Marks & Spencer Company: Organisational Structure

Executive Summary

This paper is a case study of a large international retailer based in the UK, “Marks & Spencer” (M&S), which deals in food, clothes, and home products. First, challenges that exist nowadays in the textile industry are discussed; these include high levels of pollution caused by manufacturing, adverse working conditions in factories, and tough markets in the UK where buyers consider their purchases carefully.

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To address the latter problem, M&S implemented changes in its organizational structure and made it “flatter” to make the interactions between leaders and workers (and the clients interacting with workers) less mediated, and to increase the responsibility of employees, which was aimed at improving the service. The business also carried out an environmental awareness campaign and planned its development in a sustainable way, all in order to achieve admittance from the ecologically aware clients. The current leadership style in M&S is mostly consultative, which means that the leaders consult with their subordinates before making key decisions.

Introduction: the Current Situation in the Garment Industry

Nowadays, there exist a number of problems in the textile industry. The industry’s factories are mainly located in developing countries; most apparel is exported from there. The industry is characterized by a number of significant problems related to the technology of production. Clothes manufacturing is among the most pollution-causing industrial branches, occupying the second place after the oil industry (Ditty 2015).

It is also noteworthy that the factories are not safe; being employed in a textile factory causes serious health problems for workers, who are also forced to work overtime and are significantly underpaid (Schultze 2015). Whereas the latter problem is rarely a concern for most businesses (this is warranted by the fact that the highly adverse conditions for workers continue to exist), the pressure related to the environmental pollution forces them to invest in innovating technologies, which causes additional expenditure.

There also exist problems related to the clothes market in the UK. The recent economic downturn caused clients to consider what to buy more carefully, which led to the need for retailers to compete more severely in the market. On the other hand, over the last few years, the economy of the UK has experienced an increase in both domestic production and exports in the textile industry, which provides the apparel retailers with additional opportunities for growth today (Woodard 2015).

M&S: the Company Profile

“Marks & Spencer Plc”, also M&S, is a large multinational retailing enterprise that is based in London, the United Kingdom. The business is comprised of five main divisions, which are “M&S for Business, M&S Bank, M&S Energy, M&S Outlet, and M&S TV”; they offer the services such as “Christmas Shopping, Style & Living, Women, Lingerie, Beauty, Men, Kids, Home, Food & Wine, Flowers & Gifts, Outlets, Television, Energy and M&S Bank” (Reuters 2016).

“Marks & Spencer” was established in 1884 in the city of Leeds, and, since that time, has developed into a major company that operates not only in the UK but also in the Republic of Ireland, Europe, Asia, and the Middle East; the UK’s division for the fiscal year 2013 accounted for 89% of the enterprise’s revenue, whereas the international division earned 11% (Brook Intelligence Centre 2013, p. 3; M&S Today 2016).

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M&S owns 852 stores in the UK, and serves nearly 33 million clients there; on the whole, the company has more than 1,330 shops worldwide. The business specializes in selling apparel, foods, and home products of high quality. The food accounts for 57% of the enterprise’s turnover, whereas the rest of the turnover (43%) is earned by selling the general merchandise – clothes, home products, etc. (M&S today 2016). In 2015, the total revenue of the firm in the UK accounted for 9.2 billion of GB pounds, 5.2 billion of which were earned for selling food, whereas the general merchandise revenue was 4.0 billion.

At the same time, the international revenue of the company was 1.1 billion GBP for its sales; it is easy to see that the group revenue was 10.3 billion GBP (M&S annual report 2015, n.d.). In 2014, the total revenue (international + the UK) was approximately the same (10.3 billion GBP) (M&S key facts, n.d.); in 2013, it was 10.0 billion GBP; in 2012 – 9.9 billion GBP, in 2011 – 9.7 billion GBP, in 2010 – 9.5 billion GBP, in 2009 – 9.1 billion GBP (Brook Intelligence Centre 2013, p. 4).

M&S: Changes in the Organisational Structure and their Effects

It was already pointed out that many clothes retailers in the UK were forced to create new strategies to survive in the market where customers were paying more attention to choosing which products to buy. In order to do so, M&S employed a promotional campaign that was aimed at 1) developing the goods that clients would desire to purchase, 2) investing money in the atmosphere existing in the shop, and 3) supplying the customers with high-quality service (The role of training and development, n.d., p. 1).

To do so, one of the changes that were introduced was related to the organizational structure of the company. A new structure was created, which was “flatter” than the old one. The old structure was characterized by high amounts of bureaucracy and ineffective collaboration between different levels of employees; changes were needed. The procedure of implementing the changes might be characterized as delayering; the new structure employed a smaller number of layers between the top managers of the company and its “simple workers” (see Fig. 1).

It is emphasized that this structure meant a greater amount of both responsibility and accountability for the enterprise’s employees, and, by reducing the amount of bureaucracy, allowed for much faster decision making (The role of training and development, n.d., p. 2).

