...Instructor’s Manual CASE TEACHING NOTES Marks & Spencer Nardine Collier and Gerry Johnson 1. Introduction This case study is about why one of the world’s most famous retails, Marks & Spencer, ran into trouble at the end of the 1990s and how it attempted to manage a programme of change to overcome those problems. It is therefore useful to explore issues concerned with organisational culture, strategic drift, strategic choice and the management of change. The case covers both the history of Marks & Spencer throughout the last century and, in more detail, from 1998 to 2004, the period when it moved from a position of market dominance to one in which it was deemed to be a take-over target. The case charts the attempts by its different chief executives to address the problems during this time and, therefore, the various change initiatives that were mounted. 2. Position of the case The case study relates, in particular, to the problems and means of managing strategic change in Marks & Spencer. So it is particularly related to the coverage of strategic inertia and strategic drift in chapter 1 and programmatic design and change in chapter 10. With this in mind it might be taught at the end of the strategy course. However, it could also be used as a case to require students to analyse the reasons for the problems of Marks & Spencer, not only in terms of organisational culture, but also in terms of the market and competitive position of the firm. In this sense it could be...
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...Marks & Spencer Marks & Spencer was founded on 1884 as a market stall by Marks. It became Marks & Spencer in 1894 as a partnership with Spencer. From that humble beginning Marks & Spencer became leader in the industry. And for more than half a century M & Spencer was the epitome of enlightened capitalism. It dominated the British high streets and provided shoppers with quality and value clothing unrivalled by competitors. It was one of Britain’s largest high profile retailers selling variety of goods and services such as clothes, food, furniture and loan services. But its glory has started to crumble when it profits began to fall since 1998. M & S has been facing their worst times ever. Their problems began at the start of financial year April 1999. They suffered almost from financial ruins. Since the event of its failure, M & S has been taking more than several attempts to recover their losses. Extensive studies and researches have been conducted to find out the root causes so as to come up with appropriate strategies for development. Most of the studies started with the company’s profile. Below is an analysis of the company’s profile and the validity of one strategic management models to Marks & Spencer’ experiences. Marks & Spencer’s organization culture is characterized as a reflection of “taken for granted fashion” that is an attitude shared by members of the organization. The beliefs and basic assumptions operate unconsciously among the members and also exist at the organizational...
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...Some investors have warned that Marc Bolland who leads retailer Marks and Spencer (M&S) will face renewed scrutiny if its Christmas and New Year trading figures to be released next week disappoints the market, the Financial Times reported. The report cited the offloading of UK-based Standard Life Investments' share of the retailer during the past six months, presumably due to concerns over the performance of M&S. The shares sold by the Standard Life, one of the largest fund management groups in UK, were substantial: from holding over 2% of the company's shares as the 11th largest shareholder of the retailer, Standard Life Investments now holds an "underweight" position of only 1.43%, the report said. The call of other investors is for M&S to begin delivering, especially in clothing where the past few months placed its overhauled women's wear range under crucial test. One of the investors of M&S was blunt when telling FT about the vulnerability of Bolland's position. The report quoted the investor as saying, "Of all the retail chief executives, Mr Bolland's position is possibly the most vulnerable. We would not start urging his resignation at this stage, but if next week's results are weak and the group fails to tackle its problems on clothing over the next six months, then his position will come under pressure." Another investor told the FT that they have not been pleased with the retailer's performance. The investor added that Bolland had made plenty of promises but...
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...Marks & Spencer (A) Nardine Collier The M&S formula for success Michael Marks began his penny bazaars in the late 1880s. He soon decided he needed a partner to help run the growing firm and Tom Spencer, a cashier of Marks’ supplier, was recommended. From this partnership Marks & Spencer (M&S) steadily grew. Simon Marks took over the running of M&S from his father, turning the penny bazaars into stores, establishing a simple pricing policy and introducing the “St Michael” logo as a sign of quality. There was a feeling of camaraderie and a close-knit family atmosphere within the stores, with staff employed whom the managers believed would “fit in” and become part of that family. The staff were also treated better and paid more than in other companies. The family nature of this firm dominated top management too: until the late 1970s the board was made up of family members only. Marks was renowned for his personal, top-down autocratic management style and his attention to detail. This also manifested itself in the way he dealt with suppliers and meticulously ensured that goods were exactly to specification, a relationship designed to build reliance of the suppliers and ensure high and consistent quality. Until the late 1990s M&S was hugely successful in terms of profit and market share, running its operations according to a set of fundamental principles; namely to: Offer customers high-quality, well designed and attractive merchandise at reasonable prices under the brand name St Michael;...
