m&s answers

8/6/2019 M&S ANSWERs

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Q: What are the reasons for M&S success in retail sector?

A useful way of running the class here is to ask for contributory explanations as to the reasons for

success of Marks & Spencer. These are l ikely to vary quite a lot in terms of both the time period being

talked about, and also the characteristics of the organization that led to success. For example:

In the early days price clearly played a part

As did consistency of quality and service

As did the caliber of staff recruited and their training.

Certainly the last two characteristics were carried forward throughout the century: but others came to

be important too. For example:

The consistency of quality of merchandise insisted upon by top management, closely monitored in

suppliers

Direction from the head office for identical store operations, for example in items of layout,

merchandising and training of staff, which further ensured consistency

The prime location of stores The middle of the road appeal of the shops and merchandise

The no questions asked returns policy, which was a guarantee to customers of quality acceptable to

them

The strongly embedded sense of family, which permeated throughout the entire organization; this

meant that for much of the century employees felt care for and, in turn, adopted the same feelings to

the organization

The successful development of new product ranges (e.g. food) with a similar emphasis on

quality/value.

The important point to get students to understand is that all of these may well be relevant: that the

reasons for the success are not based on single characteristics, but rather on the mix of characteristics

and how they fit together.



Bases of competitive advantage:

Why did Marks & Spencer achieve the advantage it enjoyed over so many decades?

It is not any one characteristic but a mix of characteristics that, as a set of linkages, would be very

difficult to imitate. Any one of the characteristics may be possible to imitate, but the mix would not.

Marks & Spencer had identified a market that had the benefits of being large, middle of the road withweak competitors in it. Most of the niche retailers concentrated on younger market segments or more

fashion-conscious market segments. There remained a large percentage of the population who looked

for more conservative clothing, and durable merchandise and consistency.

It was the quintessential British store, and had been like this since its establishment.

The price of its products was always reasonable, and the quality was always assured to be high.

Furthermore, traditionally it used only a few dedicated British suppliers, and was proud to do so.

Q: What were the reasons for the crisis it faced?

Strategic drift and the problems of the 1990s

Strategic drift:

Recall the Icarus Paradox namely that an organizations success is often the root of its demise. Over the years Marks & Spencer developed a whole culture around the way it did things and

how it built upon its competences. This was a tremendous strength for it and led to its success.

However, it also led to an entrenched and embedded way of doing things, together with a

degree of certainty even arrogance in so doing, which was extremely difficult to change. It

appears that no one saw the need for any change; indeed the strategy of the organization was,in effect, a function of the certainty of ways of doing things. For the most part and for many

years this worked. However, there were early signs of it not doing so. The manifestations came

in the late 1990s, but decline in performance lagged. By the early 1990s commentators were

critical of the arrogant attitude of Marks & Spencer towards customers. Other retailers had

moved to credit card facilities; Marks & Spencer had not. Marks & Spencer did not introduce

changing facilities for customers until the mid 1990s. Research had shown that people were

tolerant of inefficiencies in Marks & Spencer, such as lines being out of stock, when they would

not be in other retailer.

P ractice of family culture:

Moreover it had become clear that the culture was not only driving the strategy, but also

driving the appointment of senior personnel in the firm. Up to and including Greenbury, there

had never been a chief executive of Marks & Spencer who had not been a member of the

family, or who had worked with the firm for the whole of his career. These strategic leaders

came to embody the Marks & Spencer way of doing things; so it was hardly surprising that they

could see few other ways of doing things, or the threats of competition that were looming.



Bureaucracy and employee orientation:

The internal workings of Marks & Spencer had also become highly deferential, male oriented,

with layers of management and considerable bureaucracy. These were all symptoms of an

organization removing itself from immediate contact with customer need.

Threat of substitutes:

In addition the market was changing. Increasingly customers valued higher levels of service, and

were seeking novelty and difference. Paradoxically Marks & Spencer might have understood

this had its considered its food range, since it was a leader in providing novelty in prepared

food. However, the core clothing ranges remained determinedly middle of the road. At the

same time other retailers were beginning to target the traditional Marks & Spencer market, but

with more focused fashion ranges. On top of this, lower-priced clothing retailers began to

improve their quality. So Marks & Spencer found itself in a pincer movement, where traditional

low-priced retailers and higher priced retailers were entering its markets.

It is, perhaps, important to note that many of these changes took place over many years.

This was not a sudden occurrence. Most retail observers would agree that the changes were

evident from the late 1980s onwards. The point that can be emphasized again is the extent to

which there is a lag effect in terms of performance.

The underlying problems of M&S in the early 2000s:

There were a number of underlying problems in M&S throughout the early 2000s.

These can broadly be separated into two areas, culture and core products.

Culture:

Even though Vandevelde, and then Holmes, had wanted to update M&Ss culture, many of the old

beliefs and values that had been instilled for decades were still believed and pervaded the organization.

There had been some changes, for example the removal of the St Michael symbol. In addition because

of the poor financial performance there was less of a feeling that we are the best. In spite of this,

though, much of the old culture remained, for example M&S still wanted to be synonymous with high

quality, and to have respect from customers. There also remained many of the old elements of tradition

and formality, much of which was felt would not alter until M&S moved into its new headquarters.

There continued to remain a feeling that employees knew their place and role. The structure, which had

been subject to much reorganization over the years, was felt to be too complicated, with too many

members. This resulted in problems with lengthy and convoluted decision making.

At this point a further re-webbing exercise might be useful to identify what the cultural web would need

to be like to address the problems which remain at M&S.



The Core of M&S:

Throughout the early 2000s Vandevelde attempted a number of different strategies to improve the

flagging performance of its core ranges: food and clothing. Both ranges had been performing poorly and

for the most part underperforming the market. To attempt to stem these problems new innovative food

solutions were created to improve the food range, and collaborations with Desmond and Sons and

George Davies were undertaken in the clothing range. After these measures were put in place there was

an immediate increase in profits and share price.

Q: How successfully was the turnover strategy implemented?

The change initiatives

The case shows the almost frenetic activity in trying to manage change and turn around the organization

since the departure of Richard Greenbury. It might be useful to encourage the students to use the

diagnostic approach suggested at the beginning of chapter 10 as a basis by which to evaluate these

initiatives. Specifically they might be asked to:

Use the cultural web as a basis for identifying the main features of the culture of Marks & Spencer.

Perhaps do a re-webbing analysis similar to that in illustration 10.2 to identify required change and

draw up a force field analysis.

Use the checklist in section 10.2.2 and exhibit 10.3 to consider the contextual features of Marks &

Spencer which might inform required change.

Marks & Spencer culture

The characteristics of the Marks & Spencer culture identified through a cultural web exercise might

include:

P aradigm: we are the best; we set the standards; we know best; we occupy the middle ground; we aresynonymous with high quality; people respect us and will always shop here

P ower : very top-heavy with deference to top management; male dominated

Organization: mechanistic, bureaucratic; top-down; hierarchical

Control : top-down control in detail both of the stores and of suppliers; insistence on conformity

Rituals and routines: deference; knowing your place; store layout; family atmosphere

Stories: history and legacy; Simon Marks; power over suppliers; authoritarian behavior of top

management; staff welfare benefits

Symbols: the St Michael brand; Simon Marks and CEOs as father figures; identical store appearance

The picture that emerges is one of tradition, formality, set ways of doing things and huge self-confidence

bordering on arrogance. It is an internalized system where everyone knows their place and their role. Intimes of success it would ensure the continued delivery of that success. In terms of threat or downturn it

would be very difficult to change and would insulate the firm from seeing the problems.

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