M&S Failure in Internationalisation

Topics: United Kingdom, Target market, Target Pages: 5 (1672 words) Published: August 11, 2013
BACKGROUND
Marks & Spencer ( M&S) , popularly known as Marks & Sparks , one of the leading retailers in UK began internationalizing in early 70s with formal store based operations in Canada and so on and so forth. However , On 29 March 2001, Marks and Spencer (M&S) announced that it was to sell its Brooks Brothers clothing chain (USA and Japan) and Kings supermarkets (USA) businesses, and turn its company-owned stores in Hong Kong into a franchise. In addition, it was going to close most of its company-owned continental European stores, viewing them as ‘distractions’ in its quest to restore its fortunes . A wave of protests across continental Europe about the closures and job losses was the result.
CURRENT SCENARIO

M&S decided to shut down or sell any assets which get in their way of the UK recovery.The adopted a strategy of total focus on UK retail,improving returns to the shareholders and increasing the leverage and earning potential of the business.However, around a decade after their exits and European sell off , M&S have started intenationalising again with opening up of stores in China,India,Dubai and also planning to buy back the European stores.

PROBLEM STATEMENT / AREA OF OPPORTUNITY DEFINED

To find the reasons why M&S failed initially in its internationalization process and how it can succeed in spreading the brand overseas now. Basically performing a GAP analysis , PESTEL analysis combined with the reasons for failure to recommend the implementation strategy for M&S to go international.

GAP ANALYSIS

STRATEGIC OBJECTIVE| CURRENT SCENARIO| ACTION PLAN|
To transform M&S from being a traditional british retailer to a modern international & multi channel retailer| Appointed Marc Boland as the new CEO & devised a strategy to target Asian,Russian& Gulf markets| Devise a more committed & standard implementation strategy by proper research .| To re-enter the European markets| Trying to buy back the old stores sold during the hasty exit strategy| Make a comeback by changing their strategy & keeping local taste & trends intact| To target India as a major market| Joint venture with Reliance Retail ltd to set up stores| Using latest FDI act to its advantage & also extending its existing franchisee operations even further| Keen to build its presence in powerhouse China`| Opening up a store in shanghai in addition to 10 stores in HongKong| Following the successful models of Zara & careful selection of products & advertisement to improve brand image| To be technologically competitive and sustainable| Following trends of the brands like IKEA and going for market specific websites & instore technology | Diversifying the existing product line, enjoying the first mover advantage by using different market specific schemes|

PESTEL ANALYSIS OF M&S

Here is an analysis of the external factors that affect M&S’s performance POLITICAL: Governmental policies revised to safeguard the primary business streets of the cities have made the out of town developments extremely difficult., also its extremely expensive for retail centres to be in the centre of large towns and cities. Also UK not having the Euro is a liability in European markets as they are being sold at UK price.International markets providing more assistance & friendly norms are more attractive than ever. ECONOMIC: The UK currency being stronger to other currencies works against M&S, also currency fluctuations may result in unpredictable buyer and supplier behavior.The youth between 18-35 spend their disposable income on clothing and opportunity lies there. SOCIOLOGICAL:M&S have always failed to keep up with changing market trends, buying behavior ,attitudes,products & continuing with obsolete products &ways of doing business leaving them behind of their competitors....
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