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...An Analysis of Marks and Spencer INTRODUCTION TO THE FIRM AND ITS INDUSTRY Marks and Spencer is one of the largest retailers in the United Kingdom, and is also known as a major retailer selling diverse product ranges under their own exclusive brand in more than thirty countries. Customer confidence in the Marks and Spencer brand remains second to none. According to recent research undertaken by the Company, it shows that, in clothing, Mark and Spencer has a clear lead over all its major competitors in the key areas of fit, quality, trust, breadth of range and customer service. In November of 2000, Marks and Spencer will launch a trial of three new lingerie-only outlets in Paris, Hamburg and Dusseldorf. According to industry statistics, Marks & Spencer remains the clear leader in the UK lingerie market, with over thirty percent of the market share. These pilot stores, distinctly branded 'msl', are designed to showcase the product range, taking the very best of Marks & Spencer lingerie to the Continent. Moreover, twenty-five percent of the 'msl' range has been designed exclusively for the continental market (Marks & Spencer PG). According to David Norgrove, Marks & Spencer Executive Director, the new stores developed by Marks and Spencer "clearly show how we can give customers what they want in the way they want it. Today we have both depth of product and a variety of retail formats, so that we can encompass factory outlet stores and designer clothing under...
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...INTRODUCTION Marks and Spencer was pioneered by Michael Marks and Thomas Spencer in 1884. Over the years it has developed from a single market stall to a global multi-chain retailer. It is one of the best-known traders and UK’s fifth largest retailer for clothes, footwear, groceries and home appliances. It has more than 895 stores across 40 regions around the world. Their turnover is split between 54% food and 46% general merchandise. They deliver quality services, value, and maintain trust among their employees and customers by complying with the various laws, policies and procedures (Marks and Spencer, 2013). The financial statements of the company that measures the overall financial performance shows a true overview of the company and it is prepared using the accepted accounting principles. The financial ratios prepared using the financial report acts as a useful management tool for effective planning and financial management for Marks and Spencer’s. It is also used as an indicator of organizational performance by funders and investors. FINANCIAL RATIOS PROFITABILITY RATIOS S.No | RATIOS | 2010 | 2011 | 2012 | 2013 | 1. | Gross profit Margin | 37.9% | 38.2% | 37.8% | 37.9% | 2. | Operating Profit Margin | 8.9% | 8.6% | 7.5% | 7.5% | 3. | Return on total capital employed | 16.2% | 16.3% | 14.1% | 14.1% | 4. | Return on ordinary shareholders capital employed | 24.1% | 22.3% | 17.5% | 18.3% | Over the past four years, the sales revenue of marks and spencer has...
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...An analysis of the results of For the year ended 2nd April 2006 Report devised and prepared by Duncan Williamson www.duncanwil.co.uk May, June and July 2006 3rd Edition Marks and Spencer Analysis Introduction This article concerns Marks and Spencer and came about following the publication of their annual financial results. There is nothing extraordinary about the results apart from two things! • • They were very big news in the business and ordinary press They have been prepared under International Financial Reporting Standards rather than under UK Financial Reporting Standards The second point took me a little by surprise for the simple reason that it didn’t seem to cause a fuss. I expected a few more explanations by accountants and analysts over the restatement of 2005’s results and the potential impact on 2005 and 2006 and beyond of the application of IFRS. Of course, M&S published comparative figures for the IFRS based results for the latest year and they restated the previous year as they should. However, I seem to be the only person who is worried or concerned or bothered in the slightest about the potential for smoke and mirrors lying behind some or all of what was revealed. Why am I worried? Well, M&S is still trying to work its way out of a fairly tough trading period and coming at the end of the transition to IFRS I wanted to hear what analysts thought about what I was worried about. This is the second edition of this article and the final section...
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...Marks and Spencer: Plan A Issue: Issue of the Marks and Spencer written below: * Fluctuation in M&S sales (According to data which provide in the case show that M&S growth is not constant) * High prices then competitor like Tesco Value (Cost of M&S is high while competitor prepare the product at low cost) * In UK company face perfect competition * Social environment (In the past M&S face problem in social image but still they implement “Plan A” in future) * Plan A is perfect and in future it is successful? Analysis: Fluctuation in M&S sales: Sales of M&S do not grow at constant rate. Sales growth rate varies from year to year in some year growth is high and in some year growth is low and in some year growth is negative. For example in 2004 growth as compared to 2003 at 27.04% while in 2005 growth is 9.09% in next year 2006 growth is negative -17.34% and next year 2007 is 42.85%. High prices then competitor like Tesco and Sainsbury’s: Cost of M&S is higher than competitor because M&S use 100% British made products. So that the competitor took advantages of this by offer high quality and low cost imports to undercut M&S’s prices. In UK M&S face perfect competition: Because the market of the UK full saturated and all companies face perfect competition. Due to this reason growth rate in the UK market is not good or attractive. For further expansion M&S move toward other Market in different countries. Social...
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...The latest results from Marks & Spencer and Primark paint a very different picture of the high street. While M&S’s like-for-like sales of general merchandise, which is primarily clothing, have fallen 1.5pc over the last six months, Primark has reported a 5pc increase in like-for-like sales and a 22pc uptick in total sales. Marc Bolland, the chief executive of M&S, says the 129-year-old retailer’s clothing business is on a “journey” after the leadership team and style was revamped. “The most important [factor] is to choose the right direction,” he said on Tuesday. The new-look M&S womenswear collection has won strong reviews from the fashion press. It shows the company has listened to criticism from customers by stepping up the quality and introducing sleeves to dresses, which was a particular sore point. Mr Bolland said there has been a “gradual improvement” in the performance of M&S’s clothing business. The company “sold through” 80pc of the clothing advertised in its high-profile 'Leading Ladies’ campaign within six weeks. However, if M&S is to put its clothing arm on a permanently firmer footing, it could still learn lessons from the extraordinary success of its upstart rival Primark. The discount retailer Primark only arrived in the UK in 1973, 89 years after M&S, but if present trends continue then it will have as many clothing customers as M&S within two years. The first lesson from Primark is that price really matters. This sounds obvious, but...
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...Theme: The Walt Disney Co. is an enigma in these rough economic times for the sole purpose that they show minimal signs of slowing down. Mickey Mouse has his hands dipped into everything and from an investor’s standpoint that’s a good thing because that equals diversification, and in turn, diversification lowers risk. The Disney Company operates in several areas of the media and entertainment industry. They have recently acquired Pixar, which consistently provides box office record sales with their animated films. Along media entertainment lines, Disney also operates dominant media channels ABC and ESPN. These are two channels that carry with them a strong loyal following. Sports have always been America’s past time and it’s unlikely to see them ever declining or the viewership that goes along with it. People have always poured capital into sports and will continue to for many centuries to come. Aside from Disney’s ventures, investors focus and confidence should be in the trademark of Disney. Characters such as Mickey Mouse and Buzz Light-year are icons that will never be lost in the pages of time. Kids and adults alike will always want to participate in the next big thing the company has to offer and these kinds of expectations will always lead to Disney having a stable stock price and even unstable in the positive manner because the growth potential is limitless for this company. You can see that limitless with the many franchises Disney has under its wing. For...
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... The Factors which led M&S to internationalize The company had an understanding about the domestic market which was saturated and expansion was only possible if they internationalize. Just to test M&S started exporting which helped in franchising relationships which lowered the political and economic risks, thus they finalize to invest directly. The sequence of country entry and the reason behind it • Canada • France • Belgium • Spain • Germany • Greece • Hungary • Portugal • Czech Republic • Japan • Hong Kong M&S started with Canada and concluded with the Far East because they concentrate in regions with high incomes, solid infrastructure, large middle class, low political risk and con-sider very important the use of English language. The company’s first step was opening its own stores and expanding through purchases in major economies, this is why Far East remained last. Modes of entry in various countries • Exporting • Franchising • Acquisitions • Sole ownership • Joint venture The possible reasons are: • Low political and economic risks • High purchasing power • Infrastructure • Unfamiliar with the culture and the political climate The country factors M&S seem to value M&S merchandised its stores to French lifestyle which clearly showed they valued France. The store had large sections of French wine and clothing than British imports. They also seemed to value US as they did not change the name of the...
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...Ethics and Sustainable development Mark&Spencer Plan A analysis Bao Quoc Nguyen Ethics and Sustainable Development Mark and Spencer Plan A with Oxfam Table of Contents MARK & SPENCER PLC ................................................................................................................... 3 COMPANY OVERVIEW ........................................................................................................................................ 3 BUSINESS DESCRIPTION .................................................................................................................................... 3 HISTORY .............................................................................................................................................................. 4 SWOT ANALYSIS ................................................................................................................................................ 4 PESTLE ANALYSIS ............................................................................................................................................... 5 OUTLINE SOME PROBLEM FACING RETAILERS IN UK .........................................
