(a)MARKS AND SPENCER’s SUCCESS
This question is answered in relation to the success achieved before the downturn in performance in the late 1990’s.
•The strategic intent was to have a simple pricing policy and the use of the ST MICHAEL LOGO as a sign of quality. •Had structured formula for all its stores whereby a set of principles were held as core to the organisation •The value chain was well managed suppliers been local and control could be exercised over suppliers and the manner in which the supply to the customers was dealt with in a uniformed manner throughout. •The company was well funded through public listing and held value for shareholders. •The business was in a cash cow phase with business and financial risk being medium. •The company had a high market share within their target market with the promotion of the their flagship product the ST MICHAEL brand. •The company had a strong competitive position.
•Products were valued by customers due to high quality.
•Products were made locally and perceived to be of high quality as they were British products. This can be especially true after the post wars years and before companies started large scale globalisation. •Chinese boom of imports had not yet really affected the market. •Customer loyalty was built and maintained.
•The corporate culture and top down structure suited the environment. •Before globalisation could affect local markets in the UK the environment was relatively stable. •Corporate culture of the “family atmosphere” was adequate for the pre-globalisation era. •There was an understanding of what the customers valued – good quality at a good price. •The stores were adequately staffed to supply a good consumer service to the client. •There suppliers were totally reliant on them and thus placed them in a high position over suppliers. •Knowledge of the industry having been operating from the late 19th century. •Superior brand image to competitors – differentiation strategy through product quality and brand image •The company protected their brand ST MICHAEL as a quality brand •High entry costs for new competitors.
(b)BASIS OF COMPETITIVE ADVANTAGE
MARKS AND SPENCERS competitive advantage eminated from its concentration on a product differentiated basis by supplying a product of high quality, manufactured in the UK and carrying the brand name of ST MICHAEL which it built over a long period of time and marketed to a loyal consumer base.
(c)MARKS AND SPENCER DOWNTURN
•The company did not react to a changing environment.
•The top down structure was autocratic and led to a bureacratic environment within the organisation •Strategy was being developed by top management without understanding the problems that were being experienced in the operating environment. •They failed to recognise the fact that their competitors were obtaining products from Asia at much cheaper prices, whilst they continued to use more expensive local suppliers. •Competitors encroached on their market share by understanding the consumer better. •The company’s “one size fits all” strategy stocked their stores with products similarly across the board where different consumers in different areas had different needs. They basically did not understand consumer needs, whereas other companies where aiming at cost leadership they were still trying to differentiate with a quality brand in a cost leadership market. This equated to only the very loyal customers buying from their stores. •Management did not understand the culture that had developed within the organisation and store managers would hide the true facts from executives, true of the bureacratic environment that had been created. •They followed a global strategy of market development into other countries at a point in time when they didn’t even understand their own home countries operating environment, a recipe for disaster and one also experienced by LEISURENET. •...