In this assignment I will be explaining and exploring the effects of the environment on M&S. Marks & Spencer (M&S) is one of the UK's leading retailers with over 21 million customers visiting our stores every week. We sell high quality, great value clothing and home products and outstanding quality food. We source our products responsibly from 2,000 suppliers around the world. Over 76,000 people work for M&S both in the UK and in 41 territories overseas, where we have a growing international business.
How the external environment affects M&S
• Reduction in sourcing costs due to the free trade policy.
• Brexit to have significant implications for businesses
• Changing government and taxation policy
The government sets regulations for companies to abide by such as Health & Safety British Standards such as, planning for hazard identification, risk assessment and risk control. If companies do not abide by these regulations they will be fined or even in some cases be forced to close down. Marks & Spencer did not abide by the British Standards as they were charged for neglecting health & safety regulations after a door fell on an employee. George Blair was allegedly injured after a warehouse door in their store at Braehead, near Glasgow was left hanging on loose fixtures. Marks & Spencer are alleged to have ignored repair requests, allowing the door to fall into disrepair. Marks & Spencer pled not guilty to this; there is still no outcome of this trial.
Also according to “BBC News 30th January 2006” Marks & Spencer would be the first major retailer to go down the Fair-trade route on both clothing and food. The fair-trade policy, which they have launched will include, cut salt and fat in M&S foods, recycled packaging and animal welfare protection. Marks & Spencer Chief Stuart Rose stated, “Customers want good value, but they care more than ever how food and clothing products are made”.
• Conflict with small retailers over product price rise due to the currency impact of Brexit.
Currently the economic outlook is very uncertain and this is more than likely to affect retail sales, as people do not have the spare cash to spend on luxury items such as clothing and food luxuries. Marks & Spencer have been hit by this and have recently closed a number of stores and have had to make job cuts of 2% of their 70,000 staff. And also to show what affect the recession has had, they took the decision to have two days of 20% discounts in the run-up to Christmas. They have also recently introduced a 20% of all Wine and Champagne to keep up with their competitors. Marks & Spencer have had to change the way they market themselves so that they can try and stay ahead of the recession.
• Initiatives supporting the surrounding communities helping to cut down internal costs.
• Chain of product recalls creates negative social trend.
• Received flak as non-trendy shop.
• Technology partnership to strengthen security, risk and compliance.
For Marks & Spencer to continuously communicate to consumers they need to be heavily into advertising, which they are. They have Celebrity icon Myleen Class as the Face of Marks & Spencer who appears on the adverts on the TV and she is also on their website modelling the M&S clothing, also other M&S girls include Twiggy, Erin O'Connor and Noemie Lenoir too, so their adverts appeal to women not only in their 20's but also to the more mature lady so they are covering all areas with their advertising campaign. Also their website is very appealing with bright colours and very easy to use, it is also constantly updated with the new M&S brands.
• Financial dispute with Frascati Landlord.
Marks and Spencer carry out re-training & update every year, they keep up to date with new laws or legislations, and with issues regarding Health & Safety they also ensure that their legal protection is updated. For re-training Marks & Spencer invite business changes to the business, tax changes to the business & products changes amongst many other things. Marks & Spencer invite objectives/methods that need to be changed and new training, and also ongoing development.
Here is an example from Marks & Spencer's website to show that they are adhere to this legislation,
“Packaging helps to protect the product between being produced and used by the customer. It prevents product wastage, carries important instructions and information on ingredients and helps the product look its best in the store”.
• Sourcing of fresh milk from RSPCA assured dairy farms.
• Environmental friendly and sustainable products.
Marks & Spencer have established their own Green Policy which they call “Plan A” The chief executive of Marks & Spencer states that it is called this because there is no “Plan B”. Marks & Spencer has today announced a 100-point five-year plan to re-engineer itself to become a carbon neutral, zero-waste-to-landfill, ethical-trading, sustainable-sourcing, health-promoting business.
After mid 1990s M&S began to experience internal problems such as information flow breakdown and together with the fact that top management was concerned with international expansion M&S was drifted away from its core values such as consumer care and customer satisfaction. M&S failed to recognise that consumers were becoming wiser and its competitions much stronger. Most of consumers consider M&S to be old fashioned company, this image has to be changed to be in line with the market demand and regain its lost customers to other competitors. Based on the analyses, the author feels that M&S requires to be reorganized in various departments especially in Sales & Marketing and HRM departments.
M&S SWOT analysis
Marks and Spencer has many strengths but this research focuses mainly on the brand value of the organisation and wide range of products and different outlets which help to grow the business and the range it delivered to the public.
High recognition of the brand: Marks and Spencer's is the giant of the UK's high street is known by everyone in the market for the quality it is providing in the past years. The brand value is high as the customers who go to the high street prefer to go to Marks and Spencer's as they can finish the whole shopping in a go.
Wide variety of products: Marks and Spencer's had a variety of products in every store which helps the customers to choose the best, for example if we take vegetables , Marks and Spencer's began to sell the vegetables and fruits over 40 years ago, they started selling fruits and vegetables such as Canary tomatoes , avocados and English apples , carrots . and Marks and Spencer's always relied on the farmers with good relationship from where they are able to increase the variety of products. Back in 1970's Marks and Spencer's persuaded small growers of strawberries to drive their crop straight to local marks and Spencer's stores. To find the perfect taste of the customers Marks and Spencer's spend more than three years on testing and tasting the strawberries before launching marks and Spencer's jubilee Strawberry in summer 2003. At the moment Marks and Spencer's has more than 1200 suppliers with over 400 different varieties, as well as 500 different types of pre prepared fruits, vegetables and salads.( Marks and Spencer 2010) Where the other super markets fail to produce wide variety of products , which indirectly helps Marks and Spencer's .
