure the stability of its operations and attainment of the overall objectives. On the other hand, an adapted way of doing things will allow Marks and Spencer to take into account the regional requirements of the consumers and how the competition is shaping the operations of the market players. The adapted strategy is also necessary on the basis that the survival of a foreign enterprise is highly dependent on the ability of the enterprise to involve itself in the market in such a way that the products offered are meant to serve the needs and requirements of the consumers by their desires.

Furthermore, the previous efforts of Marks and Spencer shall be taken into account to evaluate the policies adopted by the company in the past to internationalize its operations. In the year 1988, Marks and Spencer marked its entry in the United States using acquiring the famous clothing chain Brooks Brothers and a supermarket chain Kings Supermarkets. But these acquisitions did not prove to be fruitful enough for the company and as a result, the company decided to put these chains on sale in 2001. There were various reasons behind the failure of the operations of Marks and Spencer in the United States and Canada.

The foremost reason behind the failure was that due to the UK background of the company, Marks and Spencer failed to understand the market requirements of the United States retail sector and predominantly tried to run its operations in UK style and henceforth the consumers found nothing special in the companys products for them. There was no visible strategy for the internationalization of the operations. The worldwide ambitions and slogans of the company were not supported by the actions of the company which could have given a real meaning to the ambitious strategies of the business. Moreover, the strict approach towards standardized strategy followed by Marks and Spencer accounted for its downfall in the international markets. The idea of operating in the same manner as it did in the UK made the company inflexible towards market changes and demands. The international customers were offered what was offered to UK customers back at home. These factors also affected the pricing strategy of Marks and Spencer.

Apart from these things, keeping in view the models and theories discussed in the literature review of this study, Marks, and Spencer does not fall into the category of Born Global as it has restricted its operations to the UK in the initial period of its life span. Therefore, it is recommended that the company shall follow the approach mentioned in the Uppsala Internationalization model, which is discussed under the Incremental Stage Approach. By this model, Marks and Spencer shall gradually increase its international involvement and expand its operations to other global markets.

Joint Venture and Potential Partners for Marks and Spencer

Although Marks and Spencer has already entered the Chinese retail sector through its operations in Shanghai, it is still relevant to recommend that the company shall focus on preferring joint ventures with other companies who are in the same line of operations in the Chinese retail market. This strategy will allow marks and Spencer to gain insights into the prevailing conditions of the market and would allow the company to progress quickly by making use of the skills and ideas of the potential partners and filling the gap of required expertise and knowledge. The joint venturing will also enable the company to explore new areas for development and innovation in the production techniques. Furthermore, operating through joint ventures will surely help Marks and Spencer in devising marketing and promotional strategies more effectively. While talking about joint ventures, the potential partners for Marks and Spencer can be Next, Tesco, Gucci, John Lewis, etc.

Summary

This chapter presented the analysis of the existing conditions in the Chinese retail market and also the conditions in which Marks and Spencer are placed. Based on the findings of the analysis of these areas, the researcher presented a discussion to recommend the strategies for Marks and Spencer to enter into the Chinese retail market. In doing so the researcher carried out the analysis by following different strategic tools, which included SWOT analysis and Porters Five Forces Model. These analytical tools were used and applied to find out both the internal and external factors which may affect the internationalization of the Marks and Spencers operations. After presenting the analysis of the company in the light of these models, the chapter moved on to discuss the research objectives and questions while keeping in view the outcomes of the analysis and the information and theories presented earlier. Apart from this, the chapter particularly focused on presenting an overview of the Chinese retail market and the reasons why Marks and Spencer shall enter into it. The discussion laid the foundation on which the strategies for Marks and Spencer were recommended for internationalizing its operations in the Chinese retail market.

Conclusion

The process of internationalization involves the following of strategies on which the business enterprises base their objectives and targets. These strategies are meant to provide the organizations a particular course of action; based on which they can expand their operations at international levels. This research work has taken into account the available options for Marks and Spencer to internationalize its retail business, particularly in the Chinese retail market by following particular strategies. The researcher, therefore, has discussed the strategies which may be followed by Marks and Spencer in internationalizing its operations in China and in doing so, the researcher has considered various models and theories and other analytical tools.

In the initial chapter of this study, the researcher has presented a brief background of Marks and Spencers operations and ups and downs faced by the company since its inception. The background presented also discussed the attempts made by Marks and Spencer towards internationalizing its operations and the results achieved through internationalization. The chapter also discussed the research objectives and questions which are addressed in the last chapter. The project aim has also been identified in the same chapter. Moreover, the chapter also identified the scope of this research work. Moving ahead, the study considered the reviewing of the existing literature on the internationalization approaches and strategies in the chapter Literature Review.

The literature review presented a comprehensive overview of the models and theories developed in the past which relate to the subject of this study, i.e. the internationalization of the operations of Marks and Spencer. The researcher categorized the theories and strategies into two approaches, namely The Incremental Stage Approach and The Born Global Approach. In these approaches, the researcher discussed various models and theories which included The Product Life Cycle Theory and The Uppsala Internationalization Model. Furthermore, the researcher discussed the born global approach and took into account the factors on which that approach is based. Apart from this, the factors which influence the choice of the global approach were also discussed by the author.

After presenting the discussion and review of the available literature on the subject, the author discussed the research methodology being followed by the researcher in this study. The research methodology chapter described in detail the basis on which the researcher has conducted this research work. The study, as stated in the chapter, followed a case study approach which was explanatory. The case study was also supported by a mixed approach; which included both quantitative and qualitative analysis of the information of about the company under consideration and the Chinese retail market. Apart from this, the chapter also explained how the researcher would use the strategic analytical tools, which were SWOT analysis and Porters Five Forces Model, to analyze the internal and external factors affecting the internationalization of the operations of Marks and Spencer.

The next portion of the study was the most important part which presented the analysis of the situation of Marks and Spencer and a comprehensive discussion based on the results of the analysis and theories and models discussed before. The discussion aimed at addressing the research objectives and the questions which were already set in the first chapter. While doing so, the analysis of the internal factors through SWOT analysis revealed that there are certain weaknesses and strengths of Marks and Spencer which shall be taken into account before moving towards internationalization. Moreover, the analysis also discovered areas where Marks and Spencer may find opportunities for the growth of its business operations and the threats it may have to face while internationalizing.

After carrying out the SWOT analysis for Marks and Spencer, the researcher applied the Porters Five Forces Model on Marks and Spencer in the context of the Chinese retail market, which identified the external factors influencing the internationalization of the Marks and Spencer. Porters five forces model identified the threats for Marks and Spencer concerning the new entrants in the market, the availability of the substitutes of the products in which Marks and Spencer deals and the competition from the rivals already existing in the market. Apart from these threats, the model presented the prevailing conditions relating to the suppliers and buyers power in the Chinese retail market.

After the presentation of analysis and discussion on the subject, the researcher gave recommendations in the form of strategies to be followed by Marks and Spencer to enter into the Chinese retail sector. The recommended strategies suggested that marks and Spencer shall follow the Uppsala Internationalization Model to expand its operations by focusing on following a mixed approach, i.e. standardized and adapted approach. Moreover, it was also recommended that Marks and Spencer shall look for joint ventures to initiate its operations in the Chinese retail market and for doing so some potential partners were also suggested.

Recommendations for Future Studies

It is recommended that the researchers in the future shall take into account the strategies adopted by other companies that are already operating in the Chinese retail sector and have managed to hold a strong position in the market. Furthermore, the researchers in the future shall consider the particular parts or regions of China which offer greater opportunities for the company entering into the market.

Reflection

Overall, the process of carrying out the above research and write up of the report has allowed the researcher to not only develop new academic skills but also polish existing ones. Different management strategy tools have been selected after acquiring background information and understanding regarding their purpose and way of bringing about meaningful results from the use of these tools. This practice would surely help the researcher to benefit in the years to come as they have allowed the researcher to improve his analytical and descriptive skills.

List of References

Alon, I., 2000. Marks & Spencer: A Case Study in International Retailing. Case Study. New York: University of New York.

Andersson, S., Gabrielsson, J. and Wictor, I., 2004. International activities in small firms: examining factors influencing the internationalization and export growth of small firms. Canadian Journal of Administrative Sciences, 21(1), pp.22-34.

Autio, E., Sapienza, H.J. and Almeida, J.G., 2000. Effects of Age and Entry, Knowledge Intensity, and Imitability on International Growth. Academy of Management Journal, 43(5), pp.902-06.

Business Week, 1998. Marks & Sparks Isnt Throwing Off Any. Business Week, 16 November. p.64.

Capell, K., 2002. A Sigh of Relief at Marks & Sparks, Vandeveldes restructuring has crash registers ringing again. Business Week International  European Business.

Chetty, S. and Campbell-Hunt, C., 2004. A Strategic Approach to Internazionalization: a Traditional Versus a Born Global Approach. Journal of International Marketing, 12(1), pp.57-81.

China Business Review, 2010. Understanding Chinas Retail Market. Web.

Christie, M., 2002. Marks and Spencer Enhances Customer Service Across Multiple Channels. Web.

CIAO, 2002. Web.

Doclib, 2011. Enriched Uppsala Model. Web.

Domestic Trade Ministry of China, 1997. Domestic Trade Ministry of China. Almanac of Chinas Domestic Trade.

Fernhaber, S.A., McDougall, P.P. and Oviatt, B.M., 2007. Exploring the Role of Industry Structure in New Venture Internationalization. Entrepreneurship Theory and Practice, 31(4), pp.517-42.

Gabrielsson, M. et al., 2008. Born-global: Propositions to help advance the theory. International Business Review, 17(4), pp.385-401.

Govindarajan, V. and Gupta, A.K., 1999. Taking Wal-Mart global: Lessons from retailings giant. Strategy and Business, 17, pp.14-25.

Jackson, P. and Sparks, L., 2005. Retail internationalisation: Marks and Spencer in Hong Kong. International Journal of Retail and Distribution Management, 33(10), pp.766-83.

Jobber, D., 2001. Principles and Practice of Marketing. 3rd ed. London: McGraw Hill.

Johanson, J. and Vahlne, J.E., 1990. The mechanism of internationalization. International Marketing Review, 7(4), pp.11-24.

Johanson, J. and Vahlne, J.E., 2006. Commitment and Opportunity Development in the Internationalization Process: A Note on the Uppsala Internationalization Process Model. Management International Review, 46(2), pp.165-78.

Johanson, J. and Wiedersheim-Paul, F., 1975. The internationalization of the firm: Four Swedish cases. Journal of Management Studies, 12(3), pp.305-22.

Karlsen, S.M.F., 2007. The Born Global Redefined. On the Determinants of SMEs Pace of Internationalization. Dissertation to BI Norwegian School of Management.

Laanti, R., Gabrielsson, M. and Gabrielsson, P., 2007. The Globalization Strategies of Business-to-Business Technology Industry. Industrial Marketing Management, 36, pp.1104-17.

Li, M., 1998. The Large stores should be adjusted. Market Daily.

Madsen, T.K. and Servais, P., 1997. The Internazionalization of Born Globals: An Evolutionary Process? International Business Review, 6(6), pp.561-83.

Moore, M., 2008. Marks and Spencer is a shambles in Shanghai. Web.

M&S, 2009. Proposal to Close Marks & Spencer Stores: M&S Interim Statement 2009. Web.

Oviatt, B.M. and McDougall, P.P., 1994. Toward a Theory of International New Ventures. Journal of International Business Studies, 25(1), pp.45-64.

Oviatt, B.M. and McDougall, P.P., 2000. International Entrepreneurship: The Intersection of Two Research Paths. Academy of Management Journal, 43(5), pp.902-06.

Rasmussen, E.S. and Madsen, T.K., 2002. The Born Global Concept. In Paper for the 28th EIBA Conference, 2002.

Retail Technology, 1999. Marks & Spencer Trains for 2000. Web.

Rungfapaisarn, K., 2001. Department store: Fresh look for local Marks & Spencer stores. Web.

State Statistical Bureau of China, 2000. China Statistical Yearbook. Yearbook. Beijing: Statistics Publishing House.

Stewart, A., 2000. Marks and Spencer facing its toughest battle. Web.

Sung, P. S., et al., 2002. A Marketing Analysis of Marks and Spencer. Web.

Vernon, R., 1966. International investment and international trade in the product cycle. Quarterly Journal of Economics, 80(2), pp.190-207.

