Case study on Marks and Spencer

Marks & Spencer External Analysis

The purpose of this paper is to examine the business environment of Marks & Spencer and perform an external analysis as well as examining the main issues faced by the company, the company's competitors, performance in the industry and offer any possible recommendations.

According to a "Financial Times" report:

The sun now sets on Marks and Spencer (M&S). The department stores sell mid-priced clothing, food, and household items under the company's famous label, the 'very British' St. Michael brand (found on items ranging from tweed jackets to marmalade).

From all appearances, Marks & Spencer, truly is that which it claims as its vision: "The standard against which all others are measured" in light of the rewards it has received just this year inclusive of:

Named as Business in the Community's Company of the year 2004

Rated as leading retailer with a 20% lead in a supply chain ethical trading by Insight Investment and Accountability's Gradient Project.

Ranked as leading Retailer in 2003, 2004, and 2005 by Dow Jones Sustainability Index.

Rated in top 3 retailers for managing and reducing usage of chemicals that pose a risk to the environment by Friends of the Earth 2004.

Ranked as the best food retailer on replacing peat by the Royal Society for the Protection of Birds in 2004.

Marks & Spencer, Making an Attempt to Survive in the Present Economy:

Largest clothing seller of the UK, Marks & Spencer sold many of its' stores in 2001 in an attempt to concentrate on a salvaging operation of its 375 stores in the UK. Over 220 Brooks Brothers clothing U.S. And Asian stores were sold to Retail Brand Alliance in the U.S., as well as the 18 Marks and Spencer stores sold to French Company.

Offering $120 million for Kings Super Markets chain in 2003, but getting turned down by Marks & Spencer who refused the offer, Gristede's, a New York grocer, online grocer and supplier just opened its new "mega store" line.

Overview of Company and Industry:

Marks and Spencer's primary Industry is retail department stores although M&S does operate a line of financial services inclusive of asset management and retirement and pension management. Marks & Spencer also operates a line of lending services as well as operating in the insurance sector. Annual sales for the company for 2004 were reported to be 8,299.9 million with a reported Annual Net Income of 552.2 million. Marks & Spencer is ranked 292 in the Financial Times Global 500.

III. Main Competitors:

The main competitors for Marks & Spencer are:

1. ASDA Group Limited, an American owned company but operating in the UK. Owned by Wal-Mart Stores and second-largest retailer of food in the UK only after Tesco, ASDA offers clothing, books, groceries, videos and house-wares. ASDA has recently converted its stores to a type of Wal-Mart Supercenter format using the "price-rollback" strategy in its stores.

2. NEXT, a London-based retailer sells mid-priced clothing for men, women, and children as well as house-wares and furniture. NEXT has a Web site store, and operates in Europe, Asia and the Middle East.

3. Tesco is an UK company that runs a chain of over 2,300 convenience stores, supermarkets and hypermarkets in the UK, Ireland, Central Europe and Asia. it's found Sir Jack Cohen has changed the format originally founded under his philosophy of "pile it high and sell it cheap " and is opting for a mid-market format with operations including Tesco Express, gas and convenience store retail, Tesco Metro, small urban stores, and Tesco Extra, its hypermarket store.

IV. External Analysis:

Strengths:

More sub-brands strengthen product offer at M&S

Men opt for convenient locations and an 'engaging' store environment

Quicker responding to fashions with greater efficiency than those new in business.

Award winner in community, environment and global award areas.

Established Brand in Clothing

Streamlining in operations has already been addressed

Weaknesses:

Dependent on behavior of consumers and other factors that our not within control of the company.

Still needs development in integration of stores in terms of retailing format.

Opportunities

Increasing importance of fashion and price sensitivity

Men opt for convenient locations and an 'engaging' store environment

M&S Plans to: Accelerate Retail Change Program in stores/reducing Head Office costs, extend the accessibility of Simply Food offer, extend the reach of our '&more' card, open a M&S Lifestore in Kingston & Thurrock,