Food And Financial Retailer Marks Spencer Needs example essay topic

FINANCIAL MANAGEMENT PROJECT MARKS & SPENCER 1. Introduction " Springtime 1998 and 13 million shoppers a week were pouring through the doors of Marks & Spencer's 286 British stores. More important, those customers were pouring out again laden with bright green shiny plastic bags bulging with M&S clothes, food and homeware. That May, one of the sunniest and driest on record, directors and store managers alike were bedazzled by the figures.

Business had rarely been better for Britain's largest and most trusted retailer". The clothing, food and financial services retailer, Marks & Spencer, is a worldwide organisation stepped in 100 years of history. The history of Marks & Spencer tell's a tale of how a family-run business can grow from the opening of Simon Mark's first Bizarre store at Kirk gate open-market in Leeds in 1884, to being one of the most successful British department stores of all time, with profits exceeding lb 1 billion in 1997. But it is also a tale of bureaucracy, tradition, failure to change and a business obsessed by strictly restricting the chairmanship of the company for over half a decade to purely family members.

"Family businesses have many virtues - the partnership with staff and suppliers, the proprietorial interest - but one of Marks & Spencer's flaws was the reluctance of the founding family to acknowledge that as a result of turning the business into a public company with outside ownership it had duties and obligations to outside shareholders. Marks & Spencer's rhetoric was full of tributes to the customers, the staff and the suppliers. The importance of the shareholders was rarely considered - at least until after the share price collapsed in the late 1990's". Failure to change and recognize the need for competitive advantage ultimately lead to a five year slump which started in late 1997 with the acquisition of nineteen Littlewoods stores aquired for almost double their worth but which never fully realised their potential, leading to half-year profits falling by 23 per cent in November 1998 and by 1999 shares fell by 23 per cent on profits warning. Profits collapsed by 50 per cent in May 1999 and by June Rick Greenbury had resigned as chairman. In the years to follow, and up until the present day, Marks & Spencer has struggled to gain market share, re-establish a sound brand image and appoint a new chairman, Luc Vandervelde (2000).

Figure 1 shows Marks & Spencer's share price since 1999 as compