This paper aims to provide an in-dept analysis of the company, Mark and Spencer on how the company survived through times of challenges it faces. The important strategies and issues used and effectively and implemented by the company will also be part of this paper. Lastly, this paper also provides discussion on related theory which was reflected in the actions and initiatives made by the company, like leadership, motivation and organizational structures.
Leadership, Motivation and Organizational Behavior
Most of the organizations nowadays are continuing to be aggressive in their approach on how to sustain their business. Most companies would prefer finding changes from the “inside” which may include organizational cultures, work environment, or even drastically changing the people. While others would prefer to look at the outside, like understanding more on the competition, product research and marketing trends, these are just some of the common initiatives that we can find for companies who would want to stay alive in the business. But, what is best and most recommended is to combine both in order to address all the issues that the company is facing. Understanding the inside most especially are in most cases the key to improve the outside. Because company must know for a fact that everything starts from the inside, like processing, manufacturing and service before it reach to customers, and addressing issues that goes along these major parts will be the first key to success in an organization.
Like in this paper, the company Mark and Spencer, has proven that having a detailed strategy for each product lines, which not only includes main “product lines” but also people, customers, international stores and even remuneration has its own strategy. This is also where the company gets its strength. Also to include are the company’s involvement to many organization and one of that is BITC (Business in the Community) where the company was one of the founding member and most active as well. The companies also are very active in finding ways and means on how they can be of help to the environment like in this paper it will also provide a discussion on its multi million project that will boost the companies’ popularity in terms of manufacturing efficiency. Currently, the company is being headed by its CEO, Stuart Rose, who has been a well recognized personality in the industry where Mark and Spencer belong. His unique vision on the industry has made Mark and Spencer one of the most sustainable and stable company in the world. His way of thinking about innovation and deep knowledge of satisfaction both in its people as well as their customers has made the company continue to re-invent and in return made big leap of progress as well as competitive.
Company Overview: Mark and Spencer
Mark and Spencer has been in the business for more than a century, originally founded by Michael Marks, who later partnered with Tom Spencer, with more than 120 years of heritage, Marks & Spencer is one of the best-known British retailers as well as in the US. The company has 520 stores located throughout the UK; this includes our largest store at Marble Arch, London. In addition, the Company has 240 stores worldwide, including over 219 franchise businesses, operating in 34 countries. The company has also employs almost a hundred thousand people around the globe. In recent years, the UK’s retailing industry has been characterized by intense competition. Customers are more aware of where and how they want to shop. They also know what sort of shopping experience they require. This has made it much more difficult for retailers to survive. The company stayed to be in the high class market, but started to widen its market mix by adapting new innovations and better pricing strategy where more people can enjoy its wide range of product offering. These only shows how the business also grows as it always react to changes in the needs of its valued customers and at the same time addressing the needs of its people, which is the main key of its continuous success.
Company SWOT Analysis
As the company known for its :high class” and “quality” products as well as its services to its dear customers, just like other companies, M;S also faces a lot of challenges, weaknesses and threats, which the company continuously welcome and do just whatever it can to counteract the situation.
For its strength, the company continues to show have big market share in the field of quality clothing and food, which it was already the main reason why the business is still progressing. Just like for food, during the year when the business suffers big financial problems in 2001. Food categories, has given the business a good lift and even help the other product lines to re-assert its market increase.
The beleaguered company has reported a big decline in its sales, which reportedly provides the following reported sales figures: (1) Clothing and footwear -9.1 , (2) Home products -1.5, (3) General merchandise -8.5, and (4) Food + 5.9.
This only shows that during that turmoil days of the company it still has something to cheer about and look into the future, in fact this was starting to be realized at the present where the company has prioritized of expanding its food business in almost all part of UK, where almost of their stores offered fresh foods. But the success of its food business in that time is when the company applies a more cost-effective buying of stocks and through this strategy, the company only provides only the freshest food for their very loyal customers. But the company has shows great strength in terms of maintaining its quality products. Meaning, no matter what happen the company will still not dive for products that might be offered less but quality will be affected and that is what the customer likes about the company. The company continues to fulfill this tradition of quality and class since it gives them leverage in the business they do. Its strength was driven also by the number of branches it has all over the UK, where it can easily be reach by anybody, because accessibility by them can easily make big impact in the business. Food shows its strength at M;S – Marks ; Spencer reports decline in sales except for food segment – Brief Article – Statistical Data Included, 2001.
In terms of weakness, in most cases the companies “conservative” view in the business are also shown to be a weakness for the company. But, with the changes that it is now employing for its continued success will make a big difference. Like in terms of re-designing the stores will be a big factor of concern by the company. Just like what happen in 2004 when the company almost faced buyout with one of the well known UK company as well, Philip Green and the bid was withdrawn and then they hire a new boss and he I, Stuart Rose, who changed the company mindset into a more adapting to radical change type of company and eliminating the “conservative” point of view, which is now brings in the business for new heights and progress. But, there is a still modernization project that needs to be done for other stores, in order to attract more customers and for it to be seen not anymore for customers for adults but also for “yuppies” or even the kids, since it is still the weakness of the company which is to attract bigger market.
On the other hand, for its opportunities, the company may look at the many opportunities it can focus on. Firstly, is to strengthen its food business, where it was well known and continue to give them good profits, as well as producing new and innovative services for its customers, most especially nowadays where the needs to information technology and high tech communication is one of the main key for any success in the business. Another opportunity that needs to be focus on is to continue to develop good design for their customers, which must not only look for class, but also some other alternative style, which may increase the market share, but still provide the unique and distinct M;S style. Lastly, the company must strengthen its operation in other countries, by focusing it through in-dept studies and marketing research, it could help the company to progress more and even be well known and be appreciated by more customers around the world.
Lastly, for its threat, it only shows that many companies just like Mark and Spencer, that competition is still the main threat in all business; this must be addressed by continuing to produced quality products and excellent service for their customers. Another threat is maintaining its people; there are always a concern in maintaining people in the operation, most especially the experts and main people in the company. Because these people are not only provide sustainable progress in the company but also helps for future direction as well. Just like in the process of succession planning.
Companies nowadays continuous to faced bigger challenges, whether it pertains to their customers, employees, inflation, security, or meeting the next quarter target earning of the company. Preparation is very important these days, and that is also why succession planning is vital for the continuous success of the company. The main purpose of this plan is to prepare companies in advance, that when time comes the employee leaves the company there should be a person who can confidently perform the task. This is essential for most middle and high level position of the company, where strategies and technical processes are performed, like CEO of the company. But, it was revealed that based from the 1380 HR Director Respondents of top companies in the US, 60% admitted that they didn’t have a CEO succession plan. It was also stated that for the last two decades companies usually focus more on financial targets while allocating effort in finding future leaders inside the company is not being given much of a priority, even though it was clear that CEO’s are the ones who directs and provides strategies based on the company’s business objectives. It was also found out that most companies do not give this much attention since hiring a new qualifies CEO outside is easy even though there was strong evidence that well groomed insiders are the key to sustain company performance. Whether is it hiring a new CEO from the outside or preparing potentials inside, these can only be decided by not only on the focus on quantitative findings but more importantly qualitative study. Succession plan is not just an event it is more of a process. It means that when the Chairman does introduce a new CEO of the company with cocktail part is not the most important thing; instead the focus is how the company provide effective processes in doing succession planning. Like, knowing the strength and weaknesses for both potential internal leaders and qualified external leaders is necessary in order to give the management better decision. It is relevantly true that most internal leaders knows the company well and can easily work effectively with the people and with the number of years they stayed in the company, it is safe to say that they also know almost the entire operation and processes of the company, but one of their common drawbacks is that they lack outside vision, unlike for outside leaders, they are more visionary and they can easily adopt to radical change, most especially if this change can drive progress in the company. But since change is not so popular to most companies, this is also the difficulty faced by external leaders. Having to combine the different qualities of these two types of leaders, we can easily say that what the company needs is a good inside-outsider leader.
Stuart Rose is a perfect example, being in the same business and performing the same position as CEO from his previous company has made him very capable in handling issues for Mark and Spencer and he showed all the success in the way he manage. That is why it is important that this concept of getting inside-outsider leader is important for the success and should not anymore be a threat but instead an opportunity for companies to work into.
