STRATEGIC MANAGEMENT AND LEADERSHIP

STUDENT NAME:

MAVIS MC BURNIE

TABLE OF CONTENTS
1.

EXECUTIVE SUMMARY..................... 3

2.

RECENT STRATEGIC DEVELOPMENT HISTORY........................ 3

3.

2.1

Background... 3

2.2

The Cultural Web: Pre 1998 era............................. 4

2.3

1998 to 2000: Struggle for Survival........ 5

2.4

2000 to 2010: Change in Strategy....... 6

CURRENT STRATEGIC SITUATION...................................................................................... 7

3.1

External Analysis.. 7
3.1.1. PESTEL framework... 7
3.1.2. Porters five forces framework. 8
3.1.3

3.2

The industry life cycle.. 10

Internal Analysis........ 11
3.2.1

Resource based view (RBV)....... 11

3.2.1.1 VRIN............................................................................................. 11
3.2.1.2 Value Chain.................................................................................. 12
3.2.1.3 TOWS Matrix................................................................................ 13

3.2.2

4.

5.

Organisational structure.. 14

STRATEGIC DIRECTION FOR THE FUTURE.......................................................................... 15

4.1

Ansoff Matrix........................... 16

4.2

BCG Growth Matrix....... 17

4.3

Strategic Alliance................................................................................................... 19

CONCLUSION..................................................................................................................... 20

REFERENCES...................................................................................................................................

21

1. EXECUTIVE SUMMARY
This report presents a critical analysis of Marks and Spencer (M&S) strategic development history from the
1990s to 2014. The external and internal influences on the companys past, present and future strategies
were analysed using various business models like Porters five forces framework, PESTEL, The Cultural
Web and Resource Based View (RBV) theory.

The major finding is that M&S culture has driven its strategy in the past and continues to do so up to day,
evident in the fact that its target customers still remain the 55 plus demographic. The focus on high-quality
products appeared to have undermined its other core values like innovation resulting in the companys
inability to meet customers demand for fashionable clothing.

The report reveals that while the clothing UK market is mature, strong growth potential exists in lingerie
and food as well as overseas markets. As such, it is recommended that M&S adopt an innovative and
customer-oriented strategy by continually developing its internal competences and employing effective
marketing segmentation to target the profitable segments in the most efficient manner.

2. RECENT STRATEGIC DEVELOPMENT HISTORY

2.1

Background

Marks and Spencer, commonly referred to as M&S was founded by Michael Marks who opened a penny
bazaar at Leeds market stall in 1884. Ten years later he was joined by Tom Spencer, and the partnership
grew into the company known today as Marks & Spencer (Marks In Time n.d.). Built on the founding
principles of Quality, Value, Service, Innovation and Trust, M&S over its 130-year existence, has been
defined by its reputation for high quality (Johnson et al. 2011, p. 650). Notwithstanding this emphasis on
quality, M&S has had somewhat of a roller coaster history, punctuated with turbulent periods of soaring
profits, near failures, aggressive takeover bids and tenures of successful and unsuccessful leadership. Once
known as the icon of British retailing, M&S is struggling today in its traditional clothing UK market
having its 2014 annual profits taken over for the first time by one of its high street clothing competitor,
Next: 695b vs. M&S projected 630b(The Telegraph, 2014).

2.2 The Cultural Web Pre 1998 era

The cultural web is a succinct means of identifying and analysing the taken-for-granted assumptions of an
organisation (Johnson et al. 2011, pp. 176 - 81). The behaviours, symbols and physical manifestations that
grew out of the taken-for-granted assumptions of the company during its early existence are illustrated in
the cultural web depicted in Figure 2.2.
Figure 2.2 Marks & Spencer Cultural Web

Stories
Michael Marks penny bazaars
and partnership with Tom
Spencer.
More than 100- year old rich
history and reputation for high
quality.

