19 Pages
4791 Words
Introduction of Leadership and Business Environment of Marks and Spencer Assignment
Get free written samples from subject experts and Assignment Writing services in UK.
The following report is based on analysing the market status and CSR strategy of Marks and Spencer (M&S). A British store based in London, M&S, also known as St. Michael in the United Kingdom as well as in Europe, the United States and parts of the Far East is known for its clothing, home furnishings, and food offerings (Hanno, 2019). M&S products are regarded as exceptional value and quality due to the retailer’s presence in the United Kingdom with over 300 outlets. Quality, value, and customer service are the company’s goals. From the SWOT and PESTEL analysis for its market research, issues will be identified in its operation, followed by a suggestion of a suitable leadership approach to be taken by the company to address these issues.
2. Business Environment of M&S
2.1 SWOT Analysis
|
Strength
|
Weakness
|
|
· Wide range of products to choose from
· The company has been in business for 136 years
· Fresh produce is brought to market by establishing strong ties with local farmers
· Extremely successful corporate social responsibility (CSR)
· By the year 2020, the market’s worth was estimated at $2.3 billion
· Over1463 locations across Asia, Europe, and the Middle East; 1035 of these are in the UK
· UK’s second-largest grocery retailer
· Selling high-end brands like Autograph, Louis Vuitton, Vero Moda, Per Una, North Coast, Collezione, Versace, Big & Tall, Indigo collection, Portfolio, Classic, Blue Harbour, Limited Collection etc.
· A robust e-commerce platform
· A lot of focus is placed on environmental and social sustainability
· Strong emphasis is placed on improving the client experience
· Offerings that are up to date with the newest market trends
|
· Lockdowns and other difficulties resulted in a yearly loss of £201.2 million in clothes and homeware sales
· Consistent product recalls eroding consumer trust
· Manual operations are time and labour-consuming, leading to increasing cost
· Has a poor reputation in the “click and collect” market due to its focus on an older demographic
· Poor financial results even before the covid-19 outbreak
· Ineffective supply chain (SC) scalability; yearly sales declined drastically in 2019 owing to the poor SC management
· Subject to market circumstances on the local platform if it relies too heavily on UK markets
|
|
Opportunity
|
Threats
|
|
· In Asia, there is a huge demand for ethnic and traditional attire
· Increases sales, save costs and improves profitability by launching various items in different areas depending on customer demand
· The internet world necessitates the expansion of a strong retail foundation
· A strong online presence to strengthen its position in the market
· Aspirations to invest in new industries
· Restructuring their garment business
· Streamlining their operational model
|
· The ever-evolving world of fashion
· Devaluation of the sterling after Brexit
· Huge competition has made it more difficult for M&S to compete with the likes of Asda, Morrisons, Tesco, Morrisons, Next, Amazon, John Lewis and Sports Direct.
· The unprecedented number of layoffs during the COVID-19 shutdown
· Consistently falls short in terms of online retail sales
· Competition for British food sector workers
|
(Source: Choudhary and Piparo, n. d; Chapman, 2021; Bedford, 2022; Forbes Media LLC, 2022)
2.2 PESTEL Analysis
|
Factors
|
M&S Market Analysis
|
|
Political
|
· Owing to the fair trade policy, sourcing costs have decreased
· For companies, Brexit will have far-reaching effects
· Changing taxes and government policies
· The European Union (EU) and Free Trade Agreements (FTA) assist other British firms in taking advantage of lower prices for items from other countries than M&S’s greater cost structure
· Tax and interest rates in the retail industry are seen as sensitive
· Profit margins might be affected by UK’s decision to exit the EU
|
|
Economic
|
· Conflicts with small retailers about the increase in product prices as a result of Brexit’s currency effect
· Survival after the COVID economic downturn
· In recent years, new rivals have emerged to grab market share from high-end companies
· Maintaining food supply standards after Brexit is a difficult task
· Many stores in EU nations are closing because of Brexit
|
|
Social
|
· Efforts that benefit the local community while also reducing operating expenses
· A long string of product recalls has a detrimental effect on society
· Perception of the brand being non-trendy among consumers
· Changing consumption and shopping behaviour of customers post-COVID
|
|
Technological
|
· Technological partnerships to enhance security, risk, and accountability
· Modern retailing has led to the widespread use of ready meals by M&S as a result of technological advancements in the food business
· A strong internet presence, although it lags behind several rivals in terms of online operation, which has increased dramatically after the COVID-19 epidemic
|
|
Environmental
|
· Fresh milk from RSPCS-accredited dairy farms
· Eco-friendly and long-lasting items
· Maintaining close ties with local farmers to ensure the availability of farm-fresh produce
· Eco-friendly business compared to the majority
· Smaller overseas manufacturers may be better compensated by selling FTA-compliant items
