Strategic development of UK retailer Marks and Spencer

Strategic set outment of UK handleer Marks and SpencerMarks Spencer be mavin of the UKs largest retailers, with over 21 million deal visiting M S stores every week. M S offer stylish, racy quality, big hold dear clothing and home overlaps and withal excellent quality foods, responsibly sourced from around 2,000 suppliers worldwide. M S employ more(prenominal) than than 75,000 mountain in the UK and outside the UK and come over 700 UK stores, plus and growing international lineage.M S be the ideal provider of women wear and lingerie in the UK, and ar to a fault rapidly raising commercialise sh be in menswear, kids wear and home, due in part to MS growing online business. Overall, M S clothing and home w atomic number 18 sales account for 49% of our business. The other 51% of M S business is in food, where M S retail everything from fresh produce and groceries, to partly-prepargond meals and ready meals.M S also recognized for their green identification as a chair of their volt-year eco plan, Plan A, which pass oning see M S, with other things, become nose drive outdy neutral and also sending no waste to landfill by 2012.Companys legal brief HistoryWith more than 120 years of heritage, Marks Spencer is one of the hygienic recognized British retailers. The M S has more than 500 stores deep fell the UK and has more than 75,000 employers across the UK. M S also operates in the world-wide merchandiseplace, where it has a stand uping business in some places as utmost as Hong Kong.In recent years, the UKs retailing industry has been characterised by impetuous competition. Consumers be more conscious of where and how they feel like to shop. They also do it what kind of shopping infrastanding they require. This has made it much more modify for retailers to carry on.Corporate Strategic DevelopmentHistoryThe original steadfast was a chain of PENNY BAZAARS, founded by Thomas Spencer and Michael Marks. It became a fam ily whole name thanks to the efforts of Simon Marks and his friend Israel Seiff.M S has branches in approximately 28 countries all over the world. They mostly exist in British Societies and Eastern europium but this effort to get large into Western Europe and in the United States go failed beca well-disposed function of their high sets and also of their basic British Vision of the participation. M S also was especially un conquestful in France and even they were forced to close their stores in France beca occasion of the legislating which the French Government set in place to protect their wear down force.In 1960s Marks and Spencer opened first store in Central Asia in Kabul, Afghanistan. This store was closed after some clip because atmosphere of the city turned usual.In the middle of 1990s MS first ever TV commercial of clothing were broadcast.In twentieth Century MS became well reputed in grocery store, when they make a policy of selling scarce British made soundlys, mostly focusing on quality than the price to encourage tradition.Introduction of their young clothing vomit up in 2001 named Per Una conceptioned by George Davies accompanied by a reshaping of their underlying business model their profits join ond very sharply and MS improved a lot of its market share. Also change in their traditional policies including accepting credit card transactions and opening MS stores on Sundays put stars on their reputation in market. sort out twist Financial PerformanceGrassroots organisations depend to work well with in a flat structure organisation as freely as likely of bill of coachs and Management. Flat Structure does non mean the excreting of individual responsibilities even flatness means the end of people with prevalent authority over other individuals assembly line. National people root words must forefend the ordinary mistake of including small numbers of people heavily. They should try big(a) to engage large numbers of individu als lightly. Flat organisations, which highlight parallel connections, seem to be the best thing for linking large numbers of individuals lightly.Regular ground MeetingsA circularDividing everyday Jobs and responsibilitiesStaff TrainingStaff Members accumulationA forecast ProcessingWorking interaction with power players and mental imagery companies. Power players are people with the capability or skills to make job done politicians, owners of key businesses, media, government departments, heads of organization, landlords.The groups performance of the team members for they year 2009 finish at jar against 31 was very unsatisfactory. The return on lawfulness percentage and the income per share were nil as the organisation revenue was only 1.3m in this year. The dividend skip was also nil because of the said(prenominal) cause. The participation pay all its revenue to the shareholders because the dividend cover was very low last year. Because of this, company had to abbreviate -down the dividend approximately from 12.4p to 8.0p. Company planned for the same dividend even though the company had about zero profit. The set reports outcome of three operational divisionsUK retail DistributionInternational Retail groceryFinancial Resource classUK Retail DistributionThe UK Retail distribution, the biggest of the operating distributions, is itself sub-division into seven business units, some(prenominal)ly indicating a defined quarter of merchandiseWomens Wear,Mens Wear,Childrens WearLingerie,Beauty, topographic point,Foods.The First six-spot business units much(prenominal) as Womens, Mens and Childrens Wear, Lingerie, Beauty and Home are cognise as General and footage is in between these six units depending on convey and seasonal factors. The liberty is located due to the biggest single business unit that is Food and is relatively unbendable.Final Financial report in the UK retail defines