Symbols
St. Michaels logo
Uniformity in store design
and layout
Store clerks with measuring
tapes to fit customers
Classical fashion image

Paradigm

Rituals & Routines

No loyalty or credit cards
No fitting rooms
No marketing campaigns
No promotional sales
Used only British suppliers
Paid critical attention to detail

Organisational structures
Hierarchical top-down
structure
No brainstorming or
engaging employees for
feedback/opinions
Strong relationships with
local suppliers

Conservative culture
steeped in tradition
driven by an
overarching emphasis
on high-quality British
products.

Control systems
Top-down, bureaucratic, rigid
system of control
No decision making power given
to store managers.
All decisions controlled by Head
Office.

Power structures
Autocratic: CEO and
Chair were one and the
same
Key decisions/directives
made by CEO; no
consultation with
executives.

Created by M. Mc Burnie, 2014

Rituals and Routines or this is the way we do things around here reinforced M&S belief that its high
quality clothing was all that mattered. Having no fitting rooms, no loyalty cards, and no marketing
campaigns did not impact customer loyalty or so it thought.

The stories of Michael Marks and Tom Spencer told around the company sought to further embed M&S
employees into the organisations taken for granted assumptions and way of doing things.
From the St. Michaels logo to the uniformity in store design, M&S symbols replicated quality and
attention to detail in every product placed on the market.

Power was highly critical to M&S. The roles of CEO and Chair were filled by the same individual so that
with fewer layers of hierarchy, key decisions could be implemented quickly.

The organisational structure of M&S was dominated by a hierarchical top-down system supported by its
power structure. All guidance issued from the top dominated the structure and control systems. Absence of
brainstorming meetings was quite evident.

Central to the core or paradigm of M&S culture in the 1990s was its focus on high, consistent and reliable
quality. Every action taken was influenced by this paradigm to the extent that M&S was drifting slowly
from the realities of the external environment and did not even realise it.
Admittedly, changing the paradigm of an organisations culture is no easy feat but according to Seel (2000,
pp. 2-9) unless the paradigm is modified, there would be no lasting change. As would be seen in Section
2.3, the paradigm became a major challenge to achieving strategic change as M&S approached the turn of
the century.

2.3

1998 to 2000 Struggle for survival

By 1998, the cultural web that had brought the British retail giant unprecedented success no longer fitted in
with the surrounding industry and external environment.

Competitors were obtaining products from

sources outside of the UK at much cheaper prices while M&S continued to maintain rigid loyalty towards
expensive local suppliers. Loyal customers were departing to competitors like Next, Gap and Oasis for
trendier clothing at lower prices. No longer were customers prepared to work around the inconveniences
of no credit cards, no loyalty cards and no fitting rooms in exchange for drab and unappealing clothing.

What M&S had overlooked was the fact that the market had changed and its outdated and static way of
doing business had become out of sync with the requirements for business effectiveness. Johnson et al.
(2011, p. 158) notes that when this occurs, organisations enter a stage of strategic drift where incremental
changes develop as a result of cultural influences but fail to keep pace with a changing environment. M&S
was in desperate need of a new strategy and according to George Davies (Johnson et al. 2011, p. 655),
owner of the Per Una brand, the biggest challenge for anyone coming into M&S at that time was to free it
from its constipated culture.
2000 to 2010 Change in strategy

2.4

Over the next decade, M&S faced an uphill task to regain market share, improve profitability and restore
shareholder confidence. Several replacements were made at the helm with the position of CEO changing
five times between 2000 and 2010, the last being Marc Bolland who assumed the position of CEO in 2010.
With new management on board, not bound by the paradigm of the existing culture the companys revenue
started soaring once again. Some of the key decisions that were taken included:
a. Acquiring a fashionable and trendy new clothing line, Per Una, from designer George
Davies that resulted in M&S recording its first sales increase in three years.
b. Launching loyalty card schemes to attract more customers into the stores and increase
spending.
c. Sourcing products from cheaper suppliers outside of the UK to reduce operating costs.
d. Launching the Simply Food stores concept and an M&S website
e. Changing its log from St. Michael to Your M&S
f.

Creating a flatter organisational structure and placing more decision making authority and
accountability in the hands of the store and department managers.

