Marks and Spencer Analysis

Marks and Spencer Analysis

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1. Introduction

This report will investigate the British retailer Marks and Spencer. It will analyse why decision making, planning and goal setting are important to the organisation. Decision making is a process of identifying problems and opportunities then resolving them. Mission planning is the way that organisations aim to achieve their goals. All organisations have goals, these are the reasons that the company exists. Boddy (2005:178) states “A goal is a desired future state for an organisational unit. Goals provide a set of detailed objectives for an organisation’s desired outcomes”. Within this report there is a brief outline and history of Marks and Spencer. It will then look at the missions and goals of the organisation and will go on to critically evaluate planning and decision making processes that the organisation could be using. To conclude it will summarise the findings.

2. Introduction to Marks and Spencer

British retailer Marks and Spencer (M&S) is a private limited company, their main aim is of a commercial nature. It is one of the most iconic and widely recognised chain stores in the UK. They have 520 stores located throughout the UK and 240 stores worldwide. It is the largest clothing retailer in the country. (Source: M&S website)

2.1 Key environmental factors impacting on M&S

This part of the report will highlight the problems within the external environment that affect Marks and Spencer. Before planning and decision making can take place an organisation must be aware of these issues. The key factors that impact upon all organisations are Political, Economic, Social and Technological. These factors are commonly referred to as PEST factors. Political changes like change of government could affect the minimum wage that M&S workers are paid. Economic factors such as inflation could affect the pricing of garments. The Social factors that would need to be taken into account are lifestyle changes and demographics, M&S would need to consider where their target market stood. Technological advances could also affect M&S sales just recently their website has been updated from a corporate site to a new website offering online buying. Globalisation is a huge environmental factor affecting M&S. Globalisation is the increase in cross-border economic, social and technological exchange. For organisations it increases competition and the search for cost advantages.

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(Webster 2006) An example from Boddy (2005:89) would be when Marks and Spencer chose to sever long-standing relationships with British clothing manufacturers in order to source supplies from lower cost countries like India. There are also environmental factors affecting M&S such as green issues and the carbon footprint. M&S has just introduced ‘Plan A’ on their website they state: “Plan A is our five-year, 100-point plan to tackle some of the biggest challenges facing our business and our world. It will see us working with our customers and our suppliers to combat climate change, reduce waste, safeguard natural resources, trade ethically and build a healthier nation.”
2.2 M&S goals

A goal can be defined as a target or aim. In 1884 when Marks and Spencer first originated it had one goal in mind which was- quality family care. Nowadays it has many goals to aspire to, which are prominent in M&S company publications and website. On the website it breaks its goals down into vision and values. “Our Vision: To be the standard against which all others are measured, Our Values: Quality, value, service, innovation and trust.”

2.3 M&S mission statement

Jones and George (2003:678) define a mission statement as “A broad declaration of an organisation’s purpose that identifies the organisation’s products and customers and distinguishes the organisation from its competition”. To determine an organisation’s mission managers must first define its business so that they can identify what kind of value they will provide. Marks and Spencer’s mission is- “To make aspirational quality accessible to all.” This is a clear statement of intent and shows that they want to meet their customer’s needs.

3. Evaluation of Marks and Spencer’s planning and decision making

3.1 Planning

Planning is crucial to any organisations success. Planning is the task of setting objectives, specifying how to achieve them, implementing the plan and then evaluating the results. (Boddy 2005) This part of the report will analyse planning processes that may operate in M&S to achieve its goals.

3.1.1 SWOT analysis

One method of planning Marks and Spencer could use is SWOT analysis; this is a way of summarising their main Strengths and Weaknesses relative to external Opportunities and Threats. In M&S chairman’s statement, Paul Myners praised chief executive Stuart Rose’s leadership: “Stuart has a profound understanding of this extraordinary business. From day one, it was clear he knew the issues that needed to be addressed. He drew up a plan, assembled the team to implement the plan, and then got on with it, in a tireless and focused manner.” M&S need to continue to be aware of their strengths, weaknesses, opportunities and threats to maintain their success. This needs to be carried out regularly as the retail sector is always changing. SWOT analysis is an effective way for M&S to plan because it takes into account the external business environment as well as the internal.

3.1.2 Forecasting

Forecasts are a way of predicting the future. They are often based on analysis of past trends in factors such as input prices, sales patterns or demographic characteristics. All forecasts are based upon assumptions. In relatively simple environments people can reasonably assume that past trends will continue. (Webster 2006) Marks and Spencer often use forecasting in their day to day planning. For M&S forecasting can clarify their direction and therefore lead to goal achievement.

3.2 Decision Making

Decision making is the process of making choices from among several options. This report will look at three of the main decision making models M&S could use to achieve their mission and goals.

3.2.1 Computational strategy- rational model

Boddy (2005:209) states “a rational model of decision making assumes that people make consistent choices to maximise economic value within specified constraints”. Buchanan & Huczynski (2004) say when there is certainty about cause and effects and a consensus on goals then a computational strategy is favoured. Marks and Spencer would use this model to achieve their goals when clear and agreed on what outcome they desire and certain about the consequences of their actions. An example relevant to M&S adapted from Buchanan & Huczynski’s ‘Organisational Behaviour’ ice cream in summer would be- bikinis in summer. The rational model may be capable of being applied to this situation since the management know the capabilities of their design team, manufacturers, costs of production and the income of the extra sales. M&S can therefore calculate the costs and return using the computational strategy. They know for a fact that in summer bikini sales will go up. Luthans (1998:494) states when using this model the decision maker always strives to maximise outcomes in the firm. Decisions are directed to the point of maximum profit where marginal cost equals marginal revenue. A downside of this model is that it needs a great deal of time and a vast amount of information to work effectively. To achieve M&S goals this would be an efficient strategy as success is guaranteed.

3.2.2 Judgemental strategy- administrative and incremental models
The decision making guru Herbert Simon came up with the administrative model of decision making, it describes how managers make decisions in ambiguous and uncertain situations. Buchanan & Huczynski (2004:782) wrote “Simon’s notion of bounded rationality, saying that the limited search for and evaluation of alternatives meant that those which were offered, differed only slightly from what already existed”. Meaning management would use this model when clear and agreed on what outcome they desire but not certain about the consequences of their actions due to information being inadequate. M& S could use this model of decision making when uncertain about the outcome and success of opening a new store. They are agreed on what they want the new store to achieve; they just need to carry out trial and error. On the BBC news website the article ‘M&S consider new fashion store’ says “Marks & Spencer is looking to roll out new stand-alone subsidiary clothing stores for its fashion brand Per Una. An M&S spokeswoman said: "We are currently investigating the feasibility of piloting the stand-alone concept for Per Una; we are looking at specific sites but can't confirm anything at the moment.” In this example M&S could use the judgemental strategy to carry out its brand development. A negative of this decision making model is that it is vague and based upon little information.
3.2.3 Compromise strategy- political model

Authors Pfeffer, Buchanan and Badman examined how decisions are made when there is disagreement over goals and how to pursue them. The political model is a model of decision making that reflects the view that an organisation consists of groups with different interests, goals and value. Decisions are bound to be resolved by reasoning, influence, politics and judgement. Marks and Spencer’s decision to introduce their plan A could potentially cause conflict. The report from FSN on 29th January 2007 called “Marks and Spencer's environmental accounting is ‘made to measure'” said “Many of M&S's environmental initiatives announced recently build on existing work undertaken by the company to monitor, manage and report its environmental impacts. But satisfying consumer trends can bring operational and environmental best practice into conflict.” M&S decision makers have decided to introduce the plan but not everyone may agree that it is necessary. Those concerned are unclear or divided as to what outcomes they desire. From this perspective, individuals and groups unite their interests, propose alternatives, asses their power, join with others, negotiate and form coalitions. Decision makers look for alternatives that can accommodate the interests of the parties involved. (Buchanan & Huczynski (2004:782)) The main criticism for this approach is it could potentially cause great divide in organisations.

4. Conclusion

To conclude this report has highlighted Marks and Spencer’s mission and goals. It has analysed SWOT and forecasting as planning methods to achieve goals. It has evaluated three decision making models that M&S could use to benefit them and consequently lead to their continuing success in the retail sector.

5. References

• BBC (2004) M&S considers new fashion stores. [online] January 30. Available from: http://news.bbc.co.uk/1/hi/business/3445443.stm [accessed 06/11/07]

• Boddy, D. (2005) Management an Introduction. 3rd Edition. London: Prentice hall.

• Buchanan, D & Huczynski, A. (2004) Organizational Behaviour an Introductory Text. 5th Edition. London: Prentice hall

• Cole, G. (2004) Management Theory and Practice. 6th Edition. London: Thompson.

• FSN (2007) Marks and Spencer's environmental accounting is ‘made to measure'. [online] January 29. Available from: http://www.fsn.co.uk/channel_kpi_environment/marks_and_spencers_environmental_accounting_is_made_to_measu
re.htm [accessed 2/11/07]

• Jones, G. & George, J. (2003) Contemporary Management. 3rd Edition. New York: McGraw Hill.

• Luthans, F. (1998) Organizational Behaviour. 8th Edition. USA: Irwin/McGraw hill.

• M&S (2007) homepage [online] Available from: www.marksandspencer.com [accessed 25/10/07]

• Ogden, S. & Wersun, A. (2006) Strategic Management. London: Thompson.

• Webster, R. (2006) Organisations and their Environments. Essex: Pearson.
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