The Association of Business Executives
International Business Case Study
Marks and Spencer Group plc
Tuesday 3 June 2014, Afternoon
This is an open-book examination, and you may consult any previously prepared written material or texts during the examination.
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© ABE 2014
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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.
June 2014 Case Study
Marks and Spencer plc
Marks and Spencer PLC (also known as M&S; and colloquially known as Marks and Sparks, or simply Marks) is a major British multinational retailer headquartered in London, with 766 stores in the United Kingdom and 440 stores spread across more than 51 countries/territories. It specialises in selling quality clothing and luxury food products. (Appendix 1 describes the different store formats operated by the group.)
The company was founded in 1884 by Michael Marks and Thomas Spencer in Leeds, in the north of England. By 1950, virtually all goods were sold under the ‘St Michael’ label. Simon Marks, son of Michael Marks, died in 1964, after 56 years of service. Israel Sieff took over as chairman and, in 1968, John Salisse became the Company Director. In 1975, M&S opened a number of stores in continental Europe, and in Ireland four years later.
In 1998, the company became the first British retailer to make a pre-tax profit of over £1 billion; although, by 2001, profits had fallen by more than a half, with some critics blaming the decline on a lack of product development and innovation in fashion lines. In early 2010, Marc Bolland (former Chief Executive of major UK grocery chain Morrisons) was appointed as the Group’s new Chief Executive, replacing previous Executive Chairman Stuart Rose. Rose remained in the role of NonExecutive Chairman until he was replaced by Robert Swannell in January 2011. The company is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. Marks and Spencer made its reputation in the early 20th century with a policy of only selling British-made goods (a policy discontinued in 2002). It entered into long-term relationships with British manufacturers, and sold clothes and food under the ‘St Michael’ brand, which was introduced in 1928. It also accepted the return of unwanted items from customers, and provided a full cash refund if the receipt was shown, no matter how long ago the product was purchased, a service which was very unusual for the time (in 2005, the retailer adopted a 90-day returns policy and, in 2009, the refund policy changed once again to 35 days). The company’s uncompromising attitude towards customer relations was summarised by the 1953 slogan: “The customer is always and completely right!”.
The company has continued to maintain an emphasis on quality across its product lines. It also had a reputation for offering fair value for money. However, when this reputation began to waver, it encountered serious difficulties. Arguably, M&S has historically been an iconic retailer of ‘Quality British Goods’.
Smoking was banned from all M&S shops in 1959 because of the fire hazards it posed. It later became a permanent rule after concerns were raised by asthmatics regarding their health. The first M&S shop to...
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