The new strategy paid off. By 2006, M&S was on its way to recovery with share prices rising to as much as
717 at the end of 2006 as illustrated in Figure 2.4.

Figure 2.4 Marks & Spencer share price, April 2000 December 2006

Source: Yahoo! Finance

3.

CURRENT STRATEGIC SITUATION

3.1

EXTERNAL ANALYSIS

An evaluation of M&S changing and complex external environment becomes critical to determine the
forces which can have a positive or negative impact on its future existence. The PESTEL framework,
Porters Five Forces Framework and the Industry Life Cycle are three tools that will be used to carry out
this analysis.

3.1.1

PESTEL Framework

The PESTEL framework provides a useful tool for identifying the political, economic, social,
technological, environmental and legal issues in the macro environment that impact the success or failure
of an organisations strategy (Jobber 2010). Figure 3.1.1 outlines a PESTEL analysis for M&S and shows
the key drivers for change likely to impact the company in 2014 and beyond.
7

Figure 3.1.1 PESTEL Analysis for Marks & Spencer

Factors

Opportunities/Threats

Political

The EU and Free Trade Agreements enable

companies to source goods from other countries at
cheaper rates

This can threaten M&S as it places competitors in a better position to

compete on cost as they are able to obtain products at a cheaper
rate.

Economic
UK economy slowly recovering from the global
recession.

Opportunities exist to become creative in anticipation of the full

recovery e.g. competitive pricing and increased sales promotions.
Increased opportunities for international expansion and trade as
well as alternative options for sourcing products.

Emerging markets in Russia, India, China, Western

Europe and the Middle East with growth economies.
Social
Food prices on the decline.

Rising demand for fashionable and trendy clothing.

Diversification into wider choices e.g. offering restaurant-quality

food delivery service at home.
Opportunities to develop new styles and designs in response to
increased spending on the better and best segments.

Technological

Increasing number of customers shopping online.

Customers are becoming more technologically savvy.

Environmental
Growing societal awareness of environmental issues
and the importance of going green.
Legal
There are a host of regulations governing the
production, packaging and distribution of food as
well as consumer protection and employee safety.

3.1.2

Opportunities to reduce investment cost for construction of

physical stores and increase geographical reach to international
markets through the internet.
Increase in online shopping can increase competition and
diminish the overall profitability of M&S as customers can easily
compare prices of retailers.

Opportunities exist for launch of other ethical and

environmental programmes like Plan A to encourage healthy
eating and utilisation of sustainable raw materials.

If integrity is not maintained in the production of its products

(e.g. food safety) and if environmental safety standards are not
held, M&S can be open to litigation.

Porters five forces framework

Developed by Michael Porter (2008, pp. 25-40), the five forces framework illustrated in Figure 2.2 is a
useful model that can be used to determine an industrys attractiveness for entry taking into account five
competitive forces; threat of entry, threat of substitutes, power of buyers, power of suppliers and
competitive rivalry among existing competitors.

Figure 3.1.2 Porters five forces framework

Source: Johnson et al., 2011

The threat of entry into M&S market is low. Traditional barriers like high capital investments for
construction of large physical storefront are being constantly reduced or eliminated with the growth of the
internet. Businesses desirous of entering industries like clothing can compete in a virtual environment
without a physical storefront.

Many alternatives exist in the food, clothing and general merchandise industry; therefore, the threat of
substitutes is high. For example, consumers can purchase a substitute food item from Tesco if not
available at M&S or a cheaper item of clothing from Primark.

The bargaining power of buyers is high as customers have many retailers to choose from ranging from
Tesco and Sainsbury in the food sector to Next, George at Asda and Zara in the clothing sector. Buyers can
demand cheaper prices or better service ultimately reducing M&S profitability.

In contrast, the bargaining power of suppliers is low as buyers have many choices. Suppliers have
reduced power over quality, price and delivery terms. With the increasing use of the internet, customers
can compare prices from different suppliers easier and make an almost seamless switch from one supplier to
the next.
9

Finally, rivalry among existing competitors is high on all fronts with price wars, high promotional
activities, rising and falling sales. In clothing, M&S faces high rivalry from competitors like Next and Zara
and in the food industry there is intense competition from the big four: Tesco, Sainsburys, Asda and
Morrison.