· A reaction tailored to the needs of COVID and its stakeholders, as well as the whole community
|
|
Legal
|
· Retail activities are regulated by national health and safety laws
· M&S has been involved in several legal battles throughout the years
· Frascati landlord has a financial conflict with M&S
· Payment to employees for legal rights such as social security, pension, as well as severance pay throughout COVID-19
|
(Source: Choudhary and Piparo, n. d; Islam, 2016; Hanno, 2019; M&S, 2020; Leite, 2020; Casadei and Iammarino, 2021; BBC, 2021)
3. Influence of Brexit on M&S
Brexit, discount competition, and a brand that conjures images of antiquity are among the macro concerns for M&S in this context. Businesses in the UK have been shaken by the Brexit vote, which has resulted in a wave of uncertainty (Choudhary and Piparo, n. d). Uncertainty will linger until the final withdrawal conditions are agreed upon. Because of this, M&S’ operations in the United Kingdom and Europe will be significantly impacted by the departure. Additionally, the significant depreciation of the Sterling has affected consumer spending. Many free trade agreements with European suppliers might be lost in a so-called “hard Brexit”, resulting in a higher product price for consumers (Faria, 2020). In addition to the macro-environment, Brexit affects the micro-environment. As a result of Brexit and the weakening of the pound, a significant portion of the company’s income is being lost in the UK.
Post-Brexit bureaucracy was a major issue for M&S in France. Customers in France have been served by M&S for a long time. It’s now almost difficult for them to offer fresh items to our clients at the high norms they demand, leading to a long-term effect on their company as a consequence of the UK’s withdrawal from the European Union. Red tape at the UK-French border made it impossible to deliver the merchandise to the stores. As a result of Brexit, M&S is shutting down 11 of its French locations (BBC, 2021). UK-EU commerce in freshly processed foodstuffs is a typical illustration of the kind of trade facilitated by the single market that would be imperilled under the new post-Brexit rules. UK retail giant announced the closure of 11 franchise locations it operates with partner SFH in France throughout 2021, but its French online business, which offers mostly apparel and home items, would be unaffected. As per M&S, concerns with the supply chain generated by Brexit have made it “almost impossible” to fulfil food supply norms. With Lagardere Travel Retail, M&S’ another French partner, the company operates M&S outlets at French airports and train stations. Because of their location, these shops will not be impacted by this decision.
While M&S, with its over 1500 abroad locations, has reaped the political benefits of free trade policies, Several of these rules, however, may no longer apply to the corporation in the wake of Brexit. As predicted, Brexit was followed by a series of strict tax embargos that impacted all brands exporting out of England. M&S’s manufacturing costs have risen as a result of Brexit. If the UK genuinely comes apart, M&S’s abroad stores are forced to close or raise their prices, losing consumers. After Brexit, the UK’s trade regulations had a major impact on the brand’s business. Nothing a corporate plan does will be able to raise this issue. Even if the company’s abroad activities shrink as a result of Brexit, it will continue to operate at its normal pace inside the United Kingdom. Nevertheless, post-Brexit policy changes are predicted.
4. Influence of COVID-19 on M&S
After the COVID-19 epidemic decimated its clothes sales, M&S in the United Kingdom was on track to announce a 90% drop in full-year earnings (Davey, 2021). The effects of Covid-19 have been felt around the globe in ways that have never before been seen. Customers, suppliers, and thousands of employees in their supply chains have all been affected by the epidemic. Pre-tax profit before one-off items is expected to be 43 million pounds ($61 million) for the year ending April 3, down from 403 million pounds in 2019-20, according to analysts on average. Since 1926, the company has never reported a first-half loss, and this is its first loss since then. Due to several lockdowns that shut down the retailer’s non-food area, like-for-like sales of clothes and homewares are predicted to drop by 34%, while food sales are expected to grow by 1.2%.
In 2020, M&S said that the crisis would permanently alter its company and that it would accelerate its strategy, delivering three years of transformation in only one year (Davey, 2021). It cut off 7,000 workers in August of 2020. A “lost year” has been declared for the retailer’s profitability in 2020-21, according to the firm. But even before the epidemic, M&S was still in trouble. As a result of inadequate supply chain management, the company’s yearly revenues plummeted considerably in 2019. During the 2017 Christmas season, there was a scarcity of gifts. The number of supply shortfalls has decreased. It has been a rough few years for M&S sales. As per Chapman (2021), lockdowns and other difficulties led to a loss of £201.2 million in clothes and homeware sales per year. It had a profound effect on the firm. Over the following ten years, the company plans to close 30 additional locations.
