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Harvard Business school case study on Marks and Spencer

The purpose of this case analysis is to select and apply appropriate tools and techniques for strategic options after thoroughly identifying and evaluating the major forces at M&S. This analysis reveals that M & S had to face internal and external battles to bear successes and failures before emerging as a renowned name in the retail market of the UK. It followed autocratic, centralized management style characterized by top-down approach and attention to detail in the early 1990s. It also applied standardized procedure to exert control over supplier maintain identical store layouts and designing. However, this formula of success could not last longer and, M& S started to face falls in profits, sales and share prices as it could not adapt its stores and management style to the market needs, dynamic customer preferences. Later on, in 2000s, the new management from outside hiring brought drastic changes in the organization such as flatter and democratic organizational style, customer focused approach, customized stores to represent local demographics, exclusive designer wear, new brand building approaches etc., which enabled the new management to see improvements in the operations and employees satisfaction levels.

Major Forces at M & S:

The analysis of the cases shows that until 1990s, company’s success in terms of profits, market share can be attributed to its top-down management style and having smooth operations according to fundamental principles of offering quality-oriented products at reasonable prices and simplifying operations to increase efficiency at stores.
The traditional trends surrounded the management styles and overall organizational structure at M &S till late 1990s. For instance there was also the trend of promoting internal employees from executives to top management. The autocratic style of the management created a controlled and supervised environment throughout the organization. This culture helped M&S standardize its operations; supplier control, merchandise assortment, store lay outs and employee standards throughout UK and ultimately led it to the heights of success because it was believed that M&S had gained a reputation of consistently high quality provider. Previously, quality control was a focused factor at M&S but during the late1990s quality was started to be associated with the choice of management. What management thought fashion, was called fashion. This inward looking culture had few inputs from workforce in decision making. Hence, autocratic style with little empowerment resulted in the company’s inability to adapt to changing trends of retailing in the UK as well as other overseas markets.
However, the new management introduced a slightly flattened structure with customer focused, and developed a separate marketing department to cater the marketing needs of the stores. Separate shopping units were also developed for having dedicated customer-focused managers and sales assistants.
Another major force that worked at M &S was the fundamental principles which provided it a concrete support. It also resulted in controlled and centrally operating system in terms of suppliers; its detailed focus on quality with reasonable prices; its collaboration with the suppliers to carry out the best possible ways for provision of specialized merchandise. However, later on the centrally controlled procedures for running the whole organization and the stores had to be changed due to the changing retail market trends. 

Appropriate Tools & Techniques for Strategic Options:

M & S can use following external and internal analysis tools and techniques to bring changes in the organization to cope with the falling sales, profits and cut-throat competition in the retail markets. 

External Analysis-PEST analysis: 

If a company wants to compete successfully in its respective industry, it must screen all the elements of this external environment. For carrying out external environmental screening, M & S can make use of PEST analysis tool. In this way, the company can come to know how changing political, economic, socio-cultural and technological elements exert pressure on it to adapt to them. It will also allow M & S to further refine its target market.
For instance, M & S by applying PEST analysis tool can easily screen the changes in labor laws of the UK and its impact on its strategies of development and cutting cost by having temporary store assistants at stores.
It also shows that the socio-cultural trends had resulted in drastic changes in customers’ preferences for clothing. They were becoming brand loyal, looking for quality-oriented products and choosing among new fashion trends rather than classics that once dominated M & S stores.
The retailing trends in the UK also presented cut-throat competition from both top and bottom ends of the retail. These retailers reduced the market share of M&A by offering similarly priced clothes with up-to-date fashion.
The technological environment of the UK was also drastically changing and it had resulted in more online purchasing trends throughout the UK and other western countries. Thus many retailers had started promoting their stores by online promotions.


Internal Analysis-SWOT Analysis


M & S must also first its internal faculties and flaws in order to come up with sound strategic options. The SWOT analysis may help M &S to critically assess its strengths and weaknesses amid the changing dynamics of the retailing environment of the UK.
From the case study it can be arrived at the M&S strong brand recognition, strong ties with supplier and high-quality clothing lines and other products provided the company a competitive edge in the early 1990s.

The SWOT analysis also reveals that the company’s autocratic management style characterized central command system, strict control over suppliers and inward-looking culture gradually resulted into the downturn of M &S in retail market. Moreover, its similar store layout and merchandising designs could not adapt to different market demographics.
The changing dynamics of the market offered the opportunities for the company such as increasing number of tourists and population, consumer started to prefer quality accompanied with reasonable pricing and they also preferred global fashion trends. Moreover, people were also becoming brand conscious.
The major threats for M & S started to emerge in the late 1990s due to changes in consumer preferences, proliferation of bottom as well as top end retailers in the retail market, new , up-dated fashion clothing lines in the retail market etc.

Assessment of Strategic Options:

From the above analysis and screening of internal and external organizational environment, M & S should aggressively as well as passively respond to changing socio-cultural environment. It can test and assess range of strategies such as market penetration, new market development, introducing new product lines or acquiring existing retail competitors. It can also think of following differentiation strategies accompanied with focused approach.
Refining target market: It should narrow down its target market to better respond to market needs and consumer preferences. As the women clothing line was its major product line, it should develop separate department dedicated to exploring opportunities in the women clothing market. It should also hire women sales assistants at various stores to provide convenience to women customers. This strategic option may allow the company to strategically focus on those products line which could increase the market share of the company and give it competitive edge amid the aggressive competition from both ends of the market.

It has also been found out that M & S fashion lines were not up to the market dynamics, hence there should be customer-oriented approach for introducing exclusive designer wears. However, it has been seen that new management under Luc Vandevelde leadership introduced exclusive clothes collections to offer latest fashion.

Market penetration: M & S should also adopt market penetration by making strategic changes in it inward-looking culture, adopting new branding techniques and making changes in the control structure of the organization. The analysis reveals that new leadership changed the inward looking culture by making external hiring and brining talented workforce. It also adopted new branding technique of placing St Michael logo to inside clothing. The new management also created new divisions and made the organization democratic and flatter. A new marketing department with customer-focused approach was also created to break down the power of the traditional buying fiefdoms established around product lines. It should also adopt new internet shopping trends as other competitors had already plunged in it so that it could harness the increasing online shoppers.

New market developments: the slashing or withdrawing from some markets may also give a competitive edge to M & S in the long run, because resources can be deployed on profitable segments of the market and exploring new opportunities in some new markets. However, M & S must adapt its new stores according to cultural and consumer tastes of the market so that its stores present local taste in layout, designing and merchandising.

This case highlights a clear manifestation of the need for awareness of the changing dynamics of external environment which offered opportunities as well as threat to the existing status-quo of M & S. It also serves as a lesson for M & S to come up with concrete strategic options to gradually leveling up with aggressive competitors. The proposed strategic options present an opportunity for the company to regain its market share, sustain its growth in the years ahead and compete more aggressively in the retail market of the UK.


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