Marks and Spencer Case Study

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CS1208

The Association of Business Executives Advanced Diploma

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INTERNATIONAL BUSINESS CASE STUDY

Marks & Spencer plc
afternoon 2 December 2008

This is an open-book examination and you may consult any previously prepared written material or texts during the examination. Only answers that are written during the examination in the answerbook supplied by the examination centre will be marked.

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© ABE 2008

D/500/3717

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Notes:


As in real life, anomalies may be found in this Case Study. Please simply state your assumptions where necessary when answering questions. The ABE is not in a position to answer queries on Case data. Candidates are tested on their overall understanding of the Case and its key issues, not on minor details. There are no catch questions or hidden agendas. After the publication of the Case Study subsequent developments may occur. The examination is based on the published Case Study and students who do not mention such developments will not be penalised. However, students may consider such developments in their answers if they wish.



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Marks & Spencer plc
Marks & Spencer is a long-established UK-based retail chain selling men’s and women’s clothing and high quality fresh food and ready made meals. In 2007 Marks & Spencer (M&S) was the UK’s largest clothing retailer with a market share of 11.1%. Food sales accounted for 49.8% of its UK business and had a market share of 4.3%. The group’s international business accounted for 7.1% of turnover and had grown to 219 franchise stores in 34 territories worldwide as well as 8 wholly-owned stores in Hong Kong and 13 in the Republic of Ireland. During 2007, the company entered four new territories and opened 36 new stores including the group’s largest ever franchise store in Dubai at 52,000 sq ft. and also opened its first store in Taiwan under a joint venture with President Chain Store Corporation. In early January 2008 nearly £1.6 billion was wiped off the value of M&S as the retailer reported its worst Christmas for three years and its share price dropped by 19% to 409p. The group dashed hopes that the company might have survived the consumer spending slowdown and it warned that trading might not improve until spring 2009. The reaction sparked a collapse across the stock market’s retail sector, with the FTSE 350 general retailers’ index suffering what was thought to be its biggest one-day loss since 1987. Other high street retailers also were badly affected: Debenhams tumbled 11%, Kingfisher 8.6% and Home Retail Group, owner of Argos, 6% (The Times, 10 January, 2008). M&S Mission, Objectives and Strategy Chief Executive, Sir Stuart Rose, stated in the Company Report for 2007: “Everything we do has one key goal: building a sustainable business for the long-term, generating shareholder value through consistent, profitable growth while making sure that our customers can always trust us to do the right thing. We will do this by continuing to focus on Product, Service and Environment: offering great products, in great looking stores with great customer service.” The group pursued these aims by a continued focus on Product, Service and Environment: offering “great products, in great looking stores with great customer service.” In addition, it pursued new routes to growth through the acquisition of new space; new food formats; new product areas such as home technology; a new website and international expansion. The group also continued to manage the impact on society and the environment with great care, through an ‘eco plan’. M&S sold clearly defined clothing brands, home furnishings, food through its own stores and food products through franchise stores in petrol forecourts, motorway service stations, railway stations and airports. The group’s international business...
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