Strategic Management II

Marks & Spencer: The Phoenix

Rises

Presented by
Group 1
Aswin Sridhar
Robin Bansal
Nikhil Saraf
Sasi Kanth Pingali
Suhail Sabharwal
Y N Sudheer

History of Marks & Spencer

Started in 1882 - Michael Marks begins
trading from a stall in Leeds

Transformation into modern retail chain

in the 1920s - Sears model

Revolutionary policy of buying directly

from manufacturers

Narrow ranges of high quality of goods

offering great value

Growth in Britain
Dominant
position in
food &
apparel
markets

One of the
worlds best
managed
companies in
1960s

Top
Management
Involvement

Charge Cards
introduced in
1985

Limited
Investment in
Inventory

Growth in Britain
High
Product
Value

M&S Formula
Partnership with
Suppliers

Lower
Supplier
Costs

Increased
Volumes

Partnership with
Employees
Partnership with
Customers

Food

M&S Business

Clothing

Financia
l
Services

Global Expansion

Unsatisfactory
Expansion Efforts in
North America
- Acquired two retail chains in
Canada
- Local Competition and
unfavourable market
challenged the M&S Formula
- High premiums paid for
Brooks Brothers and Kings
Super Markets in the United
States

Successful
Expansion in
Continental
Europe
especially France
due to popularity
of M&S Brand

The Decline
Disinclina
tion to
Source
Offshore
Site
Selection
of M&S
stores

Managem
ent
Issues

Facto
rs
1997
Asian
Financial
Crisis
Incompet
ent
Expansio
n Efforts

Rise of
Pound
against
European
Currencie
s

Saturation of retail markets in UK & loss of Best Value tag

led to a loss in customer confidence and decline of M&S

Problems identified

Econo
my

Financials

Leadership crisis
Asian Financial
crisis
Non-improving
Financials
Location of Food
stores
Sourcing

Leadership Crisis

Senior Directors replaced by

promoted managers and Leadership
plan disrupted by Queens honours
list

Asian Financial
Crisis

Retail sales dropped and new

competition in womens clothing

Non-improving
Financials

No improvement in clothing
revenues and a series of Lay-offs

Location of Food
Stores

Food stores not favourably located

Sourcing

Senior Directors replaced by

promoted managers and Leadership
plan disrupted by Queens honours
list

Luc Vandevelde and the M&S Revival

Vandevelde appointed Executive Chairman of Marks &
Spencer in January 2000

Leadership
Turnaround

Reconstitution of leadership team strategic

appointment of new directors
Complemented by long time M&S personnel
Architects of fightback

Fighting Back

Total focus on UK retail

Program of Value Realization getting rid of
distractions
Return of 2 billion to shareholders

CUBE 1
Recovery Plan

Recovery plan communicated throughout

organisation
Key Elements - Unique Fundamental Strengths,
Ways of Mission & Values, Strategy and Ways of
Working

Luc Vandevelde and the M&S Revival

Perfect and Per
Una campaigns

Other Initiatives

CUBE 2
Consolidation
Plan

Perfect aimed at getting basics right and providing

good value to customers
Per Una was a new line for the core customer
looking for style at high quality and reasonable
prices
Better, Faster and at Lower Cost was the mantra

Zip: Aimed at streamlining development,

manufacture and the sale of the childrens line
Simply Food: A convenient store in high customer
flow areas
Home: Home business with strategy of sourcing
directly and maintaining consistency across the
range
Financial Services: M &S and More Card
combined M&S Card with a credit card
Aimed at securing the recovery
Sustainable growth of business lines
Shift from product to experiences and lifestyles
Improving efficiency and productivity of the business
system

Strategy
-100% focus on UK retail and
financial services
-Realize value
-Capital Restructuring
-Exploitation of unique strengths

Values
-Quality
-Value
-Service
-Innovation
-Trust

CUBE
1 Work style
Strengths

-100% own brand

-Command of supply chain
-Economies of Scale
-Assisted self selection

-Customer centric
-Team work
-Incentivizing strategy

Ansoff Matrix

Existing Products

New Products

Existing
Markets

Market Penetration

Product Development

New
Markets

Market Development

Diversification

Case Takeaways
Most often, Successful turnaround is a
consequence of reviving the Leadership
team
Command over supply chain is crucial
for Sustainability
Corporate strategy should be aligned
with Business goals for effective
outcomes
Strong leadership with some bold
decision making can give strategic
direction to the organisation
Focus on unique strengths & be flexible
to change

Thank
You!