Marks and Spencer

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Marks and Spencer (M&S) is a well-known retailer in the UK and elsewhere.

In 2004, M&S was subject to a take-over bid from another UK retailer: Philip Green. The bid has been withdrawn (at least for the time being), and M&S has a new boss.

Among other things, this episode provides a clear challenge to M&S. Shareholders will be looking for medium term value that significantly exceeeds Green's offer, while retaining the M&S management style.

The Green bid was a challenge to the identity of M&S as well as its viability. The proposition was effectively this: let me impose my retail and management style on M&S, and watch me deliver higher long-term profits.

All organizations need both identity and viability. But in some situations, there may be a trade-off between identity and viability. Some organizations devote energies to preserving their corporate identity, even when this represents a long-term threat to corporate viability. A large retailer may maintain a strong, clear and consistent brand image, but the customers may drift towards more fashionable brands, resulting in loss of business.

> corporate identity
> viability, perceived and actual

One aspect of M&S corporate identity is in a strong (and widely respected) management system. We can learn a lot from the strengths and weaknesses of this system.

> management system

M&S website

Analysing M&S - Suggested Angles

veryard projects > business organization > case studies > m&s > angles

	View the material on the M&S website about the company and its strategy. What is the company saying about itself and its future prospects? Compare with at least one other retailer.
	Critically review the recent efforts by M&S to improve profitability. How successfully do you think M&S has balanced the needs of identity and viability?
	If you know anyone who works for M&S, ask them what they think of the recent changes.
	Do you think it possible that M&S could be more successful overseas? What are the implications for its corporate identity in overseas markets?
	Could M&S have predicted that their management system would not always deliver results for them? How?
	Search the Internet for comments and financial analysis about M&S. Has the recent take-over bid affected judgements about the viability of the company? (See if you can find what people were saying before the bid.)
	See if you can relate key events and changes to the share price graph. Apart from the takeover bid, does this graph suggest any other time period for closer study?

M&S and Corporate Identity

veryard projects > business organization > case studies > m&s > corporate identity

M&S has a very strong corporate identity.

Well-known retail brand name – clear image and style
Protective corporate principles and culture – Theory Z
Self esteem and pride.

In some situations, however, M&S has been forced to renege on its principles. For example, when it closed some stores in France, it was apparently unable to provide the level of job protection and benefits that M&S employees have come to expect. M&S did not even manage to comply with French law in the way they consulted staff about the closures, leaving them open to accusations of corporate irresponsibility. These charges wounded a company that prides itself on going beyond the letter of the law.

M&S - Viability - Perceived and Actual

veryard projects > business organization > case studies > m&s > viability

M&S is a profitable UK company.

In recent years there have been many concerns expressed about the future profitability and growth of M&S. It has been suggested in some quarters that its corporate style and identity have constrained its financial results.

Stung by criticism, M&S made various changes to its image. It has recruited fashion "experts" (George Davies) to update its clothing range, hired celebrities (David Beckham) to endorse some of the products, and produced a controversial television advertisement featuring a blurred image of a rather large naked woman.

We should also note that, like many other UK retailers, attempts to grow overseas have been unsuccessful. It seems that the corporate identity does not travel well.

5 year share price chart from BigCharts.com

3 month share price chart from BigCharts.com

Which chart gives you more information?

Price/Earnings Ratio

M&S Management and Systems

veryard projects > business organization > case studies > m&s > management systems

In the past, M&S has invested heavily in a state-of-the-art management system. By "system" here we don’t just mean a computer information system, but a comprehensive sociotechnical system, including strong management skills and culture.

This system has been regarded with respect across the retail sector and beyond; many M&S managers have been poached by other companies, hoping to gain something of the M&S management magic.

However the M&S management system, while impressive, has not always produced good results even for M&S. Sometimes when a system is regarded with such awe, people are blinded to any inadequacies or weaknesses, and accept its findings without a second thought.

The M&S management systems were developed over many years, and of course they became deeply ingrained in the culture. The culture was there to support the old, stolid M&S image and was not ready to change in support of a refashioned image. There was a limit to the management goals that the management systems were fit to pursue, and the management systems themselves came into crisis when they failed to deliver the expected financial results.

veryard projects > business organization > case studies > mks