Despite a downturn in economic activity, COVID-19 has increased in e-commerce and digital transformation. By becoming “digital”, as lockdowns have become the new normal, firms and customers have increased their online sales, pushing e-retail commerce’s market share from 14% in 2019 to around 17% in 2020. New research, “COVID-19 and E-Commerce: A Global Review”, by UNCTAD and eTrade for all partnerships, reflects on the strong global and regional sector developments documented during 2020 (Sirimanne, 2020). M&S is spending a lot of money on IT, systems, and logistics. Customers may be reached through mobile devices, in-store, and online. But when compared to other major online retail e-commerce companies like Amazon or eBay, M&S falls significantly behind the competition (UNCTAD, 2021). M&S was hesitant to offer clothing for purchase online. To avoid wasting time and resources in the early stages, Amazon was first used to outsource the company’s business. M&S then mismanaged the launch of its website because of a high-tech warehouse that did not work properly. (Guardian News & Media Limited, 2021).
5. Suitable Leadership Style for M&S
There must be a variety of management styles for large corporations like M&S (Huo, 2016). When making decisions, M&S’s management used a process that may be compared to consultative leadership. This means that employees’ input was taken into account to uphold the company’s reputation and heritage. Finally, the decision was made by a group of people inside the corporate structure. But it is possible to argue that M&S’s approach to management was not solely consultative. For example, at the highest levels of management, while formulating the company’s operational strategy, consultative methods appear appropriate (Gill, 2012). Nevertheless, in certain situations, both democratic and authoritarian management approaches might be used. For instance, if the crew running the equipment lacks expertise in the area, autocratic management may boost production. Thus, standing on the verge of facing drastic changes due to both Brexit and COVID-19, the company must consider implicating a new leadership style.
UK enterprises were actively drafting business contingency plans after the EU Exit in 2019. To cope with the pandemic’s immediate effect, several Brexit workers were redeployed (Deloitte LLP, 2020). Businesses will need to evaluate how COVID-19 affects COVID-19. COVID-19 and Brexit have caused financial shocks to business executives. As a result of the epidemic, business profits have fallen and corporate debt has risen sharply. The trade wars and Brexit were already bad enough, while COVID-19 cases continue to climb, raising questions about how long the epidemic will last. The timing of the COVID-19, not to mention the potential of a hard Brexit, was disastrous for several industries. It is clear from the preceding research that M&S is losing competitiveness as a result of the epidemic.
The post-Brexit supply chain is tense, and COVID-19 and its aftermath continue to have volatile and impactful effects. A change in thinking is starting to happen, but this is not to be mistaken with a successful systematic transformation, which needs direction, preparation and resources (Nanda, Xu and Zhang, 2021). M&S must use the transformational leadership style to meet the challenges of Brexit and make the most of its digital footprint to remain competitive in the post-COVID future. Nevertheless, it’s crucial to keep in mind that M&S must have a very competitive aim in mind. They must include the need for long-term, revolutionary initiatives and changes (Faria, 2020). To succeed in today’s volatile business environment, companies must be nimble and adapt rapidly to changing circumstances, know when to maintain the course and where to modify it, and be prepared to restart fast when the situation improves. However, the rapidity of the COVID-19 issue may necessitate the adoption of new tools and skills, such as real-time decision-making and scenario-based forecasting. Gamble (2021) stated that this will enable them to swiftly simulate the changes they are experiencing and design a potential recovery strategy, as well as a reinvention plan in the longer term.
6. CSR Strategy of M&S
No industry in the world competes with British retail as fiercely as retailing does. It is all the more illuminating since a few of the most prominent British retailers are actively fighting on issues of social responsibility and environmental sustainability (Grayson, 2011). To be an M&S customer means caring about the world they live in. The firm was built on the principles of fair trading: treating employees well, establishing long-term shared destiny partnerships with suppliers, and providing excellent quality and a liberal attitude to consumers who desire to return or exchange items bought. Paternalism was a big part of the company’s centennial celebrations, and it continued in its charitable giving. Customers, suppliers, and other customers may all benefit from a firm’s commitment to CSR, according to the corporation (Demirel, 2016). If they have an effective CSR strategy, they believe that they will attract consumers as well, and therefore get value from them.