3.1.3

The industry life cycle

The power of the five forces discussed in the previous section usually impact an organisation based on the
stage of the industry life cycle. Figure 1.3 illustrates the five stages that an industry goes through from the
first time a product is developed and introduced to the market.

Figure 3.1.3 Industry life cycle for Marks & Spencers food and clothing

Food

Clothing

Source: Johnson et al., 2011

From Figure 3.1.3, it can be concluded that M&S products are at different stages of the industry life cycle;
food is at the growth stage while clothing is at the maturity stage. Grant (2010, p. 271-5) and Armstrong
and Kotler (2009, p. 248-50) argue that during the maturity stage, low growth is experienced, products are
relatively standard and market share and cost become very important.
10

An interesting point arising from this analysis is that industries can be at different stages of the life cycle in
different countries. The clothing market in the UK has entered the mature stage; however, the economies
of Russia, India, China, and Western Europe are in their growth phases and provide opportunities for
international expansion.

The PESTEL framework, five force framework and industry life cycle clearly reveal that the external
environment in which M&S currently operates has become increasingly unstable and the identification of
profit opportunities are becoming more and more challenging. Focusing on internal resources and
capabilities to sustain competitive advantages rather than relying on industry attractiveness (Grant 2010, p.
122), would be a more reliable basis to formulate a competitive strategy for M&S, the subject of Section
3.2.

3.2

INTERNAL ANALYSIS

In this section, the resource-based view (RBV) strategy of M&S will be examined including Porters value
chain and a TOWS matrix. The section concludes with an illustration of M&S organisational structure.

3.2.1

Resource Based View (RBV)

According to Johnson et al (2011, p. 84), the Resource Based View (RBV) of strategy implies that an
organisations competitive advantage and superior performance lies in its distinct or unique capabilities:
what it has (resources) and what it does well (its competences). David (2011, p. 96) and Barney (2000, pp.
20327) believe that for an organisations resources and competences to create competitive advantages,
they must be valuable, rare, inimitable and non-substitutable, a concept referred to as VRIN. M&S
resources and competences are summarised in the following sections.

3.2.1.1 VRIN

Arguably, M&S VRIN was its powerful brand, long-standing reputation for high-quality products and
strong relationships with suppliers. Taken together, this linked set of core competences were indeed
valuable, rare and could not be easily imitated or substituted providing M&S with significant competitive
11

advantages. In recent times however, intense competition, increasing availability of substitute products as
well as the growing use of the internet have challenged M&S resources and competences. Developing new
resources and competencies that cannot be easily imitated would be key to achieving competitive
advantages in the future.

3.2.1.2 Value Chain

Porters value chain model involves reviewing the primary and support activities of an organisation to
identify areas where an organisation achieves the greatest value and then focusing on those areas of value to
achieve competitive advantage (Rainer & Cegielski 2013, p. 50-1). The primary activities illustrated in
Figure 3.2.2 deal with the actual production and delivery of the product or service. On the other hand,
support or secondary activities do not add value directly but help to improve the efficient delivery of the
primary activities.
Figure 3.2.1.2 Porters Value Chain Model

Source: Business strategy tools, 2014

For M&S, the areas of greatest value in its value chain appear to be that of outbound logistics ( warehousing
and distributing finished products to customers) linked to infrastructure (798 stores highly visible and
easily accessible on almost every high street in the UK) and supported by technology (IT systems and fast
growing e-commerce business). Rainer & Cegielski argue that an organisations value chain forms part of a
larger set of activities referred to as a value system or network (Johnson et al. 2011, p. 100). M&S suppliers
and their value chains are regarded as part of M&S internal resources and competences and so they are part
of the whole industry value system.
12