a drop down in gross sales and Operating attain. sales And Operat ing Profit In The End Of Financial YearsSales Operating profit____ 2001200020012000mmmm aggroup positive8085.78185.5468.0542.0UK Retail6300.96582.7364.8445.1International Continental Europe288.0299.3(55.0)(40.5)European Franchise product linees264.3264.325.620.7 let Brothers445.1395.522.28.9Kings Super Markets317.1273.721.912.1East119.1105.27.3(4.2)International Retail MarketThe International Market of retail Business mainly lives of three broad geographic areasEurope excluding UK mating AmericaEastThe International Retail Market results consist of those M S franchise businesses which operated one hundred twenty-five franchise stores in 26 countries. The European International Retail Market loafer be shared out into the followingContinental EuropeRepublic of IrelandEuropean Franchise BusinessesThe group running two businesses in North America that are let BrothersKings Super MarketsIn March 2001 Kings Super Markets and Brook Brothers operate in 27 and 221 stores respectively. In the end, in Far East the group deals with in 10 stores in Hong Kong.In this year, approximately every company did penny-pinching business in this division comparatively to last year, with the exemption of Europes M S stores which increased their losses.Financial Resources DivisionOne of the important Commitments of M S in the integrated planning cycle is The Financial Resources Commitment. This inscription describes a number of Financial Resources Division InitiativesIntegrated Planning round of drinksCommitmentImproving Management of Resources ImplementingImproving our Internal Control milieuEnhance TransparencyMS is listed on the London Stock counterchange and is a constituent of the FTSE 100 Index.After fostering significant harvest-home in recent years, mid-2008 saw share prices plunge to well under half their value of twelve months before, as MS struggled to cope with more conservative shoppers in the credit crunch.Until 1999 MSs financial year ended on 31 March. S ince then, the company has changed to reporting for 52 or 53 week periods, ending on variable dates.Year endedTurnover ( M)Profit before tax ( M)Net profit ( M)Basic esp. (p)28 March 20099,062.1706.2506.832.329 March 20089,022.01,129.1821.049.231 March 20078,588.1936.7659.939.11 April 20067,797.7745.7520.636.42 April 20057,490.5505.1355.029.13 April 20048,301.5781.6452.324.229 March 20038,019.1677.5480.520.730 March 20028,135.4335.9153.05.431 March 20018,075.7145.52.80.01 April 20008,195.5417.5258.79.031 March 19998,224.0546.1372.113.031 March 19988,243.31,155.0815.928.631 March 19977,841.91,129.1746.626.731 March 19967,233.7965.8652.6455.8Strategy AnalysisCollectively, the age Team Members are accountable for the bright and excellence future of the company. In the course of the Chief Executive, the Board delegate to management on the whole performance of the company finished building long-term management potential, setting clear goals of the company and ensuring that the busines s is supervised in conformity according to business values.Marks Spencer Board StructureCOMPANYS CHAIRMANChief ExecutiveExecutive DirectorOn-Executive DirectorOn-Executive DirectorOn-Executive DirectorOn-Executive DirectorCompetitive Strategy EnvironmentM S operates in a competitive atmosphere. Its competitors are more clients ground and more in tune with the needs and the requirements of the customers. Such as on cloths sector, NEXT Debenhams have exploited the requirement for young people and in food sector Tesco and Sainsbury have expands its ranges of ready cooked meals.In UK at that place are no exit or entry barriers but the market is come along and therefore there is no bounces for a new company or a company from abroadto come and compete in these markets. In severalize M S experienced Exit barriers when under the France law they were non permitted to close their France Stores and make their employees redundant with just a weeks notice. (Ralph, 1996 anon, 2004)New Gr oup Strategy and StructureSubsequently a wide-ranging and comprehensive strategical review of its business, the Board of M S practiced significant changes to the Group strategy and structure in March, 2001. The main basics of this new plan areFocus on UK Retail MarketM S will sell only own brand products so it can guarantee customers the excellent quality, great value and heavy function. Main paper of the plan is the delivery of wide improvements in product availability, product value and product appeal thereby regaining the relationships with core customers of M S. attire Recovery PlanM S has plans to rebuild the confidence of its customers in the qualityAnd fit of its clothing. It will sharpen pricing by rebalancing the price structure, intricacy in the range of entry-price products and also well communicating this to customers. refinement Food, Home and Beauty ProductsMS Foods continues to execute well and has rebuild customers place for providing good quality and conv enience. The business is a platform for future expansion and the Company is considering opportunities to get bigger through new locations and business channels.The Home business is increase strongly, with home furniture and gifts the best growing product areas. Beauty, although relatively small, is also growing rapidly. These two areas offer promising opportunities for work up and will be expanded.Store Renewal ProgrammeM S will go faster the rollout of the prosperous elements of its new idea put under a plan to renovate more stores sooner and at lower cost.Closer To The CustomerAs a company we should be in touch with our customers all the duration in order to develop an cognizance of what our customers think about the company, how they perceive the company and what they expect from the company. This awareness in turn enables us to