Large number of stores and outlets: Marks and Spencer the giant in the UK's high street history has about 900 stores all over the world with 600 stores in the UK's and above 300 in over 40 countries (Marks and Spencer, 2010). The numbers clearly say that large number of stores and outlets make the business wider and the sales even increase due to the wide range of products that Marks and Spencer has. If the stores and outlets increases the strength of Marks and Spencer goes high day by day, as it can be available to all the commodities of the people for reasonable cost and good quality.
Popular designer brands: Marks and Spencer has wide range of brands which really help the organisation. For example men's wear has wide range of brands such as “autograph, Big&tall, Blue harbour, Collezione, North coast etc” (Marks and Spencer, 2010). Coming to women brands Marks and Spencer has different brands such as “Autograph, Classic, Indigo collection, Limited collection, Per Una, Portfolio, etc” (Marks and Spencer 2010). Due to the wide range of brands the business of the organisation goes strength by strength.
Bad publicity as non-trendy store: Marks and Spencer has a draw back in the market as the organisation is out fashioned and non-trendy. Even though Marks and Spencer has wide range of products and different brands the general people has a wrong assumption that men's wear and women's wear are only for the aged people not for the teenagers and young people. These wrong assumptions are making the business low. The management should develop new strategies to focus on the sales for the young people. Even the management failed in the past years to attract the new customers, the people who had trust on Marks and Spencer from the past years still shop but the new generations are not at all interested. Some people say that Marks and Spencer is a shop for sixties and seventies but not for twenties and thirties. To overcome this management of Marks and Spencer's need to come with a new strategy to attract all the age limits not losing its reputation with the present followers and they even need to develop a strategy to overcome from the bad publicity and to give great competition to its competitors such as Primark, Next, River island, oasis, Oxygen, New look, H&M etc.
Manual working increases the costs: Marks and Spencer's had a backdrop of following old techniques rather than following the new techniques which increase the different aspects such as money, time etc.
Marks and Spencer has its own stores in Canada, France, Belgium, Germany, Hong-Kong, Ireland, Spain and Netherlands. Marks and Spencer have the Franchise agreement with developing countries such as Bermuda, Canary Islands, The Bahamas, The Czech republic and Israel (De Naridi Cole, 1998) the company started franchising in the countries that have smaller per capita income. Marks and Spencer started growing in south Asia from 2000. Marks and Spencer had a franchise deal with a company called planet sport. According to the market basis it started the clothing and bath items only, the franchise owner VP.Sharma said to BBC that most of the goods in India are imported from Europe so the brand name of Marks and Spencer would help the business to grow rapidly. It is a good idea to increase the Franchise as Marks and Spencer has a good reputation all over the world and it origins from the land of costly brands. By taking Planet Sport as example Marks and Spencer's has the chance of growing globally as it is recognised globally, The management need to take necessary steps to increase globally keeping in mind all the factors . A specific strategy need to be implemented by the management for the raise in the branches all over the world which will be a good sign for the organisation.
Market segmentation: Market Segmentation is defined as the process of splitting customers in a market into different groups within which customers share similar level of interests in the same or comparable set of needs satisfied by a distinct marketing proposition. Marks and Spencer has the opportunity to increase the technique of market segmentation by increasing its branches all over the places which will increase the business, in general marks and Spencer mainly have the mega stores all over the places but they dint concentrate on splitting the customers according to the area of interest. Sainsbury on other hand divided the customers by opening new stores called Sainsbury Local's which increased the business. In the same way Marks and Spencer has the opportunity by dividing the customers by establishing small shops which will reduce the maintenance cost and increase the profits as the manual power will gradually decrease when compared to mega stores and even the investment on the publicity will be less, keeping in mind all the features it has the opportunity of spreading the business by market segmentation.
Increased competition in all areas of business: Marks and Spencer has the threat of losing its scope in the business due to the competition, the increased competition in the retailer sector is a big worry as the other retail competitors such as Asda, Sainsbury and Tesco are expanding themselves such as Sainsbury's local and Tesco Express whereas Marks and Spencer is still relaying on the mega stores, if the same thing goes on there is a risk of losing its reputation among the customers so it is recommended to increase the stores where they can increase the profits so the Management need to come with a new scenario to develop the risk management by increasing the stores. Marks and Spencer need to come with a strategy to overcome all the obstacles.
How has M&S responded to past changes in the market?
Steve Rowe who has been working at M&S for many years has made some pretty dramtic changes over those years to try and improve the business.
M&s have confirmed it has plans to close underperforming clothing departments and putting the brakes on expansion of its Simply Food chain. They have also embarked on a five-year turnaround plan underpinned by a major cost-cutting drive to shave £340m, or 10%, from its £3.4bn UK running costs. One of M&S's biggest costs is its large store network.
The update came as M&S reported underlying pre-tax profits down 5% at £219.1m for the six months to 30 September. Like-for-like food sales were down 0.1%, with profits margins squeezed by input inflation as the weakness of sterling pushed up sourcing costs. Underlying clothing sales were also flat, which was a better outcome than many analysts had predicted. The shares closed up more than 1% at 333.1p.
In recent years M&S has focused on the expansion of its upmarket food halls as its clothing arm struggled. But Rowe said it now faced “stronger headwinds” in food and needed to sharpen its prices and improve the product ranges to keep pace with rivals. It had previously announced plans for 200 new Simply Food stores by 2019, but the rate of openings will now be slowed down.
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