3.2.1.3 TOWS Matrix

A TOWS matrix is very similar to a SWOT analysis but goes a step further by matching external
opportunities and threats with internal strengths and weaknesses (Johnson et al. 2011, p. 108). The matrix
presented in Table 3.2.1.3 reveals a series of future strategies and the extent to which M&S is capable of
supporting these strategies.
Table 3.2.1.3 TOWS Matrix for Marks & Spencer

Strengths

Opportunities

UK economy recovering from the

global recession
Growing demand for fashion
clothing among 30+ customers
More customers shopping online
Overseas markets like India and
China experiencing growth
Healthy eating habits
Threats

Intense competition from low-cost

high-fashion companies
Sale of substitution products on the
increase
Clothing industry in the mature
stage of the product life cycle
Growing use of the internet make
customers better informed

Powerful and trusted retail brand

Long-standing reputation for high
quality products
Large store network and successful
international market penetration
1,253 stores in 54 territories.
Sustainable and reliable supply
chain
Large and highly trained employee
base of over 85,000 persons
Growing e-commerce website
(SO)
Capitalise on strong brand name and
reputation
to
access
further
international expansion
Use large employee base and large
store network to roll out voluminous
sales/promotions in anticipation of
increased consumer spending with
recovery of the economy.
Use reputation for high quality to
continually introduce healthy foods
(ST)
Use long-standing relationships with
suppliers to bargain for cheaper
products of comparable quality
Use presence in overseas markets to
develop relationship with suppliers
to obtain fashionable, quality
clothing.
Continually update website to
improve customer experience and
increase online shopping

Weaknesses

Limited marketing/advertising
Slow to adjust to changing
trends/lifestyles
Unattractive clothing
Expensive products
Core customer 55 plus

(WO)
Target
marketing
and
promotional activity to younger
market segment.
Increase focus on marketing and
fashion through R&D
Improve IT systems to increase
online
shopping
reduce
operating cost and ultimately
product cost.

(WT)
Engage in R&D to offer more
brand names that are in keeping
with current trend and fashion.
Source products from overseas
markets to make products more
affordable.
Increase international expansion
outside of the UK mature
market.

13

3.2.2

Organisational structure

Figure 3.2.2 illustrates a much flatter organisational structure for M&S compared to the pre-1998 era when
the companys structure consisted of one individual holding the position of CEO and Chairman and
responsible for all decision- making.

Figure 3.2.2 Marks & Spencer Board of Directors - March 2014

Robert Swannell
Chairman

Marc Bolland
Chief Executive

Steve Rowe
Executive Director
Food

Laura Wade-Gery
Executive Director
Multi-channel

Andy Halford
Non-Executive Director

Martha Lane-Fox
Non-Executive Director

Alan Stewart
Chief Finance Officer

Patrick Bousquet-Chavanne
Executive Director
Marketing & Bus. Develop.

Vindi Banga
Non-Executive Director

Jan du Plessis
Senior Independent Director

Alison Brittain
Non-Executive Director

John Dixon
Executive Director
General Merchandise

Miranda Curtis
Non-Executive Director

Amanda Mellor
Group Secretary
&
Head of Corporate
Governance

Source: M&S Annual Report (2014)

Under each main division e.g. food and general merchandise there are various sub-divisions headed by
managers with varying responsibilities e.g. clothing, beauty. The existence of separate divisions based on
products, services and geographical areas is described by Johnson et al. (2011, p. 434) as multidivisional
Having a multidivisional structure has served to strengthen M&S internal resources and competences as
clearer focus can now be directed to each division and effective tracking of individual units performance.

14

One drawback of this structure can be the pursuit of strategies by divisional managers that are not in sync
with the strategies of the corporate parent;

As alluded to at the end of Section 3.1, the possibility of achieving VRIN could be heightened if M&S
places greater emphasis on its internal resources and competencies and design strategies to exploit the
differences that would become evident between itself and its competitors. Working to only overcome the
challenges and exploit the opportunities in the external environment are not sufficient to reap the desired
benefits available to the company.

4.