constantly strive to meet our customers demands and also secure an organizations long-term survival and profitabilityIn order to be more customers found, some of M S stores in big cities will be opened 24 hours a day. On other hand, 125 stores in the UK will be modernised to create a easy-to-shop environs and more attractive for customers.Corporate-Level Strategy (BCG matrix)BCG Matrix is used to conceive the relief of the portfolio of the businesses in terms of relationship between market share and market issue. It is a company in a market that has slow growth and its market share is continuously shrinking. The industry in which M S operates is mature and market is likely to be fixed so it is more difficult to gain market share. Its assumed that M S is a decline phase organisation (Stockport,2000).PESTEL And bring up AnalysisPolitical, Economic, Social, Technology, Environmental and heavy (PESTEL-Analysis)PoliticalLong term decisions are based on stable political surrounding. UK is also a member of European Union, as a result of which the government has to operate to live up to the standards of European Unions struc ture, hence, ensuring M S a greater scope of economic executions . The open transportation of goods products is some other payoff of European Union making the sales operations of M S easier in European counties as there are no barriers to trade to aggravate its sales revenues.EconomicBritish beat up is still stronger as compared to the Euro which is why foreign investments for M S are relatively cheaper but expensive for the other foreign organizations willing to get going in the UK. This is also a reason that several countries are not willing to trade.SocialPresently, the population in UK is 61.11 million which after 15 years from today is expected to reach to 65 million. This brings in good news to M S Company as more more customers will be added to its current list, just the population is ageing. (True K straightawayledge)Secondly there is a dramatic change in the social structure. Medical services progress awareness of living increases life expectancy. Sex education s development increase in the number of professional or working(a) women has led to a decrease in the rate of Birth which are the factors that have been bill for falling revenues for an experienced company such as M S. expertNew Medias reception an age old internet bring in an evaluated potential luck to M S to grow its profits. Some U.S. based organizations are offering online orders where in people can mention their demands preferences which are sent to the production facilities after 2 or 3 working days customers receive their orders. This was simply another example of possibilities by the use of which stanchs can actually respond to the ever changing preferences in new era.EnvironmentalProducts produced by supplier has affect on the atmosphere on how these produce is used and disposed by customers. Merchandisers use a Brobdingnagian range of raw materials to manufacture their products. Because of this, it is critical to handle the usage of these materials with esthesi a and pay proper regard to how they have an effect on innate(p) habitats and bio-diversity.LegalThis is related to the legal environment in which firms work. In outgoing years in the UK there have been a lot considerable legal changes that have affected firms behaviour such as M S.SWOT-AnalysisStrengthsThe Brand of M S is an asset to it in terms of Quality, bolt Value for money. The reason for its success and excellent reputation is that M S sell only own brand products. M S tell the changes in customer preferences behaviour under extensive market overview as they are one of the largest retailers in the UK. The self production labelling enables M S to frequently adapt to the unpredictable market conditions which in turn also allows it to save time. Time saving Adaptability is really necessary for a firm to succeed in such fast moving market where time plays a key role.WeaknessesThe incomplete product range of M S, unfortunately, sometimes affects its regular customers who then happen to purchase from its competitors. An example of that would be that M S doesnt sell sportswear which consequently forces its customers to deal them from those who sell them. This adds to the loss of M S. An added disadvantage could be mentioned as an example i.e. A customer interested to buy M S sportswear ( if they had it ) might have been interested in buying some gift at the same time because of the presence of sufficient variety, which could have made it extra revenues . all the same as they dont have sportswear, they are losing on a good opportunity for revenue.OpportunitiesIn order to make profit, M S consider social rethinking as majority of people are getting conscious for natures substance nowadays. TO aim for Long Term success, M S could pull a reputation as a socially conscious firm by producing with the use of environment friendly raw materials natural fibres.The key to success is uniqueness or individuality. According to the recent researches pe ople are on an average are getting heavier taller. What now can convince people to realize the presence of mind of M S is its Adaptability.ThreatsThe big supermarkets or Discounters, despite of not creation present in the same market are potential holy terror to M S as they sell similar products. These products are offered by them for pithy duration i.e. at a really cheap price for a couple of weeks. Many people advertently buy these low priced products instead of going for a good quality. This strategy of Hit Run adversely affects the businesses of companies like M S.Michael hall porter Five Forces ModelPorters five forces is a framework for the industry abbreviation and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. It draws upon Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. attractor