Company’s Core Strategies
Clothing and Home Product
The following are the main factors in considering the company’s clothing and home product strategy. (1) Innovation, (2) Performance, (3) Value, (4) Choice, (5) Outlook. For Innovation the company always finds a way to produced new good and stylish design for their clothing and home products. The company’s technologist’s team always makes sure that they produced not only well design products but also practically it will benefit more to their customers. Like in the case of producing products that adapts to climate change as well as economic change. Next is performance, most if its product most especially those targeted to women market has produced better appreciation, performance that brought out by quality products and durable as well, since the product are developed to last longer than its competitors. Then, it has also produced value for money, value not only in terms of cost but also in terms of service, which is standard to all its branches. Then, Choice and outlook, the company has continuously focus also its strategy in creating a wide variety of products to choose from shoes, to clothing to house products, and continuously the company do some research on other products that will also be important for the customers. Lastly, outlook, the class looking will tell it all on the product produced by the company, it also reflects to quality.
The following are the main strategies applied for food business in mark and Spencer, (1) New trends in eating, the company adapts to the growing changes in the food habit of people around the world, most especially nowadays people tend to eat out and dining in a formal restaurant are not anymore a choice or preferred by people. In the company, usually the design is simple and customers just orders what they like directly from the counter, (2) Fresh, Natural and healthy, since the world is starting to be health conscious, the company also look into providing only the healthiest, fresh food for their customers, and these strategy was brought out by keeping a well selection of foods, which only focus more on health benefits. This strategy also made possible by having partners or suppliers that are also focusing to better quality of food. (3) Authenticity and provenance, by providing new and exciting dishes, from time to time has also made the business well followed by many, because customers would always find best products to choose from in their way to the store and will always excite them even in asking what is in the menu, unlike in other usual food stop, they offer the same everyday, which drives customers. (4) Indulgence and Celebration, by producing something for the customer to satisfy is also part of the company’s strategy, like in the case of some products it was created and prepared for the appeal and appreciation of their loyal customers that it is only them that can appreciate. (5) Food hospitality, where it focuses on how customers be satisfied by the service the company provides, this is one of the main feature that keeps our business growing in our food business. Lastly, (6) Trust, we built trust to all our partners, including our people, and most especially in our customers. This has made the company grow in such a way that we build the business through a judge effort of employing trust in everything we do. The company will make sure that we provide only the healthiest and freshest food in all of our customers and that does not mean that 0% fat is just a label, but it will always be true in some of the products and customers can trust on that.
Store Design and Environment
Modernization is the main program applied for the stores of Mark and Spencer, since there are other stores that lacks modern design looks, which will definitely helps increase customer visits in the company’s store. Recently, the company has announced that it will improve the average space of the store from 13.2 million sq. ft, by 15 to 20% in the next five years. The main drive of this change to improved space management in its store was brought out by the following priorities:
· Enhancing its city center stores, mainly though expansion and redevelopment
· Finding more out of town stores of around 100,000 square feet
· Opening more stores of between 40,000 to 60,000 sq. feet
· Examining the performance of each high street stores if they are really on the right size and in the right place.
· Doubling the number of simply food stores to more than 400.
This strategy of enhancing and current stores that the company has established will surely help increase the company’s profit. This direction was driven for its main objective of serving its customers better and to provide more conducive buying experience in all its stores. And the companies are all ready to allocate money just to make sure all of this modernization projects.
Service (Customer and People)
Another key of the company’s success was not only the strategy they bring in to their products. But strategies that will focus for the effectiveness of work done by their people as well as focusing on how they can serve better for their customers, are just some of the strategies that their CEO, Stuart Rose has implemented and performed well for the success of its business. With its main core customers, age 45 and above, with the radical change that the company is heading and with the attraction to more and more customers from all age bracket, the company has to focus on it in order to have a good lift in the market share as well as giving higher improvement in sales and profit report for the company.
The company has provided significant numbers of training for its people in order to achieve this goal, which focuses not only on the skill but also customer service. The training program that serves 60,000 stores worldwide, which was ended just last June, will be expected to improved and be applied in all stores in the world. With the better service and appreciation by the customers, it will definitely help. The company also has developed “coaches” that will be there to assist middle managers and even staffs in dealing with the issues they faced in the stores.
