Business Strategy Marks and Spencer Term Paper
- Length: 11 pages
- Sources: 8
- Subject: Business
- Type: Term Paper
- Paper: #42647266
Excerpt from Term Paper :
Current Problem Diagnosis
The problems within Marks and Spencer began in the 1990s, starting with financial difficulties, aggravated by fierce competition in the industry and consequently decreased sales and profits. Market analysts blamed the occurrence of the problems on a poor quality of the management. M&S was accused of not having paid enough attention to the changes affecting the market and as such, they had failed to adapt to the new requirements.
Also, another cause leading to the issues raised was that of an increased focus on the daily operations, generally low risk activities. The approach had been successful on the short-term as it ensured high quality of products and services through a high attention to details, but it had generated negative implications on the long-term.
Then, a third force generating the problem was that of the internal structure of the leading positions. All managerial seats were occupied by Marks and Spencer employees, who had started on low paid and qualified jobs and had gradually promoted. "Almost all M&S managers and executives were promoted internally, starting at the bottom of the organization and becoming immersed in the routines and established traditions of M&S, a culture that had been established, and continually reinforced, since its creation. There had never been a CEO of M&S who had not been a member of the founder's family or a lifetime employee" (Collier). The advantage of the strategy was that the leaders had already been formed into the corporate culture and knew the characteristics of the businesses run better that any outsider. However, it also meant a limitation of creativity and innovation as the same individuals occupied various positions at different times and no new manager was able to introduce elements of novelty that would help M&S better adjust to the new market conditions.
When Richard Greensbury resigned as CEO, his position was taken by Peter Slasbury, who had the ambition to turn Marks and Spencer around. He divided the organization in three, based on the operations conducted: financial services, retail business in the U.K. And international operations. He also aimed to reinvent the corporate culture and implement a customer-based orientation; his strategies, continued by his followers, had some success and in early 2000s, the company began to revive. Today however, their stability and growth is once again being challenged.
5. Generation of Strategic Options
In order to resolve the impending problems at Marks and Spencer, the managers would have to develop a wide set of strategies, all adapted to the market demands and the unique corporate capabilities and features. These strategies would be developed within the given resource limitations and would basically target the revival of the British retailer. A specification that must be made here is that the company should develop several alternative strategies, and based on an evaluation of these courses of action and their possible outcome, choose the one that best meets the demands. Also, it could be highly probably for a single course of action to be insufficient; therefore, the organization might have to combine two or more strategic approaches. This would eventually ensure a reduction in the risks generated by each alternative and a maximization of the beneficial outcomes. This being said, the executives at Marks and Spencer should focus on the following strategies:
a) Implement a customer-oriented approach - this would basically mean that the organization would place more emphasis on the requirements forwarded by the customers and potential customers. They would no longer produce whatever items they desired and hope to sell them, but would inquire the clientele as to the products they need and then sell those particular items. The strategy is expected to revive M&S through an increased customer satisfaction, increased sales and consequently higher profits.
A b) Separate the operations - what this means is that the executives and Marks and Spencer should establish clear distinctions between departments and retail locations. In other words, financial services should only be sold in one place; then, food products should not be sold near the clothes shelves - this would once again increase customer satisfaction.
A c) Diversify the product palette - the diversification of the offering does not necessarily refer to adding more items on the shelves, but to offering products for all pockets; in other words, the M&S stores should come to represent a viable alternative for the individuals coming from all socio-economic backgrounds; the strategy would most likely give a sense of belonging to all customers and would increase their satisfaction and purchases.
A d) Reshape the target market - M&S' primary target market is formed from women, but the once highly profitable sector was declining; therefore, the need for a new approach become obvious. Marks and Spencer should first strengthen this target market by offering more diversified products, manufactured with more modern designs and with numerous features that satisfy various needs. Then, they should also place increased emphasis on the children and menswear, sectors generally neglected. These products should also be fashionable, high quality and price accessible.
A e) Internal strategies - the success of the proposed market strategies is not possible without strong support from within the organization. In this order of ideas, the company should hire newer managers that add more value and support the concepts of innovation. Then, they should make increased efforts to reduce their reticence to change, engage in riskier operations with more positive outcomes and decide based on the long-term benefit.
6. Evaluation of Strategic Option
Each of the alternatives proposed is characterized by possible losses and gains. Therefore, a need for an evaluation is imposed.
A a) Implement a customer-oriented approach - this strategy is risky in the meaning that it implies additional expenditures with researching the market and changing the production process. The possible gains on the other hand are quite high as through offering the products desired, the British retailer could strengthen their market position. Also, the losses would be quite high if the company continues to disregard the demands of the customers, and the finality of such negligence could easily be bankruptcy.
A b) Separate the operations - the potential gains and losses are quite reduced in the meaning that no major changes would occur from the implementation of this strategy; it could at most lead to a better customer satisfaction, but it would unlikely materialize in increased sales c) Diversify the product palette - the diversification of the offering in terms of prices accessible to everyone would imply additional efforts with contracting more suppliers or changing the contracts with the present partners. Then, it would also pose the risks of financial losses provided that the public does not respond favorably to the enlarged price offering. However, if it is properly implemented, the success could materialize in increased customer satisfaction, increased sales and accordingly higher corporate revenues.
A d) Reshape the target market - this strategy has the main risk of once again investing large sums of money and failing to properly attract the right audience; this risk can however be minimized if the executives require the assistance of marketing specialists. The potential gains on the other side are quite favorable as the customer base would increase significantly, leading once again to increased sales and higher organizational revenues.
A e) Internal strategies - two risks occur with this strategy: operational risks and financial risks. The financial ones revolve around the necessity to invest additional funds into an uncertain course of action. Then, the operational risks refer to the possibility that the staff members will be unable to adapt to the new requirements, slowing as such the operational processes. However, if the strategy is properly implemented, it will materialize in a higher efficiency of corporate actions and even cost reductions, superior product and service quality, all leading to more purchases and more revenues.
7. Description of Selected Strategy
As previously mentioned, it may not be sufficient to implement a single strategic approach, but the company may have to simultaneously consider more courses of action. In this order of ideas, it becomes obvious that the retail giant has to work on both its internal environment, but also its market position. As such, they will reshape their entire business perception. They will no longer sell the items they have on stock, but the items desired by the customers. In other words, they will implement a customer-oriented approach.
Then, they will increase their customer base and enlarge their target market. However it will imply additional costs, they could also offer promotional purchases so to attract more clients. Finally, they will diversify the product offering, enlarging it with items accessible to all income levels. Otherwise put, they will implement the product diversification and market reshaping strategies.
In terms of internal approaches, they will undoubtedly have to implement a different approach. They will have to make a swift from short-term to long-term measures and they will have to adopt change as an ongoing process, necessary for survival and future success.
8. Action Plan for Implementation
In order for all…