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Marks and Spencer: Strategy

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on 5 November 2012

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Transcript of Marks and Spencer: Strategy

Marks and Spencer:
1884-2012 (Marks and Spencer PLC 2012n) Mission "Corporate level" VISION... “The key now is execution of our strategy to become an international, multi-channel retailer.” Robert Swannell Chairman (Marks and Spencer PLC 2012c) "STRATEGIC POSITION" Business Level Strategy (Walters and Hanrahan 2000 p.41) (Lynch 2012 p.345) (Lynch 2012) “As one of the UK's leading retailers, we sell stylish, high quality, great value clothing and home products, as well as outstanding quality food, responsibly sourced from around 2,000 suppliers globally.” (Marks and Spencer PLC 2012a) Outline “A group engaged in the retail of clothing, footwear, food and home products.”
(Marks and Spencer PLC 2012c) (Fame 2012) Clothing and home
Food
Multi-channel
International
(Marks and Spencer 2012l: Marks and Spencer 2012b; Marks and Spencer 2012p) Introduction Growth Maturity Decline? Adapted from: (Lynch 2012) Multi-channel
£559m
up 18% International
£1.1bn
up 5.8% UK Stores
£4.2bn
down 0.9% Plan A
£105m Strategic Issue 2:
Internationalisation “Whether we're working at home or abroad, within our own stores or in partnership with our franchisees, our Vision, Mission and Values remain the same. Ensuring we meet our customers' needs with appealing, superior quality products at attractive prices.” •387 stores in 43 territories.

•International business grew by 4% in FY2011

•No. 56 in the top 250 global retailers in 2009 Faced criticism for being a UK retailer which exports Key Markets:
Thinking Globally and Acting Locally The 3 key areas for expansion are Europe, Asia and the Middle East.



One business model does not fit all, and entry mode for the company differs depending on the market, either JV (Joint Venture) or wholly owned. The 'Bricks and Clicks' Approach “Bringing Internet age to the Shopfloor”

A combined store and e-commerce effort; whereby new stores are opened with the support of an interactive shopping online offer.

• The aim of creating a unique shopping experience whereby customers have ready access to their product offering- all products, all sizes, all colourways.

• “Shoppers who shop on its website as well in its stores spend four times as much; throw smartphones into the mix and they spend eight times as much.” However this technological area is still in its infancy and there may be potential issues;

• Delivery times– standard delivery is 5-14 days and costly dependent on the location. (overseas)

• The wi-fi facilities may be of less interest to their core market

Risk Prevention:

• Recently launching websites for the French market; and the Irish market to ensure more product availability to those regions.

• They plan to launch 10 more international websites by 2015 Positive Forecasts Consumer
Awareness M&S have won awards such as ‘Business of the Year’ by Business in the Community and having the highest ‘ethiscore’ on the Ethical Consumer Group website. In 2012 M&S was named responsible retailer of the year at the World Retail Awards ‘Plan A’ responds to the view of their consumers as the corporation’s 2003-2004 CSR report identified areas of concern Ethical concerns had a huge impact in 2008, however this declined in 2009 as a result of economic uncertainty Increasing Consumer Confidence Consumer spending intentions are strong as economic concerns become less prevalent to many. Environmental and ethical issues will become increasingly focused on when consumer confidence fully stabilises A 2011 survey conducted by NEMS Market Research which utilised 1000 UK residents over the age of 16 found that 83.6% of respondents often aimed to save energy in their homes. Also, 92.8% claimed that they recycle at home. Many consumers would also consider boycotting retailers if they were believed to be unethical The ethical consumerism market will increase by 40.5% between 2012 and 2016 (Bishop 2012)
Continuing to pursue their ‘Plan A’ strategy has provided M&S with competitive advantage, as they are now considered as the leaders of sustainability in retailing. This will assist with appealing to future consumers. Plan A Competitive Advantage Strategic Issue 4: Plan A CSR has become a major focus for M&S and is now regarded as a fundamental part of the business; “Plan A is integral to our strategy for future growth” Political Alignment 'Plan A' is a pseudo-legal strategy, as it has prepared the company for future government policies with regards to environmental and health issues. It also adheres to existing objectives, such as 'The Climate Act 2008' Multi-Channel Retail E-commerce “E-retail represents an ideal opportunity to cut costs, improve channels to market and grow an increasingly loyal customer-base, involving a strong accumulation of new business" Online strategies Social Media "Twitter, Facebook, and YouTube represent different types of social media, and that each site has its own unique architecture, culture and norms." 2000 4 million 11% 300% Mainstream
Customer Service
Engage Innovative ... small Refurbishment strategy 2004-2010: Former CEO Stuart Rose invested 2bn in a store modernisation plan.