Carroll (2016) presents four categories of corporate social responsibility that encompass the following:
Carroll’s Pyramid of CSR
(Source: Carroll, 2016)
|
Philanthropic
|
Ethical
|
Legal
|
Economic
|
|
Philanthropic obligation stipulates that the lawful acts performed by a firm without any restriction or forces, such as compassion, are considered charitable. It’s prohibited and unregulated for companies like M&S to support the impoverished or children with leukaemia, for example, on their brand’s behalf. Offering energy-efficient appliances is a way for M&S to give back to the community while simultaneously boosting sales.
|
Ethical actions benefit the community as well as the well-being of the company’s workers or shareholders. To save costs, boost efficiency, and do business responsibly, M&S is experimenting with a new programme for suppliers. The organisation also practises community welfare, including the correct use of donated food supplies, financial gifts, and clothing giving initiatives.
|
The majority of M&S’s legal duties are handled by the government and other regulatory authorities, and as a result, all of the company’s acts are carried out following the law.
|
Financial stewardship comprises shareholders who want to see a return on their investment and workers who want stable employment with adequate benefits, but this can only happen if the business is profitable.
|
(Source: Choudhary and Piparo, n. d; Gill and Broderick, 2014; Demirel, 2016; Islam, 2016; Sughra, 2019)
Carroll’s pyramid asserts that M&S engages in CSR efforts that benefit individuals and society. Their resolve to become carbon neutral and eliminate all landfill garbage by 2012 exemplifies this (Marks and Spencer plc, 2022). No other store has gone that far. For M&S, it is important, to be honest with suppliers, shareholders, and consumers. They want equitable working conditions, hours, and pay for their employees. However, labour conditions and hours are unethical in certain places.
The “Environmental, Social, and Governance” (ESG) framework of M&S highlights their commitments to driving action on the most significant sustainability issues that enterprises, society, and the planet face now and in the future (Marks and Spencer plc, 2022). It’s important to them that their clients, co-workers, vendors, and shareholders know they’re doing the right thing. Since they initiated “Plan A” fourteen years ago, the climate emergency has advanced swiftly. M&S is placing sustainability at the centre of its strategy to guarantee that the earth and M&S are both in better form for the future in the face of that emergency. Even after ten years, Plan A continues to be one of the most important sustainability initiatives (Marks and Spencer plc, 2022). As a company that empowers its customers to positively affect their well-being, communities, and the world via everything it does, Plan A aims to establish a sustainable future.
Despite the overwhelming nature of the climate change problem, the firm is certain that a brighter future can be achieved since they have already made progress. Free plastic bags were outlawed by M&S in 2008, and the shop also introduced the first garment recycling programme (Marks and Spencer plc, 2022). Over the years, strong partnerships have been created between communities, authorities, charities, NGOs, and companies, including the competition. M&S has modified its objectives to include enhancing the well-being of its workers as well as advancing global socioeconomic and environmental progress. All stakeholders are encouraged to work collaboratively to lessen the harmful effects of COVID-19. Workers’ social security, pensions, and severance pay are just a few of the benefits the corporation believes in (M&S, 2020).
7. Conclusion
The UK’s decision to exit the EU, known as Brexit, is having a major impact on M&S’s business. After Brexit, the UK’s position on trade restrictions and tariffs is unclear, but many of the possible outcomes are bad for UK retail. An increasing number of consumers are shopping online, and M&S is capitalising on this trend to expand internationally. But the company is still far behind its competitors in this regard, although the sales of M&S had been declining well before the covid-19 outbreak over the previous several years. The business achieved carbon neutrality in 2012, making it the first big retailer in the UK to do so. This proves that the CSR strategy of the company is quite strong. To strengthen its market position, M&S has to expand into new areas and enhance its online presence, and cope with the impact of Brexit’s new policies. In this case, the company needs to implicate a transformational leadership style in its operation.
References
BBC. 2021. M&S blames Brexit as it closes 11 French stores. [online] Available at: https://www.bbc.com/news/business-58582860 [Accessed on: 30th March, 2021]
Bedford, E. 2022. Most popular supermarket chains in the UK Q4 2021. [online] Available at: https://www.statista.com/statistics/1135764/most-popular-supermarkets-in-the-uk/ [Accessed on: 30th March, 2021]
Carroll, A.B., 2016. Carroll’s pyramid of CSR: taking another look. International journal of corporate social responsibility, 1(1), pp.1-8.
Casadei, P. and Iammarino, S., 2021. Trade policy shocks in the UK textile and apparel value chain: Firm perceptions of Brexit uncertainty. Journal of International Business Policy, 4(2), pp.262-285.