STRATEGIC DIRECTION FOR THE FUTURE

The conditions prevailing in the current external environment have no doubt challenged M&S ability to
sustain the competitive advantage and superior economic performance it once enjoyed in the past. The
significant rise and fall in share prices up to July 2014, speaks to the fact that expected performance
outcomes have not yet met the expectations of shareholders.

Figure 4 Marks & Spencer plc share price: January 2007 July 2014

Source: Yahoo! Finance

Should M&S now turn to a cost leadership, innovation or customer-orientation strategy? The response to
this question will be determined after an evaluation of M&S future strategic direction is undertaken using
the Ansoff matrix, BCG Matrix and the strategic alliance frameworks.
15

4.1 Ansoff Matrix

The Ansoff matrix developed by Igor Ansoff (QuickMBA, 2010) and illustrated in Figure 3.1 presents
market penetration, product development, market development and diversification as four ways in which an
organisation can achieve profitable market/product growth.

Figure 4.1 Ansoff Matrix

Source: Riley, 2012

Market penetration
Market penetration focuses on growing existing products in existing markets to increase market share.
M&S can penetrate the market by engaging in more aggressive promotional campaigns and sales
promotions and adopting a competitive pricing strategy. The introduction of free overnight shipping on
selected items purchased on M&S.com is one way in which the e-commerce market can be penetrated.

Product development

In product development, new products are introduced to existing markets. The introduction of a catering
service for special events like weddings, parties, conferences is an example of product development at M&S
and also a classic example of Blue Ocean Thinking (Johnson et al. 2011, p. 73).

16

Market development
Market development involves selling existing products to new markets. M&S needs to be able to sell its
products to the 30-year growing demographic in the way the Per Una brand was able to do back in 2003.
The challenge to expand into new markets is in already in train as plans are afoot to open 250 stores outside
of the UK within the next three years and increase stores in India to 100 by 2016 (The Telegraph 2014).

Diversification
Through a diversification strategy new products are developed for new markets; usually viewed as a risky
option since it may be outside the core competences of the organisation. The emerging economies of
Russia, India and Western countries provide opportunities for innovative products to be marketed for
example introducing Western cuisine into its food lines.

As M&S focuses on achieving market/product growth, it should consider developing products that fit
closely with the companys core philosophy and competencies as too many product lines can result in
cannibalisation (Investopedia, 2014). In addition, despite the attraction of increasing internationalisation,
timing as well as the elements of the PESTEL framework are key factors that must be taken into
consideration as these can impact the success or failure of any strategy being undertaken.

4.2

BCG Growth/Share Matrix

The Boston Consulting Group (BCG) Growth/Share Matrix is a useful tool that is used to determine the
attractiveness of an organisations products against market growth rate/relative market share (Armstrong &
Kotler 2009, pp. 40 -1).

Products are placed in one of the four categories illustrated in Figure 4.2 and a

decision made on whether to build, hold, harvest or divest.

Figure 4.2
The BCG Growth/Share
Matrix

Source: Business strategy tools, 2014

17

According to Armstrong and Kotler (2009, p. 40), stars are business units in high growth markets with high
market share and require heavy ongoing investment to sustain them. Question marks exist in high growth
markets with low market share and require significant investment to push them into the star category. Cash
cows operate in low growth or mature markets with high market share. David (2011, p. 186) recommends
milking these business units as much as possible without destroying the cow. Finally, dogs are business
units with low share in low growth markets.

Because they are a drain on resources, it is usually

recommended that they be removed from the portfolio.

M&S has a wide range of products and many different business lines within each of its portfolio as
illustrated in Figure 4.2.1. Other product lines have not been reflected on the matrix as the focus of this
report has been limited to the companys core business of food, clothing and general merchandise.
Figure 4.2.1 BCG Growth Share Matrix for Marks & Spencer

Relative market share

High

Stars

Low

Question Marks
Home ware
Beauty

High
M&S.com

Market
growth
rate

Menswear & Kidswear

Womenswear

Cash cows

Dogs

Food products

Lingerie

Low

Premium price
clothing

Created by M. Mc Burnie, 2014

Stars
M&S.com is a star in the product/service portfolio. The new M&S.com website launched in 2013
supported by the new e-commerce distribution centre at Castle Donington capable of processing
one million products daily has shown great potential for growth. A build objective should be
pursued by continually upgrading and enhancing the website and making more products available
online to enable it to become a future cash cow.
18