2010-2013: Current CEO Marc Bolland invested a further 600m implementing a new vision.
Completion date due for mid 2013. Why?:
-"shop in shop approach".
-To give their sub-brands clarity and distinctive values.
-clear target customer
-easier for customers to navigate around the store.
-fresh merchandising and clear signposting. Positive (cc) photo by medhead on Flickr Feedback to the Refurbishment : Research found M&S shoppers struggled to navigate round the store each sub-brand is now "easily identifiable and naturally pushes you into the next range" Trend led fashions at the front of the store Mannequins are in visible spots and are individually tailored to each sub-brand Negative Not as easy to go in and pick anything up as it is broken down into clear sub-brands This may alienate customers from buying in all areas Marc Bolland has said that “M&S had in the past taken a 'shotgun' approach to global expansion, 'flag planting' rather than building a coherent business.” India and China particularly have two of the fastest growing markets at the moment. Women's wear sub-brands of Marks and Spencer Own-Brands Own brands have seen significant growth in recent years, rising by 51.7% since 2007 reaching £118.13bn in 2011 This has resulted in increasingly sophisticated own-brand ranges. Customers are looking to save where possible, in times of economic downturn, yet still receive value and quality for money goods. Marks and Spencer solely consists of own brands ranging from low to high price, while retaining their trademark high quality. M&S has highly relied on the ageing customer base for many years however, Mr Bolland is hoping to excite younger fashion seekers in store. (Marketline, 2012. p4) This can be seen in the youth targeted sub-brands such as Limited and Indigo receiving sole television advertising. Woman's wear contains the highest number of sub-brands in relation to the whole store.

These include: Autograph, Limited, Classic, Indigo and Per Una.

Each have a specific target market, styling principles and key competitors from other high street stores. Each Sub-brand is like a branded shop within the Marks and Spencer brand however, customers were not understanding this approach.

They did not see clarity between the sub-brands whilst shopping and could easily fall upon a different sub-brand without realising. (Brown 2010)

Former and current CEO of the company saw this as a huge problem and a refurbishment plan was developed.
(Hall 2011) This was a large opportunistic strategy for the future growth of the company Adapted from: (Davies 2012) Critical Analysis of Refurbishment concept 12 Inspiring shopping experience ! Where before all the stores had an equal and type of product mix, they are introducing a new segmentation approach. This will mean all stock will be tailored to local demographics broadening the appeal to their existing customers and hopefully attracting more. However, "the youth retail market is a very competitive business. As the UK's ageing demographic continues to thrive the outcome of the risky strategy of moving further into the youth market, instead of the existing mature market, remains to be seen." 21 million Mobile launch May 2012;
First mobile site from major UK retailer ‘The Whole Store
in Your Pocket' M-Commerce Smart phones Online Platform
Representation
Schwopping
W.O.M
Interaction "Twitter is recognized as being a site on which users ask for information and
complain" "Being more proactive entails creating content
more regularly, and initiating and maintaining conversations with consumers on an ongoing
basis. More proactive companies often empower employees, sometimes at local levels, to talk,
listen, and respond to what consumers post
on social media." Do the strengths of M&S' online strategies weigh out the weaknesses? Throughout the recession period, the majority of adult consumers still expected retailers to tackle sustainability issues "We've improved our energy efficiency by 28% saving us nearly £22 million a year" Economic Benefits £185 million net benefit has been reinvested into the business. Encouraging ‘fair-trading’ will also allow the company to flourish in the future as they will have strong, reliable and economically safe ties with suppliers (Keynote Limited 2012a; Keynote Limited 2012b) (Baker 2011) (Marks and Spencer PLC 2012d) (Smith Fischer and Yongkian 2012 pg. 104) Strategic Issue 1: (Ashworth et al 2006 pg. 290) (Smith Fischer and Yongkian 2012 pg. 4) (Miller 2012) (Felsted 2010) Adapted from: (Datamonitor 2012) (Marks and Spencer PLC 2012h) (Marks and Spencer PLC 2012j) Strategic Issue 3:
Concept 12 (Marks and Spencer PLC 2012k) (Marks and Spencer PLC 2012m; Marks and Spencer PLC 2012e) (Deloitte LLP 2009; Deloitte LLP 2012) (Felsted 2010) (Wood 2012) (Hall 2011) (Thompson 2011) (Marketline 2012 pg.4) (Mintel Group Ltd 2009). (Jones et al. 2005) (Mintel Group Ltd 2009) (Marks and Spencer PLC 2012h) (Bishop 2012) (Bishop 2012) (Bishop 2012) (Elman and Barry 2012) (Marks and Spencer PLC 2012j) (Shaw et al. 2006) £394.60p (Marks and Spencer PLC 2012g) (Marks and Spencer PLC 2012i) (Marks and Spencer PLC 2012o; Marks and Spencer PLC 2012f) (Marks and Spencer PLC 2012d) (Keynote Limited 2012a) (Marks and Spencer PLC 2012d) (Johnson Whittington and Scholes 2011; Porter 2008) Porter: overall competitive advantage Growing loyalty reduces the likelihood that customers will default to prolific competition in women's fashion (Porter 2008) Competitive advantage? (Porter 2008) Bargaining power of buyers (Porter 2008; Johnson Whittington and Scholes 2011) Bargaining power of buyers means M+S must tailor provision to their needs (Porter 2008) Increases competitive advantage as M+S are so advanced in this field (Porter 2008; Johnson Whittington and Scholes 2011) ? Multi-channel <18%
However targetting?

Internationalisation <5.8%
Integral to overall vision

Concept 12 ?

Plan A- business level unrivalled (Marks and Spencer 2012b) (Mintel Group Limited 2012) (Porter 2008) (Marks and Spencer 2012b)
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