In order to make this training work efficiently in stores the company has launched “mystery shopping” program, which focuses on quality of service. This program has help the stores and the company as a whole, because it becomes a constant reminder and process on how the staffs performs their duty, like in the way they ask customers, how to rely better and even how to convinced them on coming back to the stores and the way they have to see their genuine values was also part of the program. Another aim of the company is also productivity, with the program of “mystery shopping” it was easily achieve in the stores. (See Figure 1 and 2).
The aggressive strategy by its CEO Mr. Rose, has started also penetrate market by opening new stores in new territories, like recently it has opened 36 new stores and will continue to increase in order to get greater market share. This was also driven by the competition and also changing the image of the company of being “conservative” and just focusing on the location where it was known. The company will continue to have this international strategy by opening new stores in Asia and in the Middle East and most of these are run through franchise agreement. (See Figure 3).
Company’s Strategy Issues
Security is still one of the main issues that come along in all of the company’s strategy. Mark and Spencer’s store has been very attractive not only for its customers but also for some people who might be doing some irregular things in the stores, like stealing items. The store is starting to increase its usage of cameras in all the major areas of the stores. This will also help not only for the company but also will give better convenience for their loyal customers since they will consider that the store are well secured by these cameras and other security systems that are installed.
Employee Retention Issues
Change management is not only a problem for M&S but also a global problem as well. The company also recognize that in order for the company to be in the business and stay progressively, they need to retain valuable people that will not only give them the present boost to their operation and profitability but also will follow them in the future of the business. In the US and it might also be common to all industries most especially multi-national companies that retaining a good and highly skilled staff is hard nowadays. Since the growing competition and the usual issue if pirating good stuff from one company to another, which is sometimes, would not even take even days and then the staff, just transfer again to another company is becoming a perennial problem. In the US each day a good staff quits their employers for better job elsewhere, whether it may be better package which is very common or finding better working environment which may cause by too much pressure and demand. Approximately 200 billion USD is spending annually by the business in recruiting and replacing their employees. And this is not a good sign for the business since it incurs cost as well as organizational process dilemma which can affect performance.
There are seven well applied practice or key factors applied by some of the well known consultancy firm that are being hired to assist companies face problem with retention of employees. First, is Better matching, this is a process on how to find better potentials within the company who maybe best to perform a specific job in the organization. It may also include preparation and training for the staff. Second, is Better Managers, here it will not only teach how managers developed or build teams but also becoming a more personalized type of manager whose main duty is to carefully addressed the issues of the staff for him to perform quality results for the company, typical mentoring and coaching are done. Better integration, at this point, it is more on how to effectively collaborate new staff with existing ones, since there are issues that comes when these types of staff work together. For Better Connection, this is teaching how employees conduct themselves effectively through better relationship from his co-staffs as well as his supervisor or manager. Better Culture, on the other hand is preparing employee in facing multicultural type of customers, how they can be appreciated and can work effectively without experiencing dissatisfaction from their customers or colleagues from other nationalities, which are very common to multi-national companies. Lastly, is Better Accountability for Turnover, this is to teach or guide HR professionals in establishing technically sound approach and best practices in understanding the need of staffs in order to eliminate issues of retaining employees as well as other concerns. (High-Turnover to High-Retention, n.d.).
This was very evident to M&S where the company always looks into the welfare of its people; one of the significant actions made by the company is providing its people better remuneration, from managers down to their staff. In fact the company has even created its own Remuneration Committee to handle it’s effectively. The main duty of the committee are the following: (1) to recommend to the board, the senior remuneration strategy and framework, in order to give due regard to the financial standing of the company, (2) also to determine the individual remuneration package within that framework, (3) to approved the design of annual and long-term incentive arrangement and agree the targets and levels of award, (4) to determine and agree the general terms and condition of service contract for senior management and the specific terms for an individual either on recruitment or termination, (5) to determine the policy for and scope of senior management pension agreements. The program improves the performance level of the staff, most especially the senior management team. It also provide a good leverage for the financial growth of the company which only shows that if the company has given much attention to its workforce, it follows that the financial status will also improved. And this is what happens to Mark and Spencer. (See Figure 4 to 5).
Company’s Conflicting Strategies
Another issue that is continued to be managed by the company is to have a strategy that would not conflict or confused its marketing public. This focuses on eliminating the two conflicting strategies for the company’s food business as well as its clothing. The company is mainly separating the way they target the market, different committees and groups are managing, this is in order to eliminate the problem of conflict. It also provides a clear vision and focus for the company.
