Marks and Spencer became a household name, first in its country of origin, the UK, and later internationally. However, the late 1990’s saw a reversal of fortune for this company. In this case study, we look at the relevant issues surrounding this decline and the initiative to turn this problem around. The topics that will be discussed include the business environment, resource and competence analysis, strategic leadership, culture, strategic options, managing change, and the future of Marks and Spencer. Business Environment
The environment encapsulates many different influences. The difficulty is to make sense of this diversity. Identifying very many environmental influences may be possible, but it may not be of much use because no overall picture emerges of the really important influences on the organisation. Furthermore, there is the issue of the speed of change. Managers typically feel that the pace of technological change and the speed of global communications mean more and faster change now than ever before. There is also the issue of complexity. Managers like other ‘normal’ individuals try to simplify what is happening by focusing on those few aspects of the environment which have been important historically. (p.97, 98) The strategy of an organisation is therefore, the result of decisions made about the positioning and repositioning of the organisation in terms of its strengths in relation to its markets and the forces affecting it in its wider environment. (p.40) We find that Marks and Spencer fell terribly short in revising its strengths within their wider environment, and this short-sightedness contributed to their slump. A changing and unpredictable environment will generate a diversity of ideas and innovations because it will demand responses from organisations and they will vary. An organisation that seeks to ensure that its people are in contact with and responsive to that change is likely to generate a greater diversity of ideas and more innovation than one that does not. On the other hand, one that tries to insulate itself from its environment, like Marks and Spencer, by trying to resist market changes or rely on a particular way of doing or seeing things – sometimes known as ‘strong culture’ – will generate less ideas and innovation. (p. 52) We see that Marks and Spencer relied heavily on the traditional way that the company did business and did not encourage innovation and idea generation amongst managers and employees. In reality, these employees feared to show thought patterns that would ‘anger’ the senior management. It is clear that the market that Marks and Spencer were in was complex, dynamic and unpredictable and encouragement of ideas and innovation would have probably saved them from the fate they endured. Similarly, high degrees of control and strict hierarchy are likely to encourage conformity and reduce variety, so innovation is less likely the more elaborate and bureaucratic the top-own control. We see that Marks and Spencer typically was a company of this description. (For a detailed explanation, see the section on ‘Culture’). If we look at the PESTEL Framework (Political, Economic, Socio-cultural, Technological, Environmental and Legal), we see that Economic, Socio-cultural, Environmental and Technological factors are relevant to Marks and Spencer’s problem. Economic
Marks and Spencer had the notion of that they did not and should not have to reduce prices, either at end of range or during seasonal periods like Christmas. We see that although this strategy worked initially for them, in time, the public realized that with other stores in the market, they could not only purchase the same items that Marks and Spencer stored at lower prices, but also receive discounts from these other stores at times as mentioned above. Marks and Spencer once again did not pay attention to this sentiment of the public. Socio-Cultural
In terms of socio-cultural...