Executive and Spencer (M&S) examining the company’s

Executive Summary

The shopping attitude of consumers in
the clothing market is changing and their expectations is on the increase. As a
result, the sector has continued to struggle, with two of the major players in
the market, M&S and Next, reporting decreasing sales. This case study
analysis is focused on M&S to examine the management structure and the changes
the company has implemented to improve its operations in order to remain
competitive. The leadership styles adopted within the company and its impact on
the employees is also examined. The changes and reorganisation of strategy
through the years has enabled M&S to maintain its image and quality and
also improves its turnover.

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1. Introduction

Due to the dynamic nature of the
clothing market, it has become more important for retailers to focus on
standing out from the competition through a combination of frequently changing
collections, better products, attractive stores, a seamless online experience
and excellent customer service (Mintel, 2017). Specialist clothing retailers such
as Marks and Spencer, have experience a decline in their share of the total
clothing market, with only 52.6% of all consumer spending on clothing and
accessories going through the specialists in 2017 (Mintel, 2017). This report
presents a case study analysis on Marks and Spencer (M&S) examining the company’s
management and decision making process. The report is structured as follows:
M Company Profile; Management Style and New Organisation Structure; Planning
Processes Used in the Case Study; Leadership Styles Adopted; and Conclusion.

2. M Company
Profile

M is one of the UK’s leading retailers
offering high quality, own-brand food, clothing & home products online and
through its 1,433 stores (Reuters, 2018). The company was founded in 1884 by
Michael Marks and Thomas Spencer in Leeds. M&S food
accounting for 60% of UK turnover is sold across 1,025 UK stores, including 253
owned and 383 franchise Simply Food stores (M&S, 2018).
Womenswear, menswear, kidswear, lingerie, beauty and home products accounts for
40% of UK turnover. These items are sold to consumers through 343 full-line
stores, outlets and website M&S.com. The company’s pricing strategy is positioned
at upper mid-market, competing with Next. It has undertaken to restore its
price position by cutting prices and reducing the number of promotions and
sales it runs. However, despite a focus on repositioning womenswear, M
continues to struggle with its clothing business as clothing sales fell by 4.2%
in 2016 and 1.2% in the first quarter of 2017 (Mintel, 2017).
As a result, the company is planning
to reshape its store portfolio, with less space dedicated to clothing and more
to food.

3. Management Style and New
Organisation Structure

M management style at inception
was a top-down management style which gave no opportunity for employees to introduce
ideas into the company. A top-down management style is when the CEO or top
management of an organisation has independent control over the decision-making
process (Will, 1998; Truss et al, 2012). When Simon Marks took over leadership
of the company, he demonstrated a sense of personal control over the
organisation’s activities. The next CEO, Richard Greenbury also adopted a
similar management style. Managers and employees were not encouraged to
generate ideas and be innovative. They were told exactly what to do and feared
to present ideas that could anger the top management. For example, M&S used
to allocate products to stores without speaking to employees and customers to determine
if the products were needed in that store. This resulted in some stores
stocking products that do not suit customers in that location. Store managers
and store assistants had knowledge about what the customers wanted which could
have enabled M&S review and change their strategy in accordance with the market.
However, they were not given the opportunity to voice their opinion which led
to reduced sales and falling profits.  

Salsbury took over leadership of the
company and adopted a management style that was different from his predecessors.
He chose a customer centric approach that involves a shift from the
bureaucratic culture and creating a decision-making environment that wasn’t
encumbered by hierarchy. His leadership allowed for effective change management
and an implementation of a reorganisation strategy. However, this was not sufficient
as the company needed to determine what their customers wanted before giving it
to them. In 2000, Luc Vandevelde was appointed as the CEO. He was the first CEO
to be appointed from outside of the organisation. His management style was geared
towards restructuring the organisation and enforcing change management by implementing
many new ideas in the organisation. He introduced a new corporate image, with a
detailed plan of moving the business closer to the customer. Profit centres were
created to allow more effective information flows and responsiveness; thereby, creating
a customer-facing organisation with explicit focus on the customer and providing
what they wanted. Vandevelde also created dedicated buying and selling teams to
simplify the management structures. After the major changes to the management
structure, M experienced a turnaround in performance as customers were
coming back and buying more.

4. Planning Processes Used in the
Case Study

In order to recover from the
challenges of the 1990s and be competitive, M made some changes to its
planning process. These changes include the following:

Creating a New Image: M has an established brand name with a core competence of
quality. When sales began to decline in the 1990s, a customer centric approach was
adopted to restore the image of the company and promote the brand. A new
corporate image with new colours and logos was introduced to replace the famous
original St Michael brand. This includes changing the uniform of the store staff
and also the symbol of the Marks and Spencer brand. In addition to these, new
styles of clothing and food ranges were launched to present M as innovative
retailer. These changes enabled the company to increase sales and remain
competitive.

Supply Chain: M’s
supply chain is regarded as a critical resource used to plan its operations. M&S
expanded into Europe and America using UK suppliers. However, this strategy
failed and resulted in a fall of share price and profit as these countries has totally
different cultures to the UK. In order to maintain competitiveness, the supply
chain was restructured by using overseas sourcing and severing links with UK
suppliers. M&S stores outside the UK were allowed to develop their own
strategies that were tailored to the needs of the local market and do not have
to follow the strategies implemented in the UK market.

Stock Optimisation: M&S implemented an information technology system called BizTalk into its
planning process to change the way sale information was being delivered to
central systems. Using this technology, product availability was improved and
cost reduced as sales information was passed in near real-time to suppliers so
that changes can be made to products during manufacturing stage. In addition to
this, excess stock were sold in factory outlet malls at a discounted price.

5. Leadership Styles Adopted

Leadership style is the approach adopted
by a leader in an organisation to implement strategies, provide direction and
motivate employees (Northouse, 2015).  From
on the case study, the following leadership styles were identified in M&S:

Autocratic: The
autocratic leadership style allows the CEO to make decisions alone without any
input from the employees (Ghuman, 2010; DuBrin, 2011). The leader possess total
authority and impose their decisions on employees without any challenge. Simon
Marks exhibited this type of leadership style as found in the case study. He
had personal control of the company’s activities and was responsible for its strategic
decisions. His attitude was aggressive and employees were bullied. Another example
is Richard Greenbury, who showed similar characteristics of an autocratic
leader. He had centralised authority over the decisions and operations of the
organisation.

Charismatic: Charismatic
leaders are visionary and motivated by a commitment to change the status quo
and redirect employees thinking (Northouse, 2017). Their style of leadership is
are sometimes referred to as transformational leadership due to similar characteristics
they share (Northouse, 2015). Salsbury demonstrated the characteristics of a
charismatic leader through the various approaches he took. He made changes that
moved the company from its bureaucratic culture by creating a decision-making
environment that wasn’t encumbered by hierarchy.  His focus was to restore M&S’s image as an
innovative retailer and he energised employees to achieve it

Democratic: A
democratic leader also known as participative leader, consults employees and considers
their ideas when making decisions regarding the organisation (DuBrin, 2011).
This characteristic is demonstrated in Luc Vandervelde when he was appointed as
the CEO. He simplified the management structures in the organisation by
encouraging effective information flows and responsiveness among employees. He adopted
a forward looking approach with an explicit focus on the customer to create
products that customers wanted.