Vernon, R., 1979. The product life cycle hypothesis in a new international environment. Oxford Bulletin of Economics and Statistics, 41(4), pp.255-67.

Zhao, E., 1996. Summing up report on distribution policies of China since the reform. Commercial Economics and Management, (2), pp.14-18.

Zhuang, G., Herndon, N.C. and Zhou, N.J., 2003. The Transforming Structure of Competition in Chinas Retail Industry. Journal of Marketing Channels, 11(1), pp.27-51.

M&S is one of the UK’s leading retailers headquartered in Westminster, London. The company management is committed to making every moment special for customers through selling high-quality own-brand clothing, home, and food products. Although primarily based in the UK, M&S sells into 57 countries from 1,463 stores and 20 websites around the world (M&S, 2018, p. 1). More than 80,000 workers are employed to serve more than 30 million customers (M&S, 2018, p. 1).

Despite unstable economic conditions, in recent years, M&S recorded tremendous success has become the most preferred brand by the consumers because of focusing on product quality and value for money. Nowadays, however, revenues of Food and Clothes & Home sectors are down due to new global competitors that have grown market share. Currently, the company is committed to a program of transformation to fulfill the potential of the brand and deliver high-quality products to customers.

The NEXT retail chain was launched in 1982 when an exclusive collection of stylish clothes and shoes for women was presented in the first seven shops. Nowadays, NEXT is a UK retailer headquartered in Enderby, Leicestershire trading from 500 UK stores and 200 stores across Europe, Asia, and the Middle East (NEXT Plc, n.d., para 2). Having overtaken M&S, NEXT Plc is now the largest clothing retailer in the UK.

Approximately 40% of NEXT Brand stock is provided from its global supplier base with suppliers from 18 different countries (NEXT Plc, n.d., para 8). NEXT Plc also sells non-competing third-party brands and issues four LABEL catalogs a year. The company management is committed to offering clothing and homeware products of beautiful design and high quality that provide outstanding value to meet and exceed the expectations of customers.

Comparison of Method, Policies, and Presentations

All the information used for further discussion has been taken from annual reports of both companies for the year 2018. According to the consolidated income statement presented in the annual report of M&S, its total revenue after adjusting items is £10,698.2m, and the net profit is £29,1m (M&S, 2018, p. 77). For NEXT Plc, the total revenue after adjusting items is £4,117.5m, and the net profit is £591,8m (NEXT Plc, 2018b, p. 5). For M&S, gross profit is £4,047.3m, whereas, for NEXT Plc, gross profit is only £1,356.2m. Current liabilities of M&S include trade and other payables, partnership liability to the M&S UK Pension Scheme, borrowings, derivative financial instruments, and provisions. Current liabilities of NEXT Plc include bank loans and overdrafts, trade payables, and current tax liabilities.

Non-current liabilities of M&S include retirement benefit deficit, trade, and other payables, partnership liability to the M&S UK Pension Scheme, borrowings, derivative financial instruments, and provisions. Non-current tax liabilities of NEXT Plc include corporate bonds, provisions, and other liabilities. For M&S, the amount of the overall liabilities decreased in 2018 compared to 2017, whereas for NEXT Plc, the amount of the overall liabilities has practically remained the same. For M&S, approximately 40% of all total liabilities are classified under the current liabilities, whereas for NEXT Plc this number stands at 44%.

Non-current assets of M&S include intangible assets, property, plant, and equipment, investment property, investment in joint ventures, retirement benefit assets, trade and other receivables, and derivative financial instruments. Non-current assets of NEXT Plc include property, plant, and equipment, intangible assets, associates and joint ventures, and defined benefit pension assets. The overall total assets of M&S have decreased since 2017, whereas for NEXT Plc this amount has increased. For M&S, approximately 17% of the total assets are classified under the current assets, whereas for NEXT Plc this number stands at 70%. Since current assets with fewer inventories are the most liquid of all assets, one could note that M&S could have a liquidity problem.

Types of accounts used by M&S to record equity include issued share capital, share premium account, capital redemption reserve, hedging reserve, and retained earnings. Types of accounts used by NEXT Plc to record equity include share capital, share premium account, capital redemption reserve, ESOT reserve, fair value reserve, foreign currency translation, and retained earnings. For M&S, total shareholders’ equity is £2,954.2m, whereas for NEXT Plc, total shareholders’ equity is only £482,6m.

For M&S, basic earnings per share are 1,6p, whereas for NEXT Plc, basic earnings are share is 416,7p. Comparing with 2017, the EPS ratio for M&S has significantly decreased (from 7.2p to 1.6p in 2018), whereas, for NEXT, this ratio has decreased only slightly (from 441p to 416.7p in 2018). That is why one could state that investing in shares of NEXT Plc would appear to be more profitable.

Other financial assets of M&S include investments in debt, equity securities, and short-term investments. Other financial assets of NEXT Plc consist of equity securities, debt investments, and long-term investments in new retail space, online warehouses, furniture, and equipment. NEXT Plc recognizes its revenue as the sum of total sales from NEXT Retail, NEXT Online, NEXT Internal retail, NEXT Sourcing, LIPSY, and property management. M&S recognizes its revenue as the sum of revenue obtained from Food, Clothing & Home, UK, and International sectors.

For both M&S and NEXT Plc, taxation comprises a current and deferred tax. Deferred tax is calculated based on the predicted manner of realization of the carrying amount of assets and liabilities with the application of tax rates and enacted laws. M&S does not have deferred tax assets, and the deferred tax liabilities equal £255.7m. NEXT Plc has deferred tax assets in the amount of £5.8m but does not have deferred tax liabilities. Both M&S and NEXT Plc have retail stores, fixtures, and equipment as leasehold assets. Depreciation on leased assets is charged to the income statements on the same basis as owned assets.

For M&S, funded pension plans are in place for the company’s UK employees and some employees working overseas. The determination of pension net interest income depends on the discount rate, inflation rate, pensionable salary growth, and expected return on scheme assets. The M&S pension scheme is the defined benefit pension scheme or M&S Pension Savings Plan (“The M&S pension scheme,” n.d.).

Defined benefit is a type of pension scheme where a person has earned a pension payable for life based on the time they were in the scheme, final pensionable salary, and the accrual rate. NEXT Plc has implemented the UK’s auto-enrolment pension scheme to which employees are eligible to join after 3 months of service. If a person does not choose to join the “Next plan”, they will be automatically enrolled in the “People’s” pension scheme (NEXT Plc, 2018a). For qualifying employees, the company provides a Pension Salary Sacrifice scheme.

M&S presents its financial statement in the form of an annual report with the income statement, statement of comprehensive income, statement of financial position, statement of changes in equity, and consolidated cash flow statement. NEXT Plc presents its financial statement in the form of an annual report with the income statement, statement of comprehensive income, statement of changes in equity, balance sheet, and cash flow statement. Annual reports, as well as trading statements, trading updates, half-year reports, and other presentations, can be found on the official websites of both companies.

Ratio Analysis

Ten of the most important financial ratios of efficiency, profitability, liquidity, and leverage have been calculated to analyze and compare the financial performance of M&S and NEXT Plc and decide in which company to invest in. All the information used for further calculations has been taken from annual reports of both companies for the year 2018. The obtained ratios have been rounded to the nearest hundreds or tenth.

The current ratio is used to compare the current assets of a business with its current liabilities. A current ratio of 1,96 times for NEXT Plc is an indication that the company is well-placed to cover its current liabilities (see Table 1 and Figure 1). However, a current ratio of 0,72% for M&S speaks of the liquidity problem faced by the company and its inability to cover short-term obligations.

Table 1. Current Ratio Calculation.

Being almost similar to the current ratio, the quick ratio represents a more stringent test of liquidity. Again, the “liquid” current assets of NEXT Plc cover its current liabilities, whereas the “liquid” current assets of M&S do not (see Table 2 and Figure 2). Based on calculated ratios of liquidity, NEXT Plc has a greater capacity to convert its assets into cash, whereas M&S is a less liquid business.

Table 2. Quick Ratio Calculation.

The consolidated income statement of M&S reveals a rather low net profit for the year 2018. As a result, the net profit margin ratio for M&S is low, too (see Table 3 and Figure 3). It shows that for every £100 in revenue, the company pays £99,73 in costs directly. The net profit margin ratio of NEXT Plc indicates that for every £100 in revenue, the company pays £85,6. The low net profit margin ratio of M&S can be explained by the implementation of a five-year program of strategic transformation.

Table 3. Net Profit Margin Ratio Calculation.

The gross profit margin relates to the gross profit of the business to the sales revenue generated for the same period. The ratio thus represents the relationship between sales revenue and gross profit. Gross profit margin ratios of M&S and NEXT Plc are almost the same, though M&S has a slight competitive advantage over NEXT Plc (see Table 4 and Figure 4). This may be explained by the pricing decisions of M&S and its production costs.

Table 4. Gross Profit Margin Ratio Calculation.

The gearing ratio measures the contribution of long-term liabilities to the long-term structure of the business. As shown in Table 5 and Figure 5, both M&S and NEXT Plc utilize loan finance. Based on its gearing ratio, NEXT Plc has excessive long-term liabilities which may be explained by NEXT’s store expansion. In comparison with NEXT Plc, the gearing ratio of M&S is considerably lower. Therefore, NEXT Plc is more susceptible to downturns in the economy.

Table 5. Gearing Ratio Calculation.

EPS ratio is considered to be a fundamental measure of share performance. This ratio is the bottom-line measure of a company’s profitability which shows the amount of net income that has been earned by each share of common stock. The EPS ratio of M&S is considerably lower than that of NEXT Plc (see Table 6). Therefore, it is possible to state that shares of NEXT Plc have greater potential to earn more net income than shares of M&S.

Table 6. Earnings per Share (EPS) Ratio Calculation.

The price-to-earnings ratio measures a company’s current price per share relative to its EPS. The P/E ratio of M&S indicates that an investor can expect to invest £154 in the company to receive £1 (see Table 7). The P/E ratio of NEXT Plc indicates that an investor can expect to invest £12,2 in the company to receive £1. THE high P/E ratio of M&S can be explained by big investments which the company makes using its recent profits. It can be assumed that investors are more confident in the future earning power of M&S than that of NEXT Plc.

Table 7. P/E Ratio Calculation.

Return on the capital employed ratio is a crucial measure of a company’s performance and profitability. The effectiveness with which funds have been used is revealed by comparing inputs (capital employed) with outputs (earnings before interest and tax). The capital of NEXT Plc has been deployed with greater efficiency than that of M&S, even though the amount of M&S’s assets and sales is much greater (see Table 8).

Table 8. Return on Capital Employed (ROCE) Ratio Calculation.

Inventories often represent a significant investment for any kind of business. For both M&S and NEXT Plc, inventories account for a substantial proportion of current assets (59% and 27% respectively). AITP ratio of M&S means that, on average, the inventories held are being “turned over” every 43 days, whereas for NEXT Plc this ratio is higher and equals 67 days (see Table 9). In other words, significant AITP ratios of both companies can be explained by the fact that businesses use various inventories to satisfy customers. AITP ratio of M&S is better than that of NEXT Plc since it is costly to hold inventories.

Table 9. Average Inventories’ Turnover Period (AITP) Ratio Calculation.

The dividend payout ratio is an investment ratio that is used to assess the returns on shareholders’ investments. The dividend payout ratio of M&S looks fairly alarming, though its dividend payout ratio for the year 2017 is needed for a reasonable comparison (see Table 10). However, one could mention that M&S uses cash reserves to pay the dividend, and this would be wisely regarded as imprudent since earnings could not be adequately invested back in the business.

Table 10. Dividend Payout Ratio Calculation.

Conclusion

Based on the above analysis, one could state that NEXT Plc is a more viable option to invest in. The financial position of NEXT Plc is better than that of M&S in terms of leverage, efficiency, profitability, and liquidity. The great restructuring campaign initiated by M&S’s chief executive Steve Rowe has not come cheap, and the one-off list for the year 2018 was long. As a result, even though the revenue generated is great, the net profit margin ratio of M&S is less than 1%. This does not allow for predicting how M&S will perform in the long run.

Currently, significant restructuring costs are associated with great strategy changes in M&S following a five-year strategic program aimed at the transformation of UK store estate, organization, IT structure, logistics, payments, and pensions. As M&S is only in the initial stage of reorganization, its consequences can hardly be predicted. Other reasons why it is not feasible to invest in M&S include problems with liquidity and funding that are well reflected in ratio analysis.

