In 1884 Michael Marks, a Russian given birth to Polish refugee opened a stall at Leeds Kirkgate market. Since that time, Grades and Spencer was created, starting over 300 stores worldwide and also being the UK's most significant clothing dealer.
In 1999, online shopping was presented to their website for customers to take pleasure from in the comfort of their own home. The internet got just started to become known and more and more people were looking to use it, so Grades and Spencer took this opportunity and establish this up at the correct time.
In 2000, M&S brought out their healthy 'Count number on us' range, for the healthier people on diets or who have been just watching what they ate.
Their 1st 'Simply food' stores opened up in Surbiton & Twickenham in 2001, providing nothing but balanced diet, no home furnishing or clothes like the standard stores.
They also launched 'Per Una' a make of clothing specifically targeting the fashion-conscious women. Shortly after in January 2001, 'Blue Harbour' was created, a everyday wear brand for males.
'View form' and 'DB07' another make of clothing was created in 2002, 'View form' for sportswear and 'DB07' for children designed in cooperation with David Beckham.
Mission Statement
Marks and Spencer's mission statement is cracked into 3 parts such as:
Vision - Being the standard against which others are measured
Mission - To make aspirational quality accessible to all or any and
Values - Quality value, service, technology and trust.
This mission declaration has been retained up because the start of making it; M&S have worked hard to achieve all these factors. Despite the fact that there have been ups and downs through the years they may have tried hard and also have kept with their word.
There are extensive companies which research to M&S and measure themselves against them, helping their company to boost and gain more customers.
Marks and Spencer's have been known for their quality value, service, creativity and trust to all or any their customers who as a business they have jammed to perfectly. They are continuing to attract new customers as well as keeping their old ones, offering them new and superior products on a regular basis.
Objectives
Every calendar year M&S possessed many objectives which were to be achieved, they were probably not split into long term and short-term but just objectives all together for each coming year.
In 2001, they had many targets but their main ones were attracting new customers, expanding stronger relationships using their suppliers, shoot for market leadership and to restore the center of M&S, stop non-core and income losing activities and to keep an efficient balance sheet phoning these three sectors their fundamental strengths.
In 2002, not only do they want to develop stronger interactions with suppliers but also to construct on a unique relationship using their customers. They had a need to keep rebuilding on their fundamental strengths, continue steadily to regain market command with value, quality and also charm.
It was targeted for M&S to start their 1st standalone home store in planting season 2003, also to improve every aspect of the company, overcome your competition and continue to draw in more customers with their stores.
Before 2004, the M&S important strengths were improved, which included bettering the management team, still guaranteeing the balance sheet was effective and also delivering impactful but low priced improvements.
In 2005, M&S only wanted to refocus on their core worth in their business which is quality, value, service, invention and trust.
Pestel Analysis
In this section a PESTEL analysis will need place and can go through the exterior factors that impact on Draw and Spencer's performance.
Political
According to the Marks and Spencer website there are constraints on out of town shopping has been however in place by the federal government. This is creating problems for M and S. This is because it is highly expensive for shops to maintain the centre of large towns and cities with all the current business rates and M and S is not providing enough produce to break even with these extra bills they need to pay for being at the heart. M&S is wanting to move some of there stores out of the centres but with constraints it is leading to problems to them. The UK not having the Euro is working as a disadvantage to M&S with regards to there european store because M&S products are too expensive as there are being sold at UK prices.
Economical
The UK current economic climate and currency is relatively strong in comparison to other countries so the durability of the pound is working as a disadvantage to Marks and Spencer's in the UK and in foreign countries. (www. bitc. org. uk)
Current world occurrences have damaged global economies, which may result in fluctuations within the industry. This might lead to unpredictable consumer and distributor behaviours.
Sociological
Market styles are constantly changing and Tag and Spencer's have always struggled to maintain with them. For instance, Lifestyle changes have made people more aware of their health, which has led to higher demand of quality healthcare related products. People are concerned with affordability.
Consumers are concerned with the image, for example; they need to possess the latest brands.
The population in the UK is ageing and with this, more people have an increased disposable income.
Technological
Internet shopping has lead to international buying opportunities, which means the consumer comes with an substantial amount of options when it comes to shopping. This means that the competition has also increased, but Markings and Spencer's can put it to use to their advantage to promote services and help show that Markings and Spencer's is an up to date company. (www. marksandspencers. com)
Environmental
M&S is fixed to where they can build its stores because of the restrictions on Darkish field sites and Inexperienced field sites. M&S can only build on Darkish field sites witch restricts them to having to stay in cities with competition.
Legal
The government is continually redefining trading laws and regulations, which enables Marks and Spencer's to trade for longer hours, for example; longer shopping hours over a Thursday. Grades and Spencer's must follow advertising lawful restrictions which are placed in place to protect the consumer, but also to promote good competition between companies.
SWOT Analysis
The Swot analysis talks about a company's advantages, weakness, opportunities and threats which are likely to have an impact on the company's performance.
Strengths
Marks and Spencer's has been jogging since 1884 and has a good traditional reputation especially with the older generation. Marks and Spencer's is also one of the primary retailers on the traditional having stores generally in most cities and large towns and with thirty other stores across the globe. (www. marksandspencers. com) The brand name is known in practically every house hold. Grades and Spencer's has a diversity of products such as food, underwear, menswear children wear, women wear and furniture.
Weaknesses
Fashions are constantly changing and Grades and Spencer's comes with an inability to keep up with changes in the retail market.
There are also problems with concentrating on the right targets markets in conditions of products and customers. (www. bitc. org. uk)
Many consumers still believe that Draw and Spencer's products are outdated and outdated compared to challengers. Even though this is one thing that Marks and Spencer's is constantly trying to change.
Marks and Spencer's is currently experiencing poor performance throughout the world which has led to the grab of foreign operations.
Opportunities
Marks and Spencer's has the possibility to collaborate with others to widen up product range even more. They could also collaborate with designers to help bring new ideas, and help increase on their furniture and beauty products.
Threats
There is frequent competition from opponents such as John Lewis, Debenhams and then. And especially from more youthful clothing rivals such as New Look.
Ever changing fashions trends which Marks and Spencer's battle to manage is intimidating Grades and Spencer's performance.
Gap research and Ratios
A gap research involves figuring out a difference or weakness in a specific company and looking to bridge that distance in order to meet a target objective as to where in fact the company wishes to be.
The following quotation helps to further identify a gap analysis:
"Gap analysis, includes defining today's state, the required 'or target express' and therefore the gap between them. Within the later periods of problem dealing with the aim is to take a look at ways to bridge the difference defined"
www. Ifm. eng. cam. ac. uk [January 23]
An example from Grades and Spencer is there downfall in the womenswear market, which in 2004 fell 0. 6% to a 10. 4% share of the marketplace.
Competition in womenswear has increased drastically with women demanding style, quality, outstanding value and real choice.
In order for Grades and Spencer to reclaim the forex market share they lay out an obvious plan, this included listening to customers better during store appointments, focus categories, better use of market data and keeping a closer vision on tracking developments, tracking competitors and also analyzing there own performance.
From a purchasing perspective they searched to strengthen there buying teams, giving clearer tasks for design, buying and merchandising.
The companies buying strategy evolved to buy less, more often meaning better ranges and fresher lines of stock.
It was also vital that Grades and Spencer didn't miss out on key styles like the recently does in 2003 such as with cardigans.
In order to help expand close that gap Marks and Spencer learnt that they have to appeal to particular needs and marketplaces.
For instance it is estimated that 42 % of womenswear helped bring is by women under the level of 5ft 3 inches, Marks and Spencer didn't previously appeal to these, often producing large, baggy clothing.
Now Grades and Spencer have now produced a petite range in 33 of its stores in order to cater for the forex market.
The three ratios which were decided to be able to assess Grades and Spencer's budget were the existing ratio, gearing percentage and return on capital hired ratio.
Firstly the existing percentage can be calculated by dividing current property by current liabilities, this identifies how far a firm can meet its short-term liabilities from its current assets without having to raise fund by borrowing, reselling fixed belongings or issuing more stocks.
A ratio less than one for a time period is a cause for concern; Marks and Spencer's did have a wholesome current proportion until 2003 however in the last year or two they have dipped below one causing concern, whereas for example a competitive company such as Next has remained consistent for the last 3-4 years.
Secondly the gearing percentage can be computed by total borrowings x 100 % and then divided by the administrative centre employed.
The percentage shows the percentage of capital applied, which is financed by borrowed funds.
The marriage between both, ought to be balanced with shareholders cash significantly bigger than the long-term liabilities to be able to have a health gearing proportion.
The higher the gearing percentage, the higher the chance to the company is, as high degrees of borrowing represent a significant risk to the business.
In 2004 Grades and Spencer's was sky high, massively bigger than that of rivals Next.
The last proportion analysed was the come back on capital used, this is calculated by Functioning income x 100% and then divided by capital employed.
The ratio is an important indicator of how effectively the business has been managed.
As a guideline if a company has a low return on capital applied then it is which consists of resources inefficiently even if the profit percentage is high.
In the years 2004-2005 both Grades and Spencer's and Net's ROCE have been high indicating a healthy come back on capital utilized.
Five push analysis
Porter's five makes model (below) can be used to help to make an examination of the competitive environment for a firm within the certain industry. In cases like this, it is Marks and Spencer in the food and clothing industry.
Source: Modified from Porter, M, (1998) Competitive strategy, New York, free press
QuickMBA, Strategic Management (1999) states that:
"The tactical business manager wanting to develop an advantage over rival companies can use this model to raised understand the industry context where the firm functions. "
The threat of new entrants
There are a variety of major companies on the market such as Next, Debenhams, Sainsbury's and Tesco in relation to advertising clothing and food products. These are well known companies which are strong on the market so the risk of new entrants is low. A firm such as Grades and Spencer (M&S) has a strong brand name which therefore creates a hurdle to accessibility for potential new entrants. Companies may possibly experience high set up losses in an attempt to make an effort to promote its products in conditions of trying to prise dedicated customers away from M&S.
There is the hazard however of company dominate where one company will buy another one away. Examples include Morrison's overtaking Safeway and Walmart taking Asda in bids to try and create better companies without having to build many stores around the country. The federal government is also keen on new businesses setting up on the market to attempt to discourage a monopoly situation
Bargaining electric power of suppliers
M&S has over 2000 direct suppliers where 1500 are for clothing and 500 because of its food. Marks and Spencer's corporate and business site online (2005) says:
"90% of other products are actually sourced abroad. "
Overseas suppliers provide a great deal of preference for M&S and also cheaper labour.
The market that M&S is in also helps it be easier for the company to bargain using their suppliers because there are many suppliers which provide clothing and food that happen to be relatively undifferentiated so M&S can go to another supplier if indeed they feel there are better suppliers to go to instead of their current ones.
Bargaining electric power of buyers
There are many clothing and food companies to choose from in terms of the buyer so it is the consumers who is able to dictate the purchase price by challenging quality products at good prices. Clothing and food are not specific items unlike a Ferrari sports car. Food and clothing are plentiful to everyone and so therefore it is important for a company like M&S to offer quality goods at right prices to be able to compete in a very price orientated market. Having a Ferrari sports vehicle, it is a very prestigious item and for that reason prices are not as important for Ferrari. M&S therefore needs to add value with their products including the Autograph selection of clothing launched in 2000 which
The risk of substitute products
If something from a new company is cheaper then consumers may switch compared to that product. If there are low turning costs e. g. replacement products are much cheaper than M&S ones then there could be more consumers transitioning to the cheaper product. For example, a set of jeans in M&S is 25 however in Primark the jeans are6. There are many retail stores selling clothes which are competing with M&S and for that reason could become substitute products. To counteract the threat of substitutes, M&S must concentrate on ensuring complete product quality and customer service to keep dedicated customers.
The depth of rivalry amongst existing competitors
There food and (especially) the clothing market has brutal competition and M&S must contend with companies such as Next, Debenhams, Tesco and Sainsbury's for selling both their food and clothing products. These businesses are all attempting to get the largest market show possible in the retail sector.
Conclusion
Overall, M&S (Markings and Spencer) established themselves over 120 years as a well known high street name. The objective statement that has been created by M&S, highlights that the business is designed to be the standard to which others look too in terms of retailing. The goals highlight on continually improving the company (targets in 2005 centered on the core principles of the business). The SWOT examination implies that M&S is an extremely popular company although is poor at maintaining fashion changes and therefore must be wary of changes and regard them as a menace.
The five pressure analysis shows extreme competition within the industry with big companies such as Next and Debenhams providing clothes and Tesco and Asda providing clothes and food. M&S must be wary of substitute products with stores such as Matalan and Primark offering the products and also M&S must recognise that the client has high buyer electricity as they have got the choice of several stores at different prices.
