Executive Summary
The objective of the report is to describe the company profile of Marks & Spencer and to analyse the management style and the new organisational structure that led the company to success. The analysis of the case study also discusses the reasons why the change was introduced, as well as the company’s operational planning and new leadership styles used in management.
Introduction
Today, Marks & Spencer is known as one of the most well-established brands not only in the UK but also on the international fashion arena. However, during its development, the company has faced a lot of issues. Some of them, such as the setback of Marks & Spencer’s performance in the late 1990s, could have affected the company quite drastically (Whitehead 1991). The pernicious impact on the fortune of the company was avoided by introducing the entirely new strategy.
In order to reverse the unfortunate market situation and adapt to the changes in the fashion industry, the management of Marks & Spencer implemented the new initiative on the multiple levels. However, to analyze the changes to the company profile of Marks & Spencer, the report needs to define the business environment and the meaning of the events that surrounded the company’s decline (Bevan 2007).
On the other hand, the objective of this paper is also to analyse the management style and the new organisational structure that guaranteed the company’s current success. In order to do that, the report discusses the incentives and motivations of why the change was introduced and the company’s new operational planning, strategic choices, and leadership styles used in administration.
Marks & Spencer Company Profile
Marks & Spencer is the company known as the giant of the fashion industry with the presence of the British and international markets for more than a century (Burt et al. 2002). Today the brand is renowned throughout the world and is often defined as one of the most stable and well-managed companies in the UK not only in fashion retail but amongst all the different industries.
However, despite having a long history of development and occupying the iconic position in the British fashion retailing, Marks & Spencer had a few major issues concerning their strategic management and market orientations quite recently. In the late 1990s, Marks & Spencer showed quite a lower performance than it was expected. The main reasons for the critical situation can be interpreted in two ways. First of all, at the time, the management of the company overlooked the major influences and upcoming tendencies in the business environment. It resulted in the fact that Marks & Spencer were by a margin behind their market competitors on the different levels of the company’s functioning. Secondly, it is hard to ignore the issues with the overall strategic leadership since it led the company to a situation where it lacked the ultimate marketing strategy and definitive management style.
Business Environment
The modern business environment is practically based on the companies’ abilities to respond quickly to the situation and its minor developments and trends. It may seem that the companies, such as Marks & Spencer, which have been on the market for over a century, would be less adaptable to those slight dynamic changes. Nevertheless, in spite of such common misconception, many long-standing firms, including some major British fashion retailers are showed to be among the most responsive to the alternations in the business environment (Case Study on Marks & Spencer 2011).
Therefore, the main reason for the company’s decline did not relate, in any way, to Marks & Spencer’s history. However, the problem of the managers who let the decline happen was that the strategy of the company’s market presence was not properly updated. The executives preferred to follow the strategy of the ‘strong culture’ relying on the assumption that re-introducing the classic models and ideas was a safer option. However, at the time, the market of fashion retail concentrated on the importance of the innovations, and lack of innovative potential could result in even bigger issues with the marketing appeal. Moreover, there was no decisive and catching marketing strategy as such at the time, when Marks & Spencer encountered their issue.
The particular reasons for the multiple spheres of the marketing strategies are the subject of the PESTEL analysis. Such a framework is meant to include the political, economic, social, technological, environmental, and legal aspects of the company’s presence in the marketplace (Case Study on Marks & Spencer 2011).
In terms of the company’s policies and economic performance, the main reason for the decline was the inconsistency with the prices. The prices were not reduced at any of the seasonal periods of the sales, which shows that the strategy of the company overlooked the importance of the appeal to the public (Campbell 2000). Furthermore, the marketing strategy labeled as the old classics, at the time, did not relate to any particular target audience.
From the standpoint of social and cultural factors, with the introduction of the new technologies, innovations from the different spheres of life, and the growth of the living standards in the UK, the market audience became more aware of the fashion trends. The fashion retailers were not anymore divided solely in high fashion and plain clothing since more people could afford to wear fashionable clothes. From this perspective, Marks & Spencer seemed too simplistic in their models and designs.
In terms of environmental and technological factors, Marks & Spencer lacked innovation in the production, distribution, and retail process. This issue not only negatively affected the customer appeal but also caused complications on the internal levels of communication and production.
Problems with the Strategic Leadership
Apart from all those factors, the executives chose to invest in renovations of some of the company’s old stores. The financial resources directed into this sphere decreased the financial potential of the company. From the strategic point of view, it would have been more effective to invest the same financial resources into opening new stores (Mellahi, Jackson, & Sparks 2002). Even without the changes to the designs and production process, it would have increased the retailing capacity of Marks & Spencer.
Another strategic issue was the superfluous simplicity of Marks & Spencer designs. The developments of the society demanded the response from the fashion industry since more people became interested in the clothing that had individuality and style to it, whereas the models and patterns of Marks & Spencer relied on the plain classics and basic models (Worth 1999).
Management Style and New Organisational Structure
The lack of market appeal and the absence of individuality in designs indicated feeble management and strategic leadership. One of the reasons was that Marks & Spencer was founded by Michael Marks as the family company, which is why, for a long time, it had an authoritative, centralized managerial style that enhanced very little innovation or initiative (Davies 1999). However, the change happened when in 1998, Peter Salsbury took over the company’s leadership.
As a result, the management style was changed quite drastically (Mellahi 2003). Instead of concentrating on the authoritative structure within the company, Marks & Spencer started to pay more attention to the customers and the market tendencies (Doherty & Alexander 2004). The organizational structure changed from the hierarchic to the more interdependent and cooperative. In particular, the structure of the firm was divided into three parts: retail in Britain, business abroad, and the financial department. The strategy was to restore the image of Marks & Spencer as a modern retailer, but despite the management change, it was not enough.
Marks & Spencer’s Operational Planning
The reorganization and change to the liberal management style introduced by Peter Salsbury created soil for the future Marks & Spencer’s success. Due to the restructuring of the company, the operational planning started to work with the account of such factors as time, scope, preservation, diversity, capability, capacity, and readiness (Case Study on Marks & Spencer 2011). United together those concepts create a company’s agenda, according to which it is most important to focus on the customers, to be ready and have the capacity to react to the changes in the market. The designs of Marks & Spencer’s clothing became more stylish, and the operational system – more responsive.
Marks & Spencer’s Leadership Styles
In the twenty-first century, the agenda of the company is to restore and sustain the business overseas and to focus on the target market, on the customers themselves. Due to a more liberal leadership style, the managerial structure was simplified, which allowed three major departments of the company to function more independently but within the framework of the same strategy (Worth 1999). Unlike the centralized system that led the company to the decline, the new leadership style enables quicker responses to the situations on the market and the new trends.
Conclusion
In the late 1990s, Marks & Spencer had a few major issues concerning their strategic management and market orientations; the company showed quite a lower performance than expected and needed change. First of all, in order to achieve success, Marks & Spencer need to renovate the company’s structure by dividing it into three parts: the retail in Britain, business abroad, and the financial department. The second step was the marketing strategy change. Instead of basic clothing relating to the plain old classics, Marks & Spencer introduced more trendy designs with an appeal focused on the customers. Identifying the needs of the customers helped to build the planning operational processes around the concept of responsiveness to the external factors. Finally, a new structural organization of the company created a ground for the decentralized leadership style that is more liberal and gives more autonomy to different departments.
Reference List
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