Question Marks
It may not be advisable to divest womenswear and beauty products as they both complement
lingerie which is a cash cow in the product portfolio. Jobber (2010) argues that if two products

complement each other, deleting one product can negatively impact the marketing of the
other products in the product portfolio. Revamping womenswear by designing fashionable
clothing to attract the 30 plus market is the growth strategy that is being recommended. Menswear

and kidswear both generate reasonable revenues for the company so it would be a good
idea to continue investing in them to turn them into stars and eventually cash cows. While
beauty products have not yet achieved a dominant position, a build objective should also be pursued
albeit on a lower scale. Similarly, a build objective, like sales on selected furniture should also be
pursued for homeware as the UK economy is beginning to recover and there are positive prospects
for expansion of the construction sector (CBI 2013, p. 3-4) which can result in increased demand
for furnishings for new or remodelled buildings.

Cash Cows
M&S has two good-sized cash cows, food and lingerie. Since these products represent the backbone
of the company they should be vigorously defended by holding onto sales and market share; for
example, continually introducing new and appealing food and lingerie lines (Bras are still regarded
as one of M&S most iconic products). Funds generated from these cash cows can be channelled
into the stars (M&S.com) and the promising question marks to develop them into cash cows.

Dogs
Premium priced clothing has been identified in the dog category. With low share in a mature or
declining market, M&S should give strong consideration to divesting this product line as it may
continue to place a drain on resources without the desired level of returns.

M&S main drivers are clothing and food. If it does not balance these products well in the portfolio, the
company can be in for trouble. Investment in fashionable clothing, tasty and healthy foods supported by
increased advertising are the strategies that M&S should pursue as it moves into the future.

4.3

Strategic Alliance

Considering that M&S operates in a mature market for clothing, it is strongly recommended that the
company consider a joint venture strategic alliance with a suitable fashion leader like Next or Zara to
improve its product offering in clothing. Under this arrangement, a new entity jointly owned by both parties
19

would be set up with specific focus on clothing and fashion. The remaining business units of M&S (food
and home ware) would continue to operate independent of the joint venture.

By combining their distinctive resources, M&S would be in a better position to overcome its individual
weakness in modern fashion and design by drawing on the strength of its partner. Conversely, Next or Zara
can overcome their weaknesses in perhaps supply chain management and distribution by drawing on M&S
expertise in strong supplier relationship and efficient distribution systems. By complementing each other, it
is obvious that both parties would be in a better position to respond to competitive challenges jointly rather
than going it alone.

Johnson et al. (2011, p. 348) emphasise that if there is lack of organisation fit, the joint alliance can involve
culture clashes as both partners come from different backgrounds and the question of who really governs
can become confrontational over time.

In addition, both partners should have similar objectives to

minimise any potential conflicts in strategy development.

5.

CONCLUSION

As a long-standing UK business, M&S differentiation strategy emphasised quality and value at a premium
price but neglected a key founding value, that of innovation. It must now refocus its efforts to become an
innovative, customer-oriented business with specific emphasis on introducing new products and services,
adding new features to existing products and services and developing new ways to bring them to the
customer.

The market is demanding fashionable clothing. M&S has to step up efforts towards meeting this demand
through a joint venture with a strategic partner to achieve competitive advantages. It should then increase
its investment in advertising to build its brand image on fashion to support innovation and value. The
external challenges of increased competition and technological improvements will require M&S to
continually develop and rely primarily on its internal resources and competencies to achieve competitive
advantages.

Ultimately, the ability to provide the right product to the right customer at the right time through the right
channel to provide an exceptional customer experience will be a defining factor in the success or failure of
any M&S future strategy.

20

REFERENCES
Bloomberg News 2012, M&S loses Britains largest clothing retailer title to Next, viewed 11 August
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