NEXT Plc is a more liquid and profitable business than M&S. Potential problems which NEXT Plc may face in the long run are associated with its excessive borrowing for store expansion. Since the gearing ratio of NEXT Plc is high, the company should consider increasing the asset base by using investment opportunities. In other respects, NEXT Plc shows better financial performance than its competitor. In particular, the business is fairly liquid, shares of NEXT Plc have great potential, and funds have been deployed appropriately.

References

The M&S pension scheme. (n.d.). Web.

M&S. (2018). Transformation underway. Web.

NEXT Plc. (n.d.). At a glance. Web.

NEXT Plc. (2018a). Distribution staff handbook. Web.

NEXT Plc. (2018b). Results for the year ending January 2018. Web.

Marks and Spencer group is classified among other large clothing retailers in the United Kingdom. It’s known globally due to its expansion in retailing clothes. The operations of this business have been managed through the present and the upcoming opportunities. On the other hand, this business has been going through some threats as well.

Marks and Spencer has an opportunity of new markets due to offering high quality clothing and of great value globally (Bownley 18). This has placed this group on a very competitive edge among other clothing traders. The clothing offered by this group has a wide range of styles making it to meet the demands of different customers globally. The group has equipped itself with highly qualified personnel and effective machines that have made the work easier, usage of less cost hence maximizing profits.

Most of the Marks and Spencer clothing customers who are busy during the day can have the opportunity of shopping their desired products online. The introduction of online shopping has made this group to reach out to many customers, as it is also a way of advertising to different people who are Internet users (Perltsy 50). This group has strong advertising agents who have created awareness of these clothing globally, hence coming up with new customers and on the other hand retaining the old customers.

Marks and Spencer clothing retail has been compounded by several opportunities, such as it has a strong capital background making it to expand throughout the United Kingdom and in other countries (Bownley 31). This has made it to reach as many customers as possible hence increasing their sales. Marks and Spencer is advantaged to have a website where different fashions and styles of clothing are displayed.

Due to their large-scale production and economies of scale, their clothing is displayed at affordable prices placing it at a very competitive edge among other clothing retailers (Bownley 26). Most of the clothing found in their websites are exclusive and cannot easily be found in other high street stores. Marks and Spencer enjoys opportunities of new customers in different nations due to its famous brands which most of people globally have confidence and special liking in them.

Marks and Spencer has a clothing variety fitting different climates in various nations, such that they are able to market their products widely. In the nations with growing populations marks and Spencer is capable to enjoy the opportunity of creating new markets as their clothing ranges from kids wear to adult wears.

Their capabilities of producing womenswear and lingerie have made this group to enjoy the available market of women and new markets (Bownley 18). They have concentrated on one brand known as marks and Spencer per una range that is known all over and people have developed some trust in it due to its quality clothing. Moreover, they have a free mail order catalogue that any interested customer can request from their United Kingdom websites

Currently, there are several upcoming businesses of clothing that are offering their products at a relatively lower prices such threatening the presence of Marks and Spencer clothing business in the market. Customers currently have become interested with the new rivals that are favoring their pockets (Perltsy 51).

Competition in the sale of clothing globally has imposed a great threat to marks and Spencer, as there is clothing of high quality with relatively low prices. Marks and Spencer is already dominant thus failing to add new products so as to fit the new market segment that is retarding its growth. Other upcoming competitors are active in trying to appeal to the new market segments hence attracting more customers and becoming more competitive than this group.

Moreover, another major threat of Marks and Spencer clothing is challenge to its management team by its competitor’s management. Within the Marks and Spencer management, there is a blame game among some individuals, instead of joining together and finding the capable reasons for decreasing sales, the relevant personnel are placing blames on each other, thus making the situation worse.

Another threat is regular employees’ turnover that is slowing down the sales. Regular replacement of the experienced employees is a way of slowing down the sales of any business (Bownley 27). This group currently is marked by using a lot of finances to some issues that cannot give an equal outcome on sales. For instance, investing much money trying to spruce its image and not sure whether this in turn will increase the profits.

Due to the fact that marks and Spencer business is well known all over, it has relaxed on offering personal services, failing to provide dressing rooms or public washrooms (Bownley 13). This has contributed much to the show down of their image for a period of time. They also don’t concentrate on decorating their stores to make them outstand, as they believe that their company is well known.

A bad reputation has weakened its strong customer base, loosing its customers to its competitors. This has made it infamous to the new customers and loosing their current ones, to the well-decorated and outstanding stores. For a business to move smoothly there must be a way of retaining the current customers and attracting more.

Works Cited

Bownley, Allan. “Marketing: Five Principles of Marketing.” 54.180 (2003): 7-39. Faculty of Economics, Belgrade.

Perltsy, Will. “International Marketing, Marketing Globally.” 3.11 (2007): 40-56. Versta, Bosnia.

Country, Industry and Competitor Analysis

This situation analysis focuses on the suitability of Marks and Spencer in Holland and the necessary factors the company has to take into account before venturing into this market. The market has several advantages, which Marks and Spencer can tap into given the level of success it has experienced in the UK.

The company can focus on developing a clothing product line that appeals to young, urbane and career individuals who are not afraid to try out new concepts. These products can be for both sexes with special focus being given to individuals of the ages 15 to 50 of both genders who are conscious of how they look and how people perceive them through their manner of dressing. The majority of the country’s population is aged 25 to 65 (Knijn & Rijken 2003, pp. 3-4).

This represents a good demographic range, which the company can profit from. It can also explore the jewellery market within the country and try to tap into the demand for the goods among the upper class of the Dutch society (Euromonitor 2010, p. 3). Marks and Spencer can position itself to target a market consisting of demographics ranging from the ages of 15 to 50 and develop a product line that meets the expectations of these demographics.

The company should focus on producing clothes, which can last both winter and summer for the targeted clients (Herbig 1997). This numbers represent the largest population in the country and they are likely to take up foreign concepts more easily (Hebig 1997, p. 46).

The industry in Holland is dominated mainly by HEMA, Vroom & Dreesman, De Bijenkorf and Maison de Bonneterie. These companies have several branches across the country and they are likely to create competition for M&S once it sets up its operations within the country. The companies offer various products within their areas of specialisation targeting their demographics.

V & D has over 62 departmental stores all over Holland, with clothing being one of the items that are on offer in these stores. The company targets the mass market for its products and this is shown by the many branches it has all over the country. The various clothes the company deals in are designed to meet the requirements of people of all ages regardless of their age.

The HEMA departmental stores are more than 400 in Holland alone and just like V & D the company has adopted the mass market model for selling its products (Euromonitor 2010, p. 3-7).

De Bijenkorf and Maison de Bonneterie are more specialised in their operations and they have their own specialised market segments, which they target. De Bijenkorf target market consists of high end fashion targeting men and women who have a refined taste in fashion. The range of clothes offered by this company targets clients who are urban and sophisticated, who crave for a unique experience in terms of the way they clad.

Moreover, De Bijenkorf ‘s target clients who are more sophisticated and who fall under the higher end segment of the Dutch society. This type of clients normally want to stand out from the crowd (De Bijenkorf 2012, p. 1). Maison De Bonneterie targets clients across the board though it offers a more general product range in comparison to De Bijenkorf.

The company has shops that target various clients, including men, women and children who like products that are general in nature (De Bonneterie 2012, p. 1). All these companies have claimed a share of the local market and Marks and Spencer should prepare itself for the tough competition within this market.

The customers that Marks and Spencer should target are those that have an urban appeal, who are more at ease with their looks. The ideal customer is one that has a sense of urban taste and who wants to be noticeable. Marks and Spencer should focus more on clothing, shoes and accessories in form of jewellery within its product range, which clients can purchase from its stores within the country (Wind, Douglas & Perlmutter 1973, p. 16).

The company can position itself as a leading location for products that target young and urbane people though it should not leave out products that appeal to the older generation and children, who constitute a significant portion of the Dutch society.

By doing so, the company can be able to create links within the country where it can have a great appeal across the different generations of consumers it targets. This can create avenues for the company to have a foothold within the market, which can make it achieve positive and higher returns (Bradley, 1998, p. 46).

The company can focus on carrying out a market research in the country to find out the products it can introduce to the market and the response these products are likely to generate. Marks and Spencer should weigh any barriers that may exist that may make the company’s entry into the Dutch market difficult (Porter 2008, pp. 1-3).

The level of customer loyalty especially among those who purchase high end brands is significant within this market and as such, the company needs to come with a unique way of capturing the market share from the established brands. The level of customer behaviour can be analysed through the market segments and since 2009, the level of customer expenditure on non-essential goods within this country has diminished considerably.

Recession has had a deep impact on expenditure patterns in Holland. M&S should focus more on providing a general product range that appeals to urrban residents and the young market who constitute a considerable segment of the population (Paley 2005, p. 53).

The supplies that are to be sold can be sourced from other parts of Europe and from the country itself. Since the company is positioning itself to take advantage of the clothing market, it needs to have a variety of suppliers who can be able to deliver quality and affordable products. The Dutch society has had an increase in the number of first generation immigrants from North Africa, Turkey and other parts of the world (Douglas & Craig 1989, p. 78).

Therefore, the company can source products from companies that are in or outside Holland, which can serve this niche market. This product differentiation targeting specific segments of the society can have a bigger influence in determining the direction M&S takes in the country (Craig & Douglas 2000a, p. 85). The company can reap from such advantages that are likely to result from targeting the tastes of minority populations within the country and including a product range that can appeal to them.

Crucially, the Muslim population in the country has very specific tastes and the company can come with a strategy that captures this market as well. The company can offer jewellery products both for young and old Muslim women and recruit staff who are well versed with the needs of these women in the M&S retail outlets (Terpstra 1999, p. 68).

SWOT Analysis for M&S in Holland

The strengths, weaknesses, opportunities and threats that M&S is likely to face within this market are many. M&S can count on its image as a top-notch company that satisfies the needs of its clients through offering them products that are of a high quality. The company can count on its values of offering good customer service across the board as shown by the various awards it has managed to acquire in the UK, Europe and other parts of the world.

The company can also highlight the various corporate social responsibility activities it has participated in as one of the strengths that add value to its image (Campbell 2012, p. 1). The manager training the company’s staff is one of the best and this can also be highlighted as one of the strengths the company can bring into play.

One of the weaknesses the company should be aware of is the limited level of branding and segmentation of its clothing products. The company also has a weak stocking system, which has made some of its products to be unavailable to the clients within the stores when they need them (Cateora 1995, p. 54).

The company needs to exploit opportunities that are offered by the internet particularly through the social media networks such as Facebook and Twitter. Social networking sites provide essential platforms through which M&S can generate interest within the Netherlands regarding its product range that it intends to introduce to the market.

The company can also look at mutual business partnerships it can create within the country, which can be of great benefit in helping it reduce on the high costs that may be associated with the Dutch market. Partnerships in other towns in form of franchises can help M&S to understand the market dynamics of each market and the various strategies it can use to acquire a foothold (Ferell & Hartline 2011, p. 64).

Some of the threats that are likely to have an impact on the operations of M&S include the existing competition in this market in the form of HEMA and V&D, which have strong presence in the country. These companies have a large branch network with loyal clients and this is likely to be a major hiccup to its business venture in Holland.

The residential permit that is also one of the business requirements by the Dutch government to foreign investors is also one of the threats that the company needs to look at. This permit can be a great seatback for some of its staff, who may be sent in the country to perform their duties in some of the branches to that are to be based in Holland (Poelzl 2011, p. 1-2).

There is a shortage of land within the country since it is one of the most densely populated territories in the world. This is likely to be a drawback to the company especially if M&S is to construct some branches of its stores within the country from scratch. All these threats have a potential negative influence on the ability of the company to do business successfully in the country.

Recommendations

M & S needs to take care of these recommendations in the way it carries out its business within the country. The company has consistently distinguished itself by offering easy access to its stores and retail outlets over a long period of time. This is one of the areas that the company can avail its services in Holland by making clients have convenient access to its stores and retail outlets.

The company can also embrace online shopping and payments for its clients. This would make it possible for clients to save time and also avoid shoping in its retail outlets, which are likely to be very crowded especially at the point of sale. The ability of the company to offer delivery services at an additional cost to the client will also make their operations within Holland more flexible (Craig & Douglas 2000b, p. 78).

The company can consider introducing high end brands in some of its stores to cater for the high end niche market. This would make the company to have a brand appeal to both high and low income segments of the society, giving it an edge within the market in the country.

The M&S brands should show a dynamic shift to modern trends, which may have a stronger appeal to younger consumers who may be attracted by the strong ideals that are associated with the company. There should be a higher product differentiation in the product range offered by the company to give it a stronger foothold in the Dutch market (Subhash 1998, p. 56).

The company can consider franchising partnerships with some of the existing stores to save on its initial costs of entry. The company should embrace effective stock management policies within its stores. The company should utilize social media in generating interest among the younger generation. This would make more people familiar with its operations in the country.

Conclusion

Holland offers immense opportunities for Marks and Spencer, which the company can readily exploit. The company must therefore consider the unique aspects of the Dutch market as it seeks to expand its operations into the country. This would make it have a stronger share of the market.

References

Bradley, F. 1998, International marketing strategy, Prentice Hall, Hoboken, New Jersey.

Campbell, G. 2012, ‘M&S and groundwork announce plans to help communities shape future of local green spaces’, M&S Press Releases. Web.

Cateora, P. R. 1995, International marketing, McGraw-Hill Professional Book Group, New York.

Craig, C. S. & Douglas, S. P. 2000a, International marketing research, John Wiley & Son, Chichester.

Craig, C. S. & Douglas, S. P. 2000b, Marketing strategies: a twenty first century approach, Prentice Hall, New York.

De Bijenkorf 2012, De Bijenkorf clothing collection. Web

De Bonneterie, M. 2012, Maison De Bonneterie product range. Web.

Douglas, S. P. & Craig, C. S. 1989, ‘Evolution of global marketing strategy: scale, scope and synergy’, Columbia Journal of World Business, vol. 24, no. 3, p. 47-59.

Euro Monitor 2010, Personal goods in the Netherlands market research report. Web.

Ferell, O. C. & Hartline, M. 2011, Marketing strategy, South Western Cengage Learning, Mason.

Herbig, P. A. 1997, Handbook of cross cultural marketing, Haworth Press, New York.

Knijn, T. & Rijken, A. 2003, ‘Demographic trends in the Netherlands’, National Report Section 1 For The Project: Welfare Policies And Employment In The Context Of Family Change, pp. 3-6.

Paley, N. 2005, The manager’s guide to competitive marketing strategies, Thorogood Publishing, London.

Poelzl V. 2011, Starting a business in Europe part 1, transitions abroad. Web.

Porter, M. E. 2008, ‘The five competitive forces that shape strategy’, Harvard Business Review, vol. 1. no. 1, pp 1-5.

Subhash, J. 1998, International marketing management, Digital Publishing Company, Storrs, CT.

Terpstra, V. 1999, International dimensions of marketing, South-Western College Publishing, Cincinnati.

Wind, Y., Douglas, P. & Perlmutter, H. 1973, ‘Guidelines for Developing International Marketing Strategies’, Journal of Marketing, vol. 37, no. 1, pp. 14-23.

Organisational Behaviour

The paper establishes the relationship between organisational structure and culture in Marks and Spencer and Dynatrade together with the different approaches to their organisational management and leadership. Organisational configuration presents the diverse ways in which actions such as job allotment, administration, and synchronisation are controlled and directed in an effort to achieve organisational objectives, aims, and goals. Jacobides terms Marks and Spencer’s organisation structure as lens through which people see it and its environment (459). Its organisational structure dictates the modes of operation whilst determining the degree of its performance. Organisational culture defines the norms, values, and ways of doing work in an organisation. Marks and Spencer and Dynatrade avail a foundation on which various standards of operation, routines, and procedures are anchored. Marks and Spencer and Dynatrade’s culture also affects the mechanisms through which their employees engage in decision-making. These impacts of organisational structure in the two companies suggest that it shapes and manipulates the mechanism of executing organisational actions, which define an organisational culture.

Marks and Spencer has adopted different structures such as matrix, bureaucratic, functional, and divisional structures among others as a way of making sure that its clothing products in all branches that are spread throughout the UAE reach the biggest number of clients. Functional structures exist where it groups its different elements according to their purposes, which while integrated, constitute the main objective of an organisation. For instance, it has structured its operations in the form of departments such as sales production, purchases and procurement, and maintenance departments. Dynatrade Automotive Group has a culture of relying on employee knowledge and talent potential to drive its success both in the short and long-term. In such situations, its functional structures become incredibly effective in the realisation of its goals. However, this type of structure encounters challenges.

The two companies have large geographical operational areas. As such, they deploy the divisional structure. The structure also exists in situations where a corporation constitutes small separate small organisations. For example, in an automobile manufacturing company such as Dynatrade, there may be some divisions that deal with engine, suspension systems, body, power trains, and transmissions among other divisions. In such an organisational structure, various divisions must foster effective flow of information and knowledge bases so that products that are produced at each divisional level can match the quality requirements for the completed products (Jacobides 461).

How Organisational Culture and Structure affects Marks and Spencer’s Performance

Marks and Spencer’s functional structure helps in bridging the demerits and merits of functional and divisional structures. Large organisations such as this one commonly deploy a functional structure. The company produces merchandise 1 and 2. The functional areas may include merchandise 1 sales department, merchandise 2 sales department, merchandise 1 production department, and merchandise 2-production department. The structure facilitates the sharing of information and knowledge base across its organisational boundaries in the effort to encourage an organisational culture of innovation and creativity to enhance its performance.

Functional structure fosters competition among different divisions. The plan enhances increased productivity of the overall organisation. Productivity entails a key parameter for measuring organisational performance. Jacobides adds that functional structures “improve upon the ‘silo’ critique of functional management in that they diminish the vertical functional structures to create a more horizontal structure, which allows the spread of information across task boundaries to happen much quicker” (467). However, they also suffer from some demerits that are inherited from demerits of functional and divisional structures. For example, the structure may give rise to organisational power struggles akin to the existence of dual managerial roles.

Factors that influence the Behaviour of Employees in Dynatrade

Factors such as organisational structure, employee motivation, and recognition influence employee conduct in Dynatrade Automotive Group. The company deploys hierarchical and bureaucratic organisational structures. A bureaucratic organisational structure is associated with Max Weber. Dynatrade’s employees are incredibly concerned with how the company can gain optimally from their labour resources. This behaviour is influenced by the company’s plan of motivating and rewarding all its workers, including qualified engineers whilst guiding and nurturing its new ones towards gaining more experience in the automobile industry. The company upholds teamwork and trainings of all levels of its workers who in turn make incredible contributions in terms of laying a fundamental background on how the company can utilise its human capital resources in more effective and efficient ways. Division of work within the organisation and allocating small divisions to persons depending on their abilities and skill levels is also upheld here to make sure that all people participate in building the company.

Effectiveness of Martin, Stephen, and George’s Leadership Styles

Leadership plays an important role in enhancing organisational success. Leadership functions to inspire followers to work collectively towards the achievement of specific goals within an organisation. Leadership is an organisational practice that not only influences its followers (employees) but also managers in a manner that ensures that organisational objectives are achieved upon applying the required change. This claim means that leadership integrates and intertwines followers and leaders. It also influences organisational objectives and missions and other organisational stakeholders (Lussier and Achua 23). Different leadership styles are effective to different extents.

From an autocratic perspective, Martin deploys strong, controlling, and directive actions to ensure that rules alongside regulations are enforced within work environments. He has the final word and decision for his company. Although this leadership is necessary, where the goal is to enforce compliance with the stipulated guidelines, it can create a negative perception that is accompanied by fear among followers. Consequently, rather than executing duties to precision to attain organisational objectives, he forces people to execute their role to escape the wrath of the leader (Martin). The theory is ineffective to the extent that it makes employees feel as if they are not part of the organisational processes.

Stephen accomplishes his roles of leadership through delegation and participation as opposed to control and enforcement of rules and regulations. This leadership approach is likely to create positive schemas about his capacity to function as a manager. Although Kedharnath emphasises that followers should be answerable to the manner in which they accomplish their organisational functions, followers still know that Stephen will appreciate and accept their responsibilities for having delegated the tasks to them (13). This situation is opposed to the laissez-faire approach in leadership in which George rejects the responsibility of his position. He only relies on what his employee deem right, regardless of whether it is at par with the organisation’s objectives or not.

How Management Theories in Infosys and Google Influence the Actual Practice Of Management

Management theories are essential in the determination of the appropriate behaviours and suitable organisational management approaches that can yield success for Infosys and Google both in the short-term and long-term basis. Management theories encompass “the study of organisations for the benefit of identifying common themes for the purpose of solving problems, maximising efficiency and productivity, and meeting the needs of the stakeholders” (Armstrong and Daft 34). Topics such as environmental perspectives of enhancing organisational development, neoclassical viewpoints, and classical perspectives in approaches of organisational management are central to the study of management theories.

How Organisational Theories affect Management Decisions in the above Two Organisations

Studying organisational theories and behaviours is integral to the derivation of strategies for Infosys and Google’s management strategies that can resort to the alignment of all their workers to common themes, goals, and objectives. Infosys, which is the leading software producer, deploys organisational theories to explain the most effective approaches of managing its workforce to realise its goals and objectives. It also stipulates different organisational models that foster employee development and growth. Coincidentally, this observation also underlines the role and purpose of management practices within Google.

How Infosys and Google are different in their Managerial Approaches

The two organisations deploy different managerial and leadership approaches. Infosys deploys centralised managerial approaches or bureaucratic strategies. In its centralised and bureaucratic managerial approach, power and authority are concentrated at the top. Managers enforce the voice of command. Consequently, opposed to decentralised and democratic managerial approaches, under Infosys’s centralised and bureaucratic managerial approaches, the top-most management personnel make organisational decisions without considering any possible alternative innovative ways of accomplishing a particular task from persons in other levels.

Google deploys decentralised and democratic managerial approaches that encourage employee participation, specialisation, and division of labour. This strategy leads to the creation of work diversity where its employees are given a chance to present their side of story. Jacobides maintains that diversity in work environments leads to high employee performance (455). This finding has prompted Google to unveil mechanisms of ensuring that people remain motivated and effective in their work. For instance, work rotations are an important mechanism of dealing with challenges of job monotony. In decentralised and democratic managerial approaches, people in the lowest hierarchical levels of organisational structure are also involved in decision-making processes.

Works Cited

Armstrong, Antony and Richard Daft. Organisation Theory and Design. Toronto: Nelson, 2009. Print.

Jacobides, Martins. “The inherent limits of organisational structure and the unfulfilled role of hierarchy: Lessons from a near-war.” Organisation Science 18.3(2007): 455-477. Print.

Kedharnath, Sylvester. “The influence of leaders’ implicit followership theories on employee outcomes.” Organisational Behaviour and Human Decision Processes 7.5(2011): 1-24. Print.

Lussier, Reynold, and Charles Achua. Leadership Theory, Application, Skill Development. Minnesota: Southwestern, 2004. Print.

Introduction

Compensation at the workplace influences the performance of any organisation in a number of ways. Most researchers have established that compensation of employees is directly related to the motivation that they get from their places of work. The result is the output that they generate for the organisation (Moriarty 2014). One of the commonest methods of employee compensation at the workplace is financial compensation. All organisations have a detailed and elaborate manner of financially compensating their employees.

The many studies in this area have established that employees who are adequately compensated have a better performance at the workplace. They increase the productivity of the organisations in which they work (Moriarty 2014). Marks & Spencer Company is one of the renowned retail businesses in the UK. The company has employed over 80,000 people. It has recorded significant success in this industry over the years. In fact, it was among the first British companies to make over £1 billion in pre-tax profit.

This paper analyses the competitive strategic compensation choices that are in place at the company. The essay also looks at the employee benefits that are in place in this business, the determination of employee salary, and the incentives and challenges in this area of the company.

Strategic Compensation Choices

The company’s strategic compensation choices have contributed to the success in the retail industry for Marks & Spencer. The company recognises employee as the most important stakeholders in the production process. Thus, it has, made sure that the rights and privileges enjoyed by these individuals are respected. Some of the rights that employees at Marks & Spencer enjoy include a decent salary.

The commonest form of employee motivation and compensation that is used in most companies is the salary, which is paid for the services that employees provide to the companies (Moriarty 2014). The laws that bind the contract and the company govern the provision of financial compensation in employment, which follows the laws in employee financial compensation.