Also, the fact that there were fewer links between the top management allowed for less mediated communication between the leaders and the company’s employees who dealt with customers, permitting the administration to take the clients’ opinions into account more fully. These are some of the advantages of the new structure. Among the disadvantages, the need to spend more time and effort on training the workers and managers is named (The role of training and development, n.d., p. 2-3).

Old and New Organisational Structures of M&S.
Figure 1. Old and New Organisational Structures of M&S (The role of training and development, n.d., p. 2).

M&S’s Competitiveness Strategies: Operation Planning and Using Resources

It has already been stressed that the pressure regarding environmental and labor concerns may cause some businesses to introduce technological changes in order to attract more customers. It is alleged that M&S was one of the companies that employed such a strategy. In 2006, the business launched a campaign named “Look Behind the Label”, which was meant to make the clients believe that the enterprise, for instance, used environmentally friendly dyes. It is stated that the campaign’s outcome was the “increased awareness and approval of M&S initiatives, particularly among opinion formers and the ethically-aware” (The Marketing Society 2012).

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Another initiative, one that was actually aimed at increasing the degree of the environmental friendliness of the business’ manufacturing, received the name of “Plan A”. It was introduced in 2007. The major points of the “plan” included: 1) making the manufacturing carbon-neutral, 2) getting rid of landfill waste by decreasing the numbers of packaging and recycling; 3) utilizing the most sustainable raw materials; 4) paying some attention to the workers employed in the factories; 5) promoting a healthy lifestyle among the clients (The Marketing Society 2012).

It should be admitted that the business adhered to the “Plan A” in spite of the fact that the situation in the market had been rather tough. Sir Stuart Rose, while being the chief executive of M&S, stated that there were “compelling commercial–as well as moral–reasons to do so [to adhere to the “Plan A”]” (Rose 2008). In addition, the plan was updated in 2014 (this “edition” received the name of “Plan A 2020”), so its implementation continues (Operational Plan A 2020 2015).

These two examples of programs (“Look Behind the Label” and “Plan A”) show how M&S plans its operations to gain an advantage in the market. The use of sustainable technologies, environmental friendliness, and promoting more humane conditions for workers from “cost-effective nations” in the factories are all able to attract customers and buyers.

The Leadership Style Adopted in M&S

As it has already been pointed out, the new organizational structure of Marks & Spencer was implemented to make the company’s hierarchy “flatter”. In the new structure, more effective collaboration among the employees of different levels was promoted so as to better the effectiveness of the business (The role of training and development, n.d.).

Nowadays, the managers and leaders of the company appear to be inclined towards democratic or consultative leadership styles. It is stated that “consultative leadership achieves shared goals through others’ willing participation, for mutual benefit” (Ferraro 2015, p. 195). In the consultative leadership, however, the key decisions are made by leaders, who first consult with others in order to consider the issue better. Therefore, the consultative leadership style is similar to the democratic one; however, in the latter, more stress in made on collaboration between employees of different levels, and the decisions are made collectively (for instance, by voting), rather than by the leaders alone.

It is stated that in M&S, the leaders of the company attempt to implement “effective governance [that] is realized through leadership and collaboration” (Swannell, n.d.). The leaders of the company usually consult with the employees of the lower levels before implementing strategies or making crucial decisions; as we have already pointed out, the “flatter” structure of the company was implemented in order to make such interactions less mediated. It means that the organization possesses significant features of the democratic leadership style, but is inclined towards the consultative leadership style.

Conclusion

To sum up, it should be stressed that M&S is a major British-based retailing company that operates in the UK, Europe, Asia, and the Middle East. To adapt to the challenges of the market, the company implemented changes in its structure, making it “flatter” in order to allow for faster decision making and better collaboration among different employees to meet the desires of the customers. It also uses carries out an environmentally friendly policy to attract further clients. The leadership style that dominates in the company is consultative, though elements of the democratic leadership style are also present.

Reference List

Brook Intelligence Centre 2013, Marks and Spencer plc: company profile. Web.

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Ditty, S 2015, Europe in the world: the garment, textiles & fashion industry. Web.

Ferraro, J 2015, The strategic project leader: mastering service-based project leadership, 2nd and, CRC Press, Boca Raton, FL. Web.

M&S annual report 2015 n.d. Web.

M&S key facts n.d. Web.

M&S today 2016. Web.

Operational Plan A 2020 committee terms of reference 2015. Web.

Reuters 2016, Profile: Marks and Spencer Group PLC (MKS.L). Web.

Rose, S 2008, Staying green in a tough economic climate. Web.

Schultze, E 2015, Exploitation or emancipation? Women workers in the garment industry. Web.

Swannell, R n.d., Governance framework. Web.

The Marketing Society 2012, 2010: Marks & Spencer, marketing for sustainable consumption: case study. Web.

The role of training and development in career progression: a Marks and Spencer case study n.d. Web.

Woodard, R 2015, UK textile and clothing industry poised for growth?. Web.

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