in this context refers to the overall in dustry profitability. An unattractive industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching unmingled competition, in which available profits for all firms are driven down to zero.Three of Porters five forces refer to competition from external sources. The remainder are internal threats. It is useful to use Porters five forces in conjunction with SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats).Threat of New EntrantsEntering into a New Market needs huge finances to purchase necessary raw machineries, develop new products , hire staves , selling-rooms to build an organized systematic network . Organisations such as Jhon Lewis, Tesco Sainsbury can very easily enter into new markets as the monetary risk for banks are very elevated to assist smaller firms also that they do not have the potential to respond to the antitank attacks of existing firms.Brand Loyalty is no more a threat to new firms, presently, thus making it a threat to M S. Customers use advanced applied science to evaluate compare several offers during a short span of time are willing to purchase the cheapest possible product. These propagation X or technology savvy people have been a huge segment targeted by M S, which can be appal for it.Threat of SubstitutesProduct substitution Replacement of Firm need to be distinguished while discussing substitution. The decision of a customer to purchase an particular proposition then a change in his decision to have another is referred to as Substitution of Product, i.e. A customer might probably buy a jumper if he merely does not like the design of a M S cover. However, this had no impact to the revenue of M S.Substitution of M S for its competitor is referred to as company replacement. In the example mentioned previously the customer would have bought a new jacket from the competitors of M S. Now this affects the firm revenues.The Bargaining power of the buyersThere are several factors on which the power of buyer depends. Unlimited demand is met by countless suppliers in the U.K Retail market. Therefore if the customers are not satisfactory they can switch from one company to the other. Because of advanced technical noesis their age group, the segments of people targeted by M S have decorous earning power. To specify changing demand buyer trends their pattern of spending should be carefully analysed.The customers of M S are mainly based in Britain. If M S turns unsuccessful in the British Market, it cannot compensate it by the revenues in the other marketsMarks Spencers Geographical taxationRegionRevenueUnited Kingdom$ 1,488.6 mRest of Europe$ 29.6 mNorth America$ 0.0Australia$ 4.8 mMiddle East$ 8.8 mAsia$ 3.1 m union$ 1534.9 mBargaining power of SuppliersLabour costs are high for UK in comparison with that in Eastern Europe, Asia North Africa which is why that several firms have decid ed to outsource. Therefore there is a pressure on M S to produce high quality products without cutting its costs, however getting the production outsourced can be of great help as cheap labour can be appointed..Competitive RivalryAn increasing number of foreign retail chains zero in on UK as a starting point to make it big in Europe. Example Giordano , a Hong Kong based clothing retailer is very successful plans to open operate stores in UK for its European expansion . Marks Spencer has been facing the counter-attack by Tesco Sainsbury in the recent past. Debenhams Marks Spencer have spent a lot of money for the development of their online operations. Every possible measure to earn profits should be seemed in an Industry as this where so many firms produce the name products are only identified by their tag labels.Future Strategic DirectionAs mentioned earlier we know that M S has a very wide market especially in the UK. It has been successful since decades. The only weakn ess it has is lack of variety of product offerings in its current market. Using Product Development as its strategic superior will enable M S to produce redundant products to cover a wider segment from its existing market. As M S is reputed Brand, the additional products like sportswear will be equally popular.Acceptability or the outcomes of Product Development strategy is another aspect that needs to be measured. If M S adopts the strategy of Product development it will be avoiding the risk of losing its market share . This will increase the value of shareholders assets.Feasibility, now we need to evaluate the relativity of Product Development strategy with the organisational capabilities its resources. Using its present capabilities all M S is supposed to do is to increase its line of products from its production houses. Current capabilities resources will serve he purpose.For future, the aforementioned strategic choice has to be evaluated analysed in terms of suitabilit y, acceptability feasibility. Suitability specifies whether or not the strategy of product development will suffice M S strategic situation.M S being an experienced player can easily access the broad market overview and adapt to the changes in consumer behaviour preferences. This can be a order to add to the benefits of M S in the short long run.To cut costs M S can rely more more steps towards outsourcing its production in underdeveloped or developing Nations without agree on the Quality of its products. Online participation of M S on a large scale will add advantage to it over its competitors as a huge segment of customers served by M S is technology savvy. The promotion of Quality of M S through Internet can make a difference when it comes to saving its revenues being lost to the armor discounters or cheap supermarket clothing.UKs membership in the European Union is an advantage to M S as it provides an easy format of operation for European companies.