The strategic compensation choices for this company are dependent on the available resources and the amount of financial revenue generated by the company. Some of the choices that the company processes include the provision of adequate services to employees. Workers in this company have a variety of choices of benefits for the work they do and the services that they provide to the organisation.

Financial compensation that is already in place at the organisation is the single most important form of reimbursement at the workplace. However, rewarding is also done in the company. This corporation also has the choice of providing the employees with specially rated services and cheap products compared to the retail prices for these goods and services.

The other choice that is available for Marks & Spencer in relation to compensation of employees is the provision of gifts and rewards for special employee achievements. If an employee achieves a set target, the company can reward him or her. Rewarding and gift management constitute other recognised methods of motivating employees. They have been found significantly effective in increasing employee motivation and performance.

Marks & Spencer Company operates in over ten countries and regions where it provides services and goods to millions of diverse individuals. The company has a diverse workforce. These individuals require different compensation and motivation methods. The adopted compensation method for the employees should be sustainable and adequate for most of them for it to be successful.

Compensation Practices

Financial compensation is the most commonly used method of compensation at Marks & Spencer, just like most other companies in the world. The company provides each employee with a salary or wage as dictated in the employment contract that the two parties enter. The employees are paid according to a set salary for the job classification and qualifications that they display.

The average employee earns a salary that is compatible with the one that is offered to other employees in the same industry, but working for different companies. At the beginning of the contract, employees get a briefing of the terms of their employment before signing the contract that also includes the salary scale.

Workers are employed based on the above contract. Some of them work on a part-time basis. The amount of money paid to the employees is related to the duration of employment at the company, the duration of the contract, job group, and the prevailing rates in the same industry (Larkin, Pierce & Gino 2012).

The company is one of the most competitive in the form of retention of qualified employees. It carries out training sessions for employees on the company’s account. This strategy has enabled Marks & Spencer recruit and maintain qualified and highly specialised workforce.

Marks & Spencer has a detailed employee benefits programme. The company has established a strong human resource department, which has developed the necessary benefits for each of the employees. The employee benefits practices in most organisations entail the provision of special services that allow the employee optimum performance.

In the case of Marks & Spencer, the existing benefits are mainly financial in nature. The company provides the employees with special health benefits. Payment for the health charges is incurred while working for the company. Employees also enjoy retirement benefits. They are also expected to work hard for the rewards that the company provides for special achievements at the workplace.

Job Evaluation and Salary Grading Structure

The process of job evaluation at Marks & Spencer is a complex one. It leads to the description of the best practices in the industry. Marks & Spencer Company has a job evaluation process that is detailed and appropriate for an organisation of its size. Employees are assessed for possible rewarding while gauging the performance of the organisation as a whole.

Most branches of this company have a representative department of the human resource department. This part of the organisation is responsible for the assessment and evaluation of the performance of the employees in these branches. Most other companies in the sector in which Marks & Spencer Company operates have a similar job evaluation structure.

The company has a job grading structure that ensures that employees’ salaries are standard and according to the universally accepted levels. Some of the strategies used during the process of employee salary grading include the prevailing conditions in the industry.

Marks & Spencer has previously underperformed in the industry in relation to the recorded success of previous years. The company was reported to hire many employees during the period of adequate performance while the poor performance period was occasioned by major job cuts in this organisation.

The salary grading structure that is utilised in this organisation also includes the qualification of employees who are recruited and shortlisted for employment. The highly qualified employees are provided with a salary grade that is better than that of similar companies in the same industry. The reason behind providing employees with the salary is due to the desire to retain them in the company and make it competitive. Marks & Spencer also uses the salaries provided in competing companies to come up with a grading structure.

Poor paying organisations can lose their employees to better paying ones within the same industry. Therefore, this situation prompts organisations such as Marks & Spencer to provide salaries that are equivalent to those that are provided in competing companies.

The other factor that is considered in Marks & Spencer while establishing the salary grading structure in this organisation is the performance of the organisation, especially the regions in which the companies is operating. Since the company has many branches that are spread all over the world, some of the branches that post poor performance pay their employees based on this performance.

Poorly performing branches often have poor pay for employees as compared to the branches that post better returns. The above considerations are made when coming up with the grading structure for employee salaries in this organisation. What this strategy means is that different employees at different levels within the organisation have different salary levels. This finding is true for different individuals who work in the same organisation with different qualifications.

The Adopted Incentives

For companies to attract and retain qualified personnel, they should adopt some incentives to attract these employees and retain them within the organisations’ structure. Companies that do not adopt these incentives often have a high employee turnover. The reverse is also true. Marks & Spencer is a company that has managed to attract and retain highly skilled workforce.

This finding is partly attributable to the incentives that are in place at the organisation. The main incentive that is adopted in Marks & Spencer is the compensation for the employees, which can be described as being adequate for the organisation of its size.

Salaries and wages that are paid by this company are among the best in the industry. The current employees together with other potential workers demonstrate a liking for this employer. The company uses the remuneration as the main motivation for employees (Larkin, Pierce & Gino 2012). Remuneration is one of the most effective incentives to attract and retain employees.

The reasons behind the use of remuneration as a type of incentive include the provision of natural motivation and improved employee performance. The improved performance ensures that employees work towards achieving the organisational goals. Eventually, this strategy leads to positive performance of the company.

The other incentive that is used in this organisation is in the form of promotions. The company, just like most other organisations, promotes employees that perform exemplarily well in their line of work. This move ensures that such employees are able to work towards the positive performance of the organisation.

Promotions ensure that employees are constantly working towards the set organisational goals, including the positive performance of the organisation. The eventual result of the improved performance at the workplace ensures that the company improves in performance (Larkin, Pierce & Gino 2012).

The other incentive that is used by Marks & Spencer Company to ensure that the business performs positively is the provision of rewards for achievements in the various areas. The organisation has some predetermined goals for each of the employees and departments. When these goals are achieved, the management rewards the concerned employees.

The rewards offered to the employees are linked directly to the positive performance at the workplace (Larkin, Pierce & Gino 2012). This performance is also directly linked to the performance of the organisation as a whole. The above incentives are mainly used to motivate employees to work towards achieving personal and organisational goals.

The company is also involved in the training of its employees. Training is a recognised incentive in the industry. It leads to the education and improved performance of the company in general. The training that is carried out for the employees can be external and internal.

Marks & Spencer Company offers frequent training programmes at the various branches. It often sponsors employees to pursue other related and relevant courses in external organisations and institutions. This plan contributes to the performance of the organisation by cultivating talent in the employees.

Laws that Apply to the Company

A number of laws dictate the compensation of employees in organisations. For Marks & Spencer, the main law that determines the mode of compensation is the one that describes the type of contract between an employer and his or her employees.

The UK has laws that define the contract of employment and/or how one qualifies to be an employee in a certain organisation. Contract of employment is the main law that dictates the employee compensation. This contract should contain the compensation that is available for the employee at the time of employment.

According to the law, an employee is someone who has entered a contract with another individual to provide services on behalf of this party for payment. The contract contains the compensation measures and the exact amount that is attributable to each of the employees. The laws that operate in the various countries permit employers to compensate their employees.

Employees are also legally responsible for a number of compensatory measures, including the salary that is guaranteed for the services that are delivered to the company. The compensation measures that are in place at Marks & Spencer are safeguarded in the law. Employees are assured of these compensatory measures as long as the contract is in place.

Challenges

Marks & Spencer has a number of challenges that can be attributed to the compensatory mechanisms in place. Some of the challenges include the maintenance cost of the compensatory measures and the processes of evaluating the effectiveness of the compensatory mechanism. The above measures that are used to compensate employees are expensive.

They lead to the loss of revenues. Some of the expensive measures used in compensation include the provision of rewards, promotions, salaries, and other forms of remuneration. Although these compensatory measures are adequate to ensure improvement in performance of the company, they are expensive and hard to maintain.

The compensatory mechanisms that are in place at Marks & Spencer are also not standard for the different branches of the organisation. In fact, each of the outlets in different countries has different compensatory measures that are aligned with the laws and regulations of these countries.

This situation presents a challenge to the organisation due to the difficulty in harmonising the compensatory mechanisms. The other challenges that the business faces in the compensation of its employees include the poor feedback that is obtained from these processes. The company has traditionally conducted surveys to establish the effectiveness of the compensatory measures that are in place. However, these measures have often been flawed.

A number of recommendations are available for this organisation in relation to its employee compensation. It is a fact that the use of employee compensation is associated with improvements in the organisational performance that is related to improved employee performance at these organisations.

Therefore, the company should ensure that the compensatory measures are not limited. The company should ensure no reduction in the number of incentives that it provides to its employees. This claim is based on the desire to reduce the cost of carrying out the various activities in compensation.

The other recommendation that Marks & Spencer should adopt is harmonisation of its incentive measures. The company practices different compensatory measures that are aimed at improving the performance of different employees in different parts of the world. The harmonisation of the different incentives will ensure that the employees in the different branches of the company are treated equally.

This strategy is meant to improve the performance of the organisation and its ability to attract trained and qualified workforce. This move will also ensure accountability from the various branches. If adopted, the above recommendations will lead to the establishment of a working compensation mechanism for Marks & Spencer.

Conclusion

In conclusion, compensation of employees is one of the vital functions of an organisation and its management. This essay has looked at some of the compensatory mechanisms that are in place for Marks & Spencer. It has established the few challenges that are available in the business. Some of the mechanisms include remuneration, rewarding, promotion, and employee training.

References

Larkin, I., Pierce, L. & Gino, F. 2012, ‘The psychological costs of pay-for-performance: Implications for the strategic compensation of employees’, Strategic Management Journal, vol. 33 no. 10, pp. 1194-1214.

Moriarty, J. 2014, ‘Compensation Ethics and Organisational Commitment’, Business Ethics Quarterly, vol. 24 no. 1, pp. 31-53.

Introduction

The use of relevant and valuable strategic initiatives characterizes any management as the body that is interested in promoting a particular enterprise and its growth. To determine how effective specific innovations are, it is possible to apply appropriate assessment tools and techniques that are designed specifically for this purpose. As an object of analysis, the British company Marks & Spencer will be considered.

This clothing and luxury goods retailer is on the list of the London FTSE platform and is a significant participant in both the domestic and global markets. The assessment of specific implementations in recent years will be conducted based on such a mechanism as Porter’s Five Forces strategy, and the parameters of the company’s corporate social responsibility will be analyzed. To identify a strategic initiative, the retailer’s transition to sustainable development will be considered.

As a justification base, topical academic resources will be cited to confirm certain facts. Marks & Spencer is a profitable and recognizable enterprise where the principles of sustainable development are promoted, and the modern practices of providing a high level of services are maintained.

Company’s Short Description

Marks & Spencer is the British brand of clothing, shoes, and accessories for the whole family. The company was founded in 1884 in the UK by Michael Marks and Thomas Spencer, and currently, it owns more than 1,300 stores (Wilson 2015, p. 437). For more than 130 years of its existence, the brand has managed to win the recognition and love of the most demanding customers around the world, becoming the symbol of the British quality and sophisticated everyday style. Today, its profit is significant, and the position in the London FTSE list confirms the authority of the company and its growth opportunities.

Nevertheless, the retailer has a positive reputation in the market not only due to its long-term work but also to the consistently high level of services provided with the help of constant control from the management and timely strategic decisions. According to Kennedy, Kapitan, and Soo (2016, p. 126), the brand focuses on “transparency, product innovations, use of external expertise, and engagement with suppliers, customers, and employees”. The managing board of the retailer seeks to make important and necessary decisions aimed at improving the quality of work and the constant search for new strategies that could increase company awareness.

As a result, valuable steps allow Marks & Spencer to stay at the leading positions in the target market and have a consistently high number of consumers. This, in turn, contributes to profit and empowerment, which are the essential aspects of recognition. One of these measures was the transition to the policy of sustainable development, and the success of this step proves a contemporary interest in Marks & Spencer and its products.

Strategic Initiative

The transition to sustainable development has become one of the main and large-scale initiatives promoted by the leadership of Marks & Spencer over the past few years. As Wilson (2015, p. 436) remarks, for the first time, the decision on the implementation of Plan A providing for the reorganization of many operating modes within the network was made in 2007. However, in subsequent years, the company worked much, and several new steps were undertaken. For instance, in 2010, the original plan was revised by the management, and it was decided to complete all reorganization activities by 2015 (Wilson 2015, p. 436).