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...Meeting of Marks & Spencer Introducing This is the first meeting of Marks & Spencer in 2015. I am working at the marketing department as an market researcher. I have been working at this place for more then 10 year now. My job is to investigate the market attractiveness of every potential country for Marks & Spencer. German Market In my opinion, the German market is the most important market in Europe. For example, Germany is the world´s second largest exporter following the USA. Germany is also a highly industrialised country with a strong service sector and very high population density. Besides that, Germany is also the world´s largest import market. A lot of opportunities lies in Germany, such as; A low inflation of 2%, retail sales of £331 billion and a Gross domestic product of a staggering £1,500 billion, nearly three times that of the UK economy. German consumer expenditure is 50% more than the UK and 22% higher than France. Researched has also shown that: * German consumers have a clear appreciation of high quality products. Marks & Spencer products would be very good value to the German consumer if the products were sold at competitive prices. * Marks & Spencer’s ‘added value’ approach to Foods would be quite unique and offer a prime differentiation factor. For example, Marks & Spencer’s standards of quality, freshness and hygiene would stand out against the lower standards in supermarkets and discount stores Despite all the opportunities...
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...Financial Statement Analysis Assignment 4 “Mark and Spencer’s Accounting Choices ” 20 February 2015 Semester 2, Period 1 2014/2015 Samantha Jay (10962670), Tutorial Group 1 Michelle Liva ()10962581, Tutorial Group 2 ___________________________________________________________________________ 1. Exhibit 1 and 2 report the income statements and excerpts from the notes to Marks and Spencer’s financial statements for the fiscal years ending between March 21, 2005 and March 31, 2009. Critically analyze M&S’s accounting choices. What choices may have helped the company to overstate its net profits between 2005 and 2009? In the report, it states that Marks and Spencer was criticized for the company’s accounting for pension liabilities, intangible assets, and depreciation. In regards to pension liabilities, Marks and Spencer reports these liabilities as equity. In 2007, M&S sold and leased back 1.1 million of its property portfolio to a joint venture with its own pension fund. M&S has full control since it was leased back from the joint venture, therefore making it equity. The result of this was reducing M&S’s pension liability. Another issue is that Marks and Spencer Group treats the software costs as an intangible asset. These costs include external direct costs of material and services and the payroll/payroll related costs for employees. Typically, the capitalization of intangible assets, particularly software development outlays, is prohibited because...
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...Manajemen inovasi Untuk tetap berada di depan kurva global, bisnis Anda harus menggunakan aset orang untuk menjadi inovatif, bukan semata-mata mengandalkan pada cara-cara untuk mengurangi biaya. Efisiensi dapat ditingkatkan dengan awal proses yang melibatkan meningkatkan nilai pemegang saham sambil meletakkan praktik terbaik ke tempatnya, tetapi perusahaan tidak bisa mengandalkan metode ini saja. Ketika bisnis Anda satu-satunya permainan di kota yang menawarkan kreativitas dan inovasi manajemen dalam skala yang Anda berikan, maka Anda telah memenangkan bagian paling sulit dari yang cocok kompetitif. orang Anda adalah kunci untuk manajemen inovasi. Dengan fokus pada menciptakan semangat kompetitif dalam tim Anda, adalah mungkin untuk menciptakan pengusaha yang oportunistik dengan tujuan untuk menjadi yang terbaik dalam cara mereka melakukan bisnis. Ini adalah kemampuan untuk terus menjadi kreatif dimana metode sebelumnya untuk meningkatkan arus kas dengan berfokus pada pengurangan biaya dan efisiensi skala tidak lagi cara terbaik untuk membuat tanda Anda dan berdiri di antara kerumunan. Dengan memonopoli pasar dan penyatuan bersama sumber daya dan aset tim Anda, hasil yang Anda syuting untuk yang diperoleh melalui manajemen inovasi. Dalam rangka membangun sebuah organisasi yang inovatif dalam arti sebenarnya, budaya, visi dan proses merupakan komponen kunci sukses. Kriteria ini menciptakan urgensi orang-orang organisasi Anda untuk menjadi kreatif dan melihat masalah sebagai...
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