As based from the previous discussion, the continuing challenge for the company mainly focuses on the following; first, continuing to modernize its operation, most especially the design of its stores, this is in order to attract more number of customers in the stores. Secondly, continue to improved its quality of service to its customers as well as service for its own people, by providing better and well studies ways on how to better serve the customers which was already started by the company through implementation of training and coaching process, it will help staffs and managers in performing better for the company, as well as finding ways on how to satisfy the needs of its people, this can either be giving rewards and recognition which is very important for employee retention in the company.
Most companies have already included employee retention rates as one of the KPI’s for company performance and evaluation. This is because that it provides a measurement as to how management performs their duty in addressing the issue of the staff and not just the customers. Approximately 83% of the HR professionals in the US has mentioned that retention rates of employees are becoming one of the biggest problem they have faced and it was even become convincing when another studies have conducted and this time, includes global companies, and the result was higher, 95% expressed similar concerns. But for a company, who performs well in addressing the issue of retention, outperforms the industry average by 22%. It even creates a good ROI for the business, like one client $32 Million to their bottom line after improving retention by up to 67%. After the U.S. Air Force retention rate for recruiters shot up to 92%, they saved $2.7 million. And when a company improves retention rating, it also improves customer satisfaction. Since the companies have addressed issue of staff, in return the staff may be performing well as well in their customers, which is a good sign for the business. And The Bureau of Labor Statistics has forecasted a shortage of 10,033,000 workers by 2010. (Employee retention Statistics, n.d.).
US Latest Bureau of Labor Statistics Employment Turnover Rates
The following are some significant statistics in the US labor market (See Fig 1-4).
Figure 1 Figure 2
Figure 3 Figure 4
And lastly is providing big focus on its involvement in environmentally sound programs, like what it is planning on Radical Change Through a Five year Environmental Plan, which the accompany will allocate big amount of money. It is a 100-point plan includes transforming the 460-strong chain into a carbon neutral operation; banning group waste from landfill dumps; using unsold out-of-date food as a source of recyclable energy and making polyester clothing from recycled plastic bottles. (Bowers, S, 2007).
Mark and Spencer as part of the BITC
BITC or Business in the Community was one of the most influential business groups in the UK, which has more than 800 hundred members and Mark and Spencer was one of its founding member. The organization actually focus on the networks, knowledge and experience of our members by providing effective and prestigious platforms, awards and endorsements to communicate their companies commitment to responsible business which inspires others to do likewise as well as challenge all members by providing effective and prestigious platforms, awards and endorsements to communicate their companies commitment to responsible business which inspires others to do likewise. This was a good way of really looking at how the companies should work effectively with the concern of its environment and its customers.
BITC Leadership Teams
The organization consists of the following leadership teams which only objective is to perform relevant studies and monitoring in their respective teams. It includes: (1) Business Action and Health teams, (2) Business Action and Homelessness leadership Team, (3) Cares Leadership Team, (4) cause Related Business Team, (5) Education leadership Team, (6) Environment Leadership Team, (7) Marketplace Taskforce team, (8) National ProHelp Leadership Team, and (9) Rural Action Leadership Team. Each of these teams have their own developed projects that is being steered up by the governing committees, in order to really see that real values and effectiveness of the p[project before it will be implemented.
Each of the leadership teams also provides a good direction to all its members, by6 providing better advice as to how the company issues can be addressed properly. In short, it provides coaching and mentoring as well, since a person who leads each leadership teams are those who are well known and respected expert in their field.
In this paper it was clear that like other company like Mark and Spencer can definitely turn things into a positive and progressive result to a company. Just needs to have the right vision and skills will be enough to achieve it. It also shows that leaders are not just being appointed but also person who earns the right to be in the position like in the case of M&S’s CEO Stuart Rose, where he was a good example of an inside-outside leader, which means he was well skilled in the business, which reflected on the number of years he works as CEO in the same kind of business as well as the “god gifted” outside vision which helps the company more in reaching its present progress, like turning the more “conservative” view of the business into a more modernize business and being aggressive in doing it. Also, the way he look at the concern and welfare of the people in the company by giving them better training and remuneration and most especially looking on how the company serve its customers. All of this and a lot more to its strategy has helped the company to grow and even expected to grow more in the years to come.
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