As a result, the entire project was successful, and Marks & Spencer benefited greatly from such a strategic move. Even though the organization had to attract new resources in a large volume, all investments paid off noticeably. The retailer established partnerships with different communities and sponsors, which became an important component of success. One of the key provisions of the corporation was the transition to an environmentally safe operation mode, and such an initiative was evaluated positively by both customers and other market participants.

One of the main success factors that enabled Marks & Spencer to achieve the ultimate goal of developing its new organizational form of work was an emphasis on the client base. As Kennedy, Kapitan, and Soo (2016, p. 127) state, in 2012, the retailer began to focus on the role of customers as part of its new program and utilized effective techniques. For instance, the authors emphasize that a charity strategy aimed at drawing attention to environmental issues became a powerful argument for the success of the corporation (Kennedy, Kapitan & Soo 2016).

As a result, the management of Marks & Spencer was able to achieve what many other trading companies failed, namely, linking consumer attention with individual growth plans. Therefore, the success of the brand is proof of the competent and efficient policy of transition to an updated working model. To analyze certain stages of Marks & Spencer’s activity in more detail, it is possible to introduce additional tools and techniques and evaluate the brand performance from various standpoints.

Porter’s Five Forces Analysis concerning Marks & Spencer

The evaluation of the effectiveness of transition to the strategy of sustainable development and a new operational model as a whole can be performed by using Porter’s Five Forces technique. According to Kabue and Kilika (2016), the resources of any firm are regarded as a significant factor characterizing the capacity of a particular enterprise and its resistance to the competition. The authors also describe all five the forces – the threat of new participants in a particular sphere, transition to new products and the risks associated with it, consumer power, the degree of supplier participation and competition indicators, and resistance to it among companies in the same industry (Kabue & Kilika 2016).

Through the brief assessment of each of these factors concerning Marks & Spencer, it is possible to determine the effectiveness of the retailer’s management in ensuring stable operations and successful changes implementation.

Regarding the threat of new market participants, the corporation in question is unlikely to experience significant challenges. According to Jones, Comfort, and Hillier (2016), Marks & Spencer is one of the largest British retailers, and the brand’s share of the profits is a strong background to protect the company from losing customer interest. Concerning the transition to new products, the corporation does not have significant freedom since during its work in the market, the organization has established itself as the seller of clothing and luxury home furnishings.

Therefore, if Marks & Spencer changes the course of its production base, it will hardly find approval among customers. In turn, the consumer power of this brand is significantly high. As Wilson (2015, p. 437) argue, it is the “retailer with 12% of the market and the majority of the goods which it sells are own brand”. Consequently, buyers’ interest in the company is consistently high, which provides it with relative freedom and an opportunity to reorganize both product lines and internal working systems.

The number of partnership agreements that Marks & Spencer has is impressive and proves the quality of those sustainable development innovations that the retailer began to promote a few years ago. Wilson (2015, p. 437) states that the corporation “has approximately 2,000 suppliers from around the world”. This figure is so impressive that there can hardly be any doubt about the external support of the company and its stably developed supply chain system. Finally, in terms of competition, Marks & Spencer has some difficulties due to the activities of other major market participants, for instance, Tesco, Sainsbury’s, ASDA, and others (Jones, Comfort & Hillier 2016).

However, the brand does not lose success, and recent changes helped the retailer to strengthen its position. The role of innovations, in this case, is significant since the reforms have affected both an external trade policy and internal organizational nuances.

Organisational Culture and Corporate Social Responsibility

The organizational culture of Marks & Spencer has undergone significant positive changes due to the initiative for the transition to sustainable development. The ultimate goals and objectives of the company have acquired a more global meaning, and the emphasis on preserving the environment has allowed the corporation to focus on new tasks.

For instance, according to Jones and Comfort (2018), the retailer posted several thematic reports on such topics as the analysis of the brand’s carbon footprint, global assistance with a high level of environmental threats, and other similar themes. Relevant positions appeared in the company, and those responsible for promoting the sustainability program began to develop the plans of interaction with large communities supporting the struggle for environmental safety.

In addition to the aforementioned issues, Marks & Spencer began to show a more active interest in other socially significant problems. Jones and Comfort (2018) remark that the retailer organized a specific program aimed at helping young people who have difficulties with employment. Participation in the life of the population is a valuable step towards customer recognition and the reorganization of strategic policies.

The emphasis on additional areas of work allowed the company to prove its interest in global issues, which, in turn, characterizes it as a market participant who is responsible to society and is ready to assist in those fields that deserve interventions. Therefore, it is possible to determine the level of the organizational culture of Marks & Spencer as stably developing and corresponding with modern standards.

Effectiveness of the Course for Sustainable Development

The transition to sustainable development has become part of the retailer’s global plan to change its course of development and the system of work in the market. According to Bhattacharya and Polman (2017, p. 77), Marks & Spencer’s management concluded timely that it “couldn’t change the world of commodity production on its own”. For this purpose, third-party organizations and communities were brought in as partners, which gave the corporation in question an opportunity to realize its plans successfully and, at the same time, establish a productive system of interaction with consumers.

Also, relevant guidance activities were carried out with the employees of the company. Wilson (2015) notes that the workers of the retailer were encouraged to make every possible effort to reduce energy consumption, thereby minimizing threats to the environment. Interaction with customers was established, and each buyer was allowed to contribute to the improvement of the entire system, offering personal recommendations, and taking part in Marks & Spencer’s environmental programs.

In the end, the retailer’s initiative was justified, and today, the company is one of the leaders of the British market. Such a move towards improvement is due to the timely steps taken by the leaders of the corporation. Market needs and floating demand are those aspects that force large enterprises to reorganize their operations. In the case of Marks & Spencer, all the changes were beneficial, and significant profits were gained from valuable innovations in policy activities.

Conclusion

Marks & Spencer successfully implemented the modern practice of transition to sustainable development as an innovation initiative and was able to set up the course of work that had a positive impact on both external activities and internal organizational culture.

When considering such a theory of strategic management from the standpoint of its results in a particular enterprise, it can be noted that properly coordinated actions aimed at drawing attention to topical problems can help strengthen consumer recognition and, therefore, market positions. The success of the entire transition program is a natural outcome, and further plans for promoting the retailer’s products will most likely include expanding the range of its participation in social issues.

Reference List

Bhattacharya, CB & Polman, P 2017, ‘Sustainability lessons from the front lines’, MIT Sloan Management Review, vol. 58, no. 2, pp. 71-78.

Jones, P, Comfort, D & Hillier, D 2016, ‘Materiality in corporate sustainability reporting within UK retailing’, Journal of Public Affairs, vol. 16, no. 1, pp. 81-90.

Jones, P & Comfort, D 2018, ‘Storytelling and corporate social responsibility reporting: a case study commentary on UK food retailers’, Journal of Public Affairs, p. e1834.

Kabue, LW & Kilika, JM 2016, ‘Firm resources, core competencies and sustainable competitive advantage: an integrative theoretical framework’, Journal of management and strategy, vol. 7, no. 1, pp. 98-108.

Kennedy, AM, Kapitan, S & Soo, S 2016, ‘Eco-warriors: shifting sustainable retail strategy via authentic retail brand image’, Australasian Marketing Journal (AMJ), vol. 24, no. 2, pp. 125-134.

Wilson, JP 2015, ‘The triple bottom line: undertaking an economic, social, and environmental retail sustainability strategy’, International Journal of Retail & Distribution Management, vol. 43, no. 4/5, pp. 432-447.

History

In 1884 Michael Marks, a Russian-born Polish refugee opened a stall at Leeds Kirkgate market. Since then, Marks and Spencer were born, opening over 300 stores worldwide and also being the UK’s largest clothing retailer. In 1999, online shopping was introduced to their website for customers to enjoy in the comfort of their own homes. The internet had just started to become known and more and more people were starting to use it, so Marks and Spencer took this opportunity and set this up at the correct time. In 2000, M&S brought out their healthy ‘Count on us’ range, for the healthier people on diets or who were just watching what they ate. (Andrew, 167)

Their 1st ‘Simply food’ stores opened in Surbiton & Twickenham in 2001, selling nothing but healthy food, no home furnishing or clothes like the normal stores. They also launched ‘Per Una’ a brand of clothing specifically targeting fashion-conscious women. Shortly after in January 2001, ‘Blue Harbour’ was introduced, a casual wear brand for males.

‘View form’ and ‘DB07’ another brand of clothing was introduced in 2002, ‘View form’ for sportswear and ‘DB07’ for children designed in collaboration with David Beckham. In 2004, was M&S’s 120th anniversary, celebrating Michael Marks’s 1st stall opening in 1884. In January 2006, M&S expanded of ‘Simply Food’ format with the acquisition of 28 stores on a leasehold basis from Iceland Foods for consideration of £38 million. M&S sold Kings Super Markets, its only non-M&S branded business to a US investor group consisting of Angelo, Gordon & Co., MTN Capital Partners, and Mr. Bruce Weitz for $61.5 million in cash in March 2006. (Judi, 130)

M&S and two of its long-term suppliers, in May 2007, decided to start the development of M&S’ first ‘eco-factories’, pioneering innovative methods of sustainable manufacturing. One factory in Sri Lanka would make lingerie and two factories in North Wales would manufacture furniture upholstery. In June 2007, M&S is launching its brand, LCD widescreen TVs, including a 15in TV/DVD model, which boasts an LCD widescreen, IDTV, and an integrated DVD-a combination unique to the market. This range is in addition to the existing collection of Sony TVs currently available at M&S. (www.euromonitor.com)

Mission Statement

Marks and Spencer’s mission statement is broken into 3 parts which include:

• Vision – To be the standard against which others are measured
• Mission – To make aspirational quality accessible to all and
• Values – Quality value, service, innovation, and trust.

This mission statement has been kept up since the start of making it; M&S has worked hard to achieve all these factors. Even though there have been ups and downs during the years they have tried hard and have kept to their word. Many companies look up to M&S and measure themselves against them, helping their company to improve and gain more customers.

Marks and Spencer’s have been known for their quality value, service, innovation, and trust to all their customers who as a company they have stuck to very well. They are continuing to attract new customers as well as keeping their old ones, offering them new and improved products all the time.

Objectives

Every year M&S had many objectives which were to be met, they were not split into long-term and short-term but just objectives as a whole for each coming year. In 2001, they had many objectives but their main ones were attracting new customers, developing stronger relationships with their suppliers, aim for market leadership and also to restore the heart of M&S, stop non-core and profit losing activities, and also keeping an effective balance sheet calling these three sectors their fundamental strengths. In 2002, not only did they want to develop stronger relationships with suppliers but also to build on a unique relationship with their customers. They needed to keep rebuilding on their fundamental strengths, continue to regain market leadership with value, quality, and also appeal. (Evans, 51)

It was aimed for M&S to open their 1st standalone home store in spring 2003, also to improve every aspect of their company, overcome the competition and continue to attract more customers to their stores. Before 2004, the M&S fundamental strengths were changed, which included improving the management team, still ensuring the balance sheet was effective, and also delivering impact but low-cost improvements. In 2005, M&S only wanted to refocus on their core values in their business which are quality, value, service, innovation, and trust.

Pestel Analysis

In this section, a PESTEL analysis will take place and will look at the external factors that impact Mark and Spencer’s performance.

Political

According to the Marks and Spencer website, there are constraints on out-of-town shopping that have been put in place by the government. This is causing problems for M and S. This is because it is highly expensive for retail stores to be in the center of large towns and cities with all the business rates and M and S are not selling enough products to break even with these extra expenses they have to pay for being in the center. (Judi, 134) M&S is trying to move some of their stores out of the centers but constraints, it is causing problems for them. The UK not having the Euro is working as a disadvantage to M&S about their western European store because M&S products are too expensive as there are being sold at UK prices.

Economical

The UK economy and currency are relatively strong compared to other countries so the strength of the pound is working as a disadvantage to Marks and Spencer’s in the UK and abroad. (www.bitc.org.uk) Current world events have affected global economies, which may result in fluctuations within the industry. This may lead to unpredictable consumer and supplier behaviors.

Sociological

Market trends are constantly changing and Mark and Spencer’s have always struggled to keep up with them. For example, Lifestyle changes have made people more aware of their health, which has resulted in higher demand for quality healthcare-related products. People are concerned with value for money. Consumers are concerned with their image, for example; they must have the latest labels. The population in the UK is aging and with this, more people have a higher disposable income.

Technological

Internet shopping has to lead to international buying opportunities, which means the consumer has an enormous amount of options when it comes to shopping. This means that the competition has also increased, but Marks and Spencer’s can use it to their advantage to promote new products and help to show that Marks and Spencer’s is an up-to-date company. (www2.marksandspencer.com)

Environmental

M&S is restricted to where they can build its stores because of the restrictions on Brownfield sites and Greenfield sites. M&S can only build on Brownfield sites which restricts them to having to stay in urban areas with the competition.

Legal

The government is constantly redefining trading laws, which enables Marks and Spencer’s to trade for longer hours, for example; longer shopping hours on a Thursday. Marks and Spencer’s must follow advertising laws that are put in place to protect the consumer but also to promote fair competition between companies.

SWOT Analysis

The Swot analysis looks at a company’s strengths, weaknesses, opportunities, and threats which are likely to have an impact on the company’s performance.

Strengths

Marks and Spencer’s has been running since 1884 and has a good traditional reputation, especially with the older generation. Marks and Spencer’s is also one of the biggest retailers on the high street having stores in most cities and large towns and with thirty other stores across the globe. (www2.marksandspencer.com) The brand name is known in nearly every household. Marks and Spencer’s has a diversity of products such as food, underwear, menswear children wear, women wear, and furniture.

Weaknesses

Fashions are constantly changing and Marks and Spencer’s cannot keep up with changes in the retail market. There are also problems with focusing on the right targets markets in terms of products and customers. (www.bitc.org.uk) Many consumers still feel that Mark and Spencer’s products are old-fashioned and outdated compared to competitors. Even though this is something that Marks and Spencer’s is constantly trying to change. Marks and Spencer’s is now experiencing poor performance across the globe which has resulted in the pullout of foreign operations.

Opportunities

Marks and Spencer’s has the opportunity to collaborate with other companies to widen up the product range even more. They could also collaborate with designers to help bring new ideas, and help expand on their furniture and beauty products.

Threats

There is constant competition from competitors such as John Lewis, Debenhams, and Next. And especially from younger clothing competitors such as New Look. Ever-changing fashions trends which Marks and Spencer struggle to manage are threatening Marks and Spencer’s performance.

Gap analysis and Ratios

Gap analysis involves identifying a gap or weakness in a specific company and looking to bridge that gap to meet a target objective as to where the company wants to be.

The following quote helps to further identify a gap analysis:

“Gap analysis consists of defining the present state, the desired ‘or target state’, and hence the gap between them. In the later stages of problem-solving the aim is to look at ways to bridge the gap defined” (www. Ifm.eng.cam.ac.uk) An example from Marks and Spencer is their downfall in the womenswear market, which in 2006 fell 0.6% to a 10.4% share of the market. Competition in womenswear has increased dramatically with women demanding style, quality, outstanding value, and real choice.

For Marks and Spencer to reclaim this market share they set out a clear plan, this involved listening to customers better during store visits, focus groups, better use of market data, and keeping a closer eye on tracking trends, tracking competitors, and also evaluating their performance. (Patrick, 108)

From a purchasing point of view, they looked to strengthen their buying teams, giving clearer responsibilities for design, buying, and merchandising. The company buying strategy changed to buy less, more frequently meaning better ranges and fresher lines of stock. It was also vital that Marks and Spencer didn’t miss out on key trends like they previously did in 2003 such as with cardigans.

To further close that gap Marks and Spencer learned that they have to cater to particular needs and markets. For instance, it is estimated that 42 % of womenswear brought is by women under the height of 5ft 3 inches, Marks and Spencer didn’t previously cater for these, often producing large, baggy clothing. Marks and Spencer have now produced a petite range in 33 of its stores to cater to this market. The three ratios that were decided to assess Marks and Spencer’s financial position were the current ratio, gearing ratio, and return on capital employed ratio.

Firstly the current ratio can be calculated by dividing current assets by current liabilities, this identifies how far a firm can meet its short-term liabilities from its current assets without having to raise finance by borrowing, selling fixed assets, or issuing more shares.

A ratio less than one for some time is a cause for concern; Marks and Spencer’s did have a healthy current ratio until 2003 but in the last couple of years they have dipped below one causing concern, whereas for example a competitive company such as Next has stayed consistent for the last 3-4 years. Secondly, the gearing ratio can be calculated by total borrowings x 100 % and then divided by the capital employed. The ratio shows the proportion of capital employed, which is financed by borrowed funds. The relationship between both, ought to be balanced with shareholders’ funds significantly larger than the long-term liabilities to have a health gearing ratio.

The higher the gearing ratio, the higher the risk to the company is, as high levels of borrowing represent a significant risk to the company. In 2004 Marks and Spencer’s was sky-high, massively bigger than that of competitors Next. The last ratio analyzed was the return on capital employed, this can be calculated by Operating profit x 100% and then divided by capital employed. The ratio is an important indicator of how efficiently the business is being managed. As a rule, if a company has a low return on capital employed then it is using its resources inefficiently even if the profit margin is high. In the years 2004-2005 both Marks and Spencer’s and Net’s ROCE have been high indicating a healthy return on capital employed.

Five force analysis

Porter’s five forces model (below) can be used to help make an analysis of the competitive environment for a company within a certain industry. In this case, it is Marks and Spencer in the food and clothing industry.

QuickMBA, Strategic Management (2005) states that:

“The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates.”

The threat of new entrants

There are a variety of major companies in the market such as Next, Debenhams, Sainsbury’s, and Tesco with regards to selling clothing and food products. These are well-known companies that are strong in the market so the threat of new entrants is low. A company such as Marks and Spencer (M&S) has a strong brand name which therefore creates a barrier to entry for potential new entrants. Companies would probably experience high start-up losses in an attempt to try to promote their products in terms of trying to prise loyal customers away from M&S. (Geoffrey, 271)

There is the threat however of the company take over where one company buys another one out. Examples include Morrison’s taking over Safeway and Walmart taking Asda in bids to try and create better companies without having to build many stores around the country. The government is also keen on new businesses starting up in the market to try to discourage a monopoly situation

Bargaining power of suppliers

M&S has over 2000 direct suppliers where 1500 are for clothing and 500 for its food. Marks and Spencer’s corporate site online (2007) states: “90% of other products are now sourced overseas.” Overseas suppliers provide plenty of choice for M&S and also cheaper labor.

The market that M&S is in also makes it easier for the company to bargain with their suppliers because there are many suppliers which provide clothing and food which are relatively undifferentiated so M&S can go to another supplier if they feel there are better suppliers to go to as opposed to their current ones. (Rachel, 344)

Bargaining power of buyers

There are many clothing and food companies to choose from in terms of the consumer so it is the consumers who can dictate the price by demanding quality products at good prices. Clothing and food are not specific items, unlike a Ferrari sports car. Food and clothing are readily available to everyone and so therefore a company like M&S needs to offer quality goods at the right prices to compete in a very price-orientated market. (Emerald Insight, 12) With a Ferrari sports car, it is a very prestigious item and therefore prices are not as important for Ferrari. M&S, therefore, needs to add value to their products such as the Autograph range of clothing launched in 2000 which

The threat of substitute products

If a product from a different company is cheaper then consumers may switch to that product. If there are low switching costs e.g. substitute products are much cheaper than M&S ones then there could be more consumers switching to the cheaper product. For example, a pair of jeans in M&S is £25 but in Primark, the jeans are£6. There are many retail stores selling clothes that are competing with M&S and therefore could act as substitute products. (Kannika, 43) To counteract the threat of substitutes, M&S must concentrate on ensuring absolute product quality and customer service to keep loyal customers.

The intensity of rivalry amongst existing competitors

Their food and (especially) the clothing market has fierce competition and M&S must compete with companies such as Next, Debenhams, Tesco, and Sainsbury’s for selling both their food and clothing products. These companies are all trying to obtain the largest market share possible in the retail sector.

Recommendations

On the basics of the analysis undertaken and on the strength of the inherent competencies, the company can regain its lost charm and market position by adapting to the following strategies.

• Merchandise ranges more accurately tailored to local demands.
• Accurate staffing models to predict demand.
• Training effort on customer service.
• Decentralized administration.
• Improved analysis of the competitive environment.
• Better information about buying decisions.
• More focused and proactive communication.
• Greater clarity in presentation and display.
• Clear customer targeting.
• More competitive prices.
• Improved promotional techniques.
• Introduction of more products in tune with the demands.
• Improved customer service.
• Frequent update of store fittings and formats.

Conclusion

Overall, M&S (Marks and Spencer) have established itself over 120 years as a well-known high street name. The mission statement that has been created by M&S highlights that the company aims to be the standard to which other companies look too in terms of retailing. The objectives highlight continuously improving the company (objectives in 2006 focused on the core values of the business). The SWOT analysis shows that M&S is a very well-known company although is poor at keeping up with fashion changes and therefore must be wary of changes and regard them as a threat.

The five force analysis shows intense competition within the industry with big companies such as Next and Debenhams selling clothes and Tesco and Asda selling clothes and food. M&S must be wary of substitute products with stores such as Matalan and Primark offering these products and also M&S must recognize that the customer has high buyer power as they have the choice of many retailers at different prices.

Works Cited

Evans, N., Campbell, D., & Stonehead, G. Strategic Management for Travel and Tourism. Oxford: Elsevier, 2003: 47-53.

Marks and Spencer, The Company Media Centre. Web.

Queensland University. Gap analysis model. Web.

FAME package. Web.

The University of Cambridge. Web.

BBC News, (2000) Inside Marks and Spencer. Web.

QuickMBA, (2005) strategic management. Web.

Judi Bevan, The Rise and Fall of Marks and Spencer: And How it Rose Again, Profile Books, 2007: 127-135.

Rachel Worth, Fashion for the People: A History of Clothing at Marks & Spencer. Berg Publishers, 2007: 334-348.

Emerald Insight. Success is so simple at M&S: Product, environment, and service are all you need: Journal: Strategic Direction, Volume: 23 Issue: 7, 2007: 11 – 13.

Andrew Seth, (2001) Geoffrey Randall The Grocers: The Rise and Rise of the Supermarket Chains. Kogan Page Ltd. 164-169.

Geoffrey Randall, Andrew Seth. Supermarket Wars: Global Strategies for Food Retailers. Palgrave Macmillan, 2005: 270-275.

Patrick M. Dunne, Robert F. Lusch. Retailing. South-Western College Pub, 2007: 102-115.

Marks & Spencer Plc. Web.

Kannika Leelapanyalert and Pervez Ghauri, Managing International Market Entry Strategy: The Case of Retailing Firms. Advances in International Marketing, Volume 17, 2006: 43-48.

Abstract

Marks and Spencer (M&S) is one of the leading retailers in the United Kingdom. It has operations in different parts of the world and uses its business model to deliver quality products to its customers. This discussion focuses on a decision that M&S made to improve its position as a competitor in the apparel and food sectors. The targeted sustainable goals included reduced carbon footprint, better sourcing procedures, green practices, and reduced landfill wastes. The company’s leaders supported the decision-making process and attracted all stakeholders to present their insights about sustainability.

Introduction

The selected organization for this discussion is Marks & Spencer (M&S). This corporation is a leading multinational retailer that operates across the world. The company has its headquarters in Westminster, London. It markets a wide range of products to its customers, including luxurious food products, home appliances, and clothes. In terms of ownership, Thomas Spencer and Michael Marks started the company in 1884 in Leeds. M&S is presently a giant corporation with different stakeholders and shareowners, including Bill Adderley who has around 40% stake (Butler, 2017). It also promotes appropriate strategies, control systems, and symbols to remain successful.

The decision that forms the basis of this case study emerged in the year 2007 (Islam, 2016). The initiative gave the name, “Plan A” was aimed at creating greener products, introducing sustainable machines, and reducing the company’s carbon dioxide emissions. This was a good decision since it managed to improve the organization’s position as a competitor in the apparel and food sectors. All the stakeholders supported the idea since it would make a difference for M&S and improve its competitive advantages.

The paper below will argue that the completed analytical studies made it possible for this company to introduce and support its Plan A. Such a move created the best environment for global competition, thereby making M&S a leading player in the retail industry.

This paper will begin by exploring the nature of this new decision and how it was essential for Marks & Spencer to improve its business model. It will go further to analyze the entire process by examining how it happened, where, key people involved, and whether this was a deliberate or planned move. The next section of the paper will consider how various factors in the external and internal environments forced this company to embrace such a decision. The final part will discuss the power relations and structures within which such a new change was implemented.

Background Information

Decision-Making Process

In 2007, the leaders at M&S came up with an ingenious move to make CSR a critical element of its wider business model or strategy. The main objective or goal behind the selected decision was to introduce superior machines and practices that took the issue of sustainability to the next level. The company was planning to revolutionize its products, offerings, services, and stores by making them more effective and capable of meeting the changing demands or expectations of all stakeholders (Marks & Spencer, n.d.b).

Some of the specific goals included reducing carbon dioxide emissions by more than 20 percent, minimizing landfill waste to zero, and creating carbon-free warehouses and stores (Islam, 2016). The key people at M&S followed a strategic decision-making approach to develop the most appropriate ideas and concepts for the proposed change. This model was suitable since it involved managers of specific divisions, the top leadership, and the inputs of stakeholders (Butler, 2017).

The key person during that time was Stuart Rose. As the executive chairman, Rose presented evidence-based ideas to support the intended strategy. He has also been a successful English businessman. The other key stakeholders include community members, suppliers, board of governors, and selected customer groups. Middle-level managers were also part of the process, thereby providing the best strategies for aligning the proposed goals with the changing needs of both the workers and the customers (Marks & Spencer, n.d.b). The company acquired information from consumer feedback and views.

The involvement of HR leaders in different divisions and regions made it possible for the team to make the most appropriate decision. The managers of different units presented numerous ideas and concepts that would support the change implementation process. As described earlier, the decision-making process took place between 2007 and 2008 (Marks & Spencer, n.d.a). This was also the time when many corporations and companies across Europe were focusing on the most appropriate measures to make their processes, products, and practices more sustainable (León-Bravo, Caniato, Caridi, & Johnsen, 2017). It was also a new opportunity for M&S to transform its business strategy.

The decision-making process took place at this corporate headquarters. The ideas and concepts presented by different stakeholders and people were communicated to other departments and divisions across the world. This move made it possible for all involved parties to consider superior measures for implementing the ideas and taking M&S to the next level (León-Bravo et al., 2017). Another important issue to consider is the nature or originality of this decision.

Sources of Motivation

Different aspects motivate this company and its stakeholders to make various decisions. This organization conceived the described Plan A to record positive results in its key areas, including production and marketing. The fact that many customers expected sustainable products inspired or motivated the company to develop its Plan A agenda. Senay and Landrigan (2018) also acknowledge that many organizations and firms were introducing evidence-based initiatives during that time to maximize performance. This trend made it possible for most of M&S’ stakeholders and leaders to think of a similar strategy.

Another source of motivation was the need to transform this organization’s corporate image. The production and marketing of sustainable products would deliver such a goal and attract more customers. Finally, the predicaments many regions face became powerful guidelines for minimizing carbon dioxide emissions and embracing environmentally-friendly industrial practices. Some of these issues included climate change and global warming.

Driving Forces in the Internal and External Environment

One of the outstanding theories that can support this discussion is the rational model of decision-making. According to Tsolakis, Anastasiadis, and Srai (2018), this framework explains how organizations and human beings develop action plans and ideas that will eventually result in increased outcomes when resources become limited. A computational strategy becomes critical since it guides companies to focus on the emerging issues in their respective industries and mitigate them (Bosch-Badia, Montllor-Serrats, & Tarrazon-Rodon, 2017). The leaders of the company considered this model to promote superior sustainability approaches.

The organizational theory supports the use of various analytical tools to understand the issues that might hinder or promote new changes. A detailed examination of a company’s environment can empower and guide its leaders to make appropriate decisions that can eventually drive organizational performance (Senay & Landrigan, 2018). The best tool that can reveal the major factors that led to this decision is Porter’s 5 Forces.

This framework presents powerful insights and views that can explain why M&S pursued the above decision. The first force outlined in this model is the threat of new entrants (Bennie, 2014). This force is worth considering since newcomers in the supermarket sector will require huge capital and resources. However, M&S’ association and partnership with other companies makes it less vulnerable to entrants. With M&S currently having a strong relationship with different partners, this risk remains low. The second one is that of suppliers’ bargaining power. Existing suppliers in the supermarket sector have a high bargaining power since they produce and distribute a wide range of products (Marks & Spencer, n.d.b). This means that only a small number of suppliers fulfilled the new requirements outlined in Plan A (Marks & Spencer, n.d.a).

The third one is the bargaining power of buyers. With many customers across the world, M&S has to implement powerful initiatives and strategies to meet their needs and achieve its objectives. Some of them include young people, environmentalists, and women. This explains why it considered the importance of a sustainability approach to remain profitable and fulfill the needs of more customers.

The fourth force is the threat of substitutes. This industry has many companies providing apparel products and food materials to many customers in different parts of the world (see Table 1). Its ability to offer products that are produced using green technologies reduces the intensity of this threat (Butler, 2017). The last one is that of industry rivalry. This remains a major force for M&S since many companies are providing superior products using cutting-edge technologies in the region.

Table 1: Porter’s 5 forces (M&S).

The leaders at M&S decided to present evidence-based ideas that would result in a superior CSR strategy. Such a move would ensure that the company was focusing on the bargaining powers of its key customers (Marks & Spencer, n.d.a). Some of the key outcomes anticipated after implementing the recommendations included making M&S a carbon neutral firm, send zero waste to different landfills, empower employees and customers to lead healthier lifestyles, and transform the entire supply chain (Kuehn & McIntire, 2014). The company was also focusing on the decision to support the use of materials obtained or produced using sustainable methods, including water and cotton.

The managers at M&S took the issue of government policy seriously since there was a need for companies to engage in practices that supported the integrity of the natural environment. Such measures were aimed at promoting sustainability, ensuring that corporations presented their reports, and introducing the concept of green accounting (Butler, 2017). With such laws in place, the company’s top management went further to monitor the expectations and needs of different stakeholders and partners (Eweje & Bathurst, 2017). The outstanding observation was that the right time had come for M&S to embrace the idea of sustainability and add value to its key clients.

Power Structures and Relations

From the 1960s, the concept of sustainability became a driving force for many corporations across the globe. Such companies were focusing on evidence-based strategies to produce and deliver healthy products to their customers and protect the natural environment (Oh, Hong, & Hwang, 2017). Towards the end of the 20th century, many countries implemented powerful laws and policies aimed at compelling business organizations to deal with the problems of global warming and climate change (Islam, 2016). Various issues became critical for many companies operating in various sectors, including automobile, textile, apparel, food production, and manufacturing.

The success of the selected decision was, therefore, founded on the existence of appropriate power structures and relations throughout the entire process. Morgan (2015) argues that the leaders at M&S always consider the importance of a corporate governance team that is composed of all key people and players (see Figure 1). Each of these individuals and groups has a role to present ideas that can take the corporation from one point to another (Galant & Cadez, 2017).

The stakeholders involved during the process believed that all decisions or initiatives could succeed if they took the issue of leadership seriously (Agyemang & Ansong, 2016). The individuals shared ideas and focused on the forces experienced in the internal and external environments.

Several situations explain why the corporate governance team made the selected decision successfully. From 2003, all group members and stakeholders began to focus on evidence-based initiatives that would eventually improve this company’s corporate social responsibility (CSR) model (Oh et al., 2017). With this kind of objective, the participants identified the right resources and persons to deliver positive results (Islam, 2016).

Such ideas led to the formulation of M&S’ Plan A. Those in charge of the project were convinced that it would make this organization more sustainable by minimizing its wastes, acquiring raw materials produced using sustainable procedures, and combating climate change (Marks & Spencer, n.d.a). Additionally, the decision would create a better working environment for all employees.

In terms of distance, the stakeholders involved had a significant influence on the nature and future of the decision to introduce sustainability initiatives. The most powerful stakeholder group was that of buyers (Marks & Spencer, n.d.b). As outlined in the above discussion, the bargaining power of customers is always high. This means that M&S considered the demands of these stakeholders in an attempt to remain relevant and achieve its potential.

Different leaders of departments, units, and divisions worked together and interrogated various actions and plans to deliver positive results. They also aligned emerging notions with all aspects of the company’s strategy and performance. All stakeholders remained accountable and responsible in an attempt to offer conceptions that would deliver the most appropriate decision (Marks & Spencer, n.d.b). The managers also pursued the idea of sustainable development to ensure that the decision made the company profitable.

This analysis reveals that there is a strong governance framework at M&S that makes evidence-based decisions and proposes initiatives that can make the company successful. This department encourages all stakeholders to be part of the process, including managers, leaders, customers, and community members (Agyemang & Ansong, 2016). These stakeholders also consider existing insights and policies to record positive results.

This model shows that broad ideological constructs were taken seriously at M&S to deliver this decision. Additionally, external and internal institutional and value systems were involved to support the entire decision-making process. The company introduced the right resources, inputs, and ideas to deliver meaningful results (Lee, Kim, & Lee, 2016). Some of the influential stakeholders involved in the decision-making process included customers, different governments, and organizational leaders.

Conclusion

The above research paper has revealed that different leaders, stakeholders, and partners collaborated to make evidence-based decisions that would eventually make M&S more sustainable. The major factors that contributed to the idea included emerging policies, new trends focusing on sustainability, changing consumer needs, improvement of the company’s CSR strategy, and transformation of the existing business model. The targeted outcomes included reduced carbon footprint, better sourcing procedures, green practices, improved lifestyles for employees and customers, and reduced landfill wastes. The organizational leaders at M&S always consider the unique forces experienced in the external and internal environment to identify emerging concepts that can deliver the most appropriate choice.

References

Agyemang, O. S., & Ansong, A. (2016). Corporate social responsibility and firm performance of Ghanaian SMEs: Mediating role of access to capital and firm reputation. Journal of Global Responsibility, 8(1), 47-62. Web.

Bennie, F. (2014). Circular economy needs consumer demand to gain momentum. The Guardian. Web.

Bosch-Badia, M., Montllor-Serrats, J., & Tarrazon-Rodon, M. (2017). Efficiency and sustainability of CSR projects. Sustainability, 9(10), 1714-1731. Web.

Butler, S. (2017). M&S offers cash grants to community businesses in ethical relaunch. The Guardian. Web.

Eweje, G., & Bathurst, R. (Eds.). (2017). CSR, sustainability, and leadership. New York, NY: Taylor & Francis.

Galant, A., & Cadez, S. (2017). Corporate social responsibility and financial performance relationship: A review of measurement approaches. Economic Research-Ekonomska Istraživanja, 30(1), 676-693. Web.

Islam, K. (2016). Can ethical business strategy influence consumers’ buying behaviour and loyalty: Marks and Spencer PLC? Case Studies in Business and Management, 3(1), 38-63. Web.

Kuehn, K., & McIntire, L. (2014). Sustainability a CFO can love. Harvard Business Review. Web.

Lee, J. S., Kim, S. K., & Lee, S. (2016). Sustainable supply chain capabilities: Accumulation, strategic types and performance. Sustainability, 8(6), 500-515. Web.

León-Bravo, V., Caniato, F., Caridi, M., & Johnsen, T. (2017). Collaboration for sustainability in the food supply chain: A multi-stage study in Italy. Sustainability, 9(7), 1253-1273. Web.

Marks & Spencer (n.d.a). Make it matter. Web.

Marks & Spencer. (n.d.b). Sustainability. Web.

Morgan, E. (2015). ‘Plan A’: Analysing business model innovation for sustainable consumption in mass-market clothes retailing. Journal of Corporate Citizenship, 57, 73-98. Web.

Oh, S., Hong, A., & Hwang, J. (2017). An analysis of CSR on firm financial performance in stakeholder perspectives. Sustainability, 9(6), 1023-1034. Web.

Senay, E., & Landrigan, P. J. (2018). Assessment of environmental sustainability and corporate social responsibility reporting by large health care organisations. JAMA Network Open, 1(4), e180975. Web.

Tsolakis, N., Anastasiadis, F., & Srai, J. S. (2018). Sustainability performance in food supply networks: Insights from the UK industry. Sustainability, 10(9), 3148-3160. Web.