Chapman, B. 2021. M&S to close 30 stores after slumping to £201m loss. [online] Available at: https://www.independent.co.uk/news/business/marks-and-spencer-sales-results-loss-b1854047.html [Accessed on: 30th March, 2021]
Choudhary, B. and Piparo, T.L., n. d. Case Study–Strategy 2020 for M&S.
Davey, J. 2021. M&S profit seen crashing 90% in “lost year” of pandemic. [online] Available at: https://www.reuters.com/business/retail-consumer/ms-profit-seen-crashing-90-lost-year-pandemic-2021-05-21/ [Accessed on: 30th March, 2021]
Deloitte LLP. 2020. Tackling Brexit and COVID-19 together. [online]. Available at: https://www.academia.edu/30450996/Case_study_of_Marks_and_Spencer [Accessed on: 30th March, 2021]
Demirel, G. 2016. MARKS AND SPENCER CSR ISSUE. [online] Academia. Available at: https://www.academia.edu/30999515/MARKS_AND_SPENCER_CSR_ISSUE [Accessed on: 30th March, 2021]
Faria, B.V.I.R.D., 2020. Potential impact of brexit in marks and spencer (Doctoral dissertation).
Forbes Media LLC. 2022. M&S. [online] Available at: https://www.forbes.com/companies/marks-spencer/?sh=e6b67487de14 [Accessed on: 30th March, 2021]
Gamble, A.N.D.R.E.W., 2021. The Remaking of Conservativism: Boris Johnson and the Politics of Brexit. The Political Quarterly, 92(3), pp.461-468.
Gill, D. and Broderick, A., 2014. Brand heritage and CSR credentials: A discourse analysis of M&S reports. In Communicating corporate social responsibility: Perspectives and practice. Emerald Group Publishing Limited.
Gill, R., 2012. Leadership and Strategy at Marks & Spencer. SAGE Publications Ltd.
Grayson, D., 2011. Embedding corporate responsibility and sustainability: Marks & Spencer. Journal of Management Development.
Guardian News & Media Limited. 2021. Five reasons Marks & Spencer is struggling against its competitors. [online] Available at: https://www.theguardian.com/business/2020/aug/18/five-reasons-marks-spencer-is-struggling-against-its-competitors [Accessed on: 30th March, 2021]
Hanno, M. 2019. Harvard Business Review Analytic - Marks and Spencer. [online] Available at: https://www.linkedin.com/pulse/harvard-business-review-analytic-marks-spencer-maha-hanno [Accessed on: 30th March, 2021]
Huo, D. 2016. Case study of Marks and Spencer. [online] Academia. Available at: https://www.academia.edu/30450996/Case_study_of_Marks_and_Spencer [Accessed on: 30th March, 2021]
Islam, K., 2016. Can Ethical Business Strategy Influence Consumers’ Buying Behavior and Loyalty: Marks and Spencer PLC?. Case Studies in Business and Management, 3(1), pp.38-63.
Leite, B.T.D.S., 2020. M&S out of fashion the case of an outdated brick and mortar (Doctoral dissertation).
M&S. 2020. M&S Covid-19 Response: Workers in Supply Chains. [online] Available at: https://corporate.marksandspencer.com/documents/plan-a/m-and-s-response-to-covid19-workers-in-supply-chains [Accessed on: 30th March, 2021]
Marks and Spencer plc. 2022. PLAN A: OUR PLANET. [online] Available at: https://corporate.marksandspencer.com/sustainability/plan-a-our-planet [Accessed on: 30th March, 2021]
Marks and Spencer plc. 2022. SUSTAINABILITY AT M&S. [online] Available at: https://corporate.marksandspencer.com/sustainability/sustainability-at-mands [Accessed on: 30th March, 2021]
Nanda, A., Xu, Y. and Zhang, F., 2021. How would the COVID-19 pandemic reshape retail real estate and high streets through acceleration of E-commerce and digitalization?. Journal of Urban Management, 10(2), pp.110-124.
Sirimanne, S. N. 2020. COVID-19 and e-commerce: a global review. [online] Available at: https://unctad.org/webflyer/covid-19-and-e-commerce-global-review [Accessed on: 30th March, 2021]
Sughra, G., 2019. CSR, a Pretence or a Bona Fide; Case Study of M&S and Next. In The Components of Sustainable Development (pp. 53-61). Springer, Singapore.
UNCTAD. 2021. How COVID-19 triggered the digital and e-commerce turning point. [online] Available at: https://unctad.org/news/how-covid-19-triggered-digital-and-e-commerce-turning-point [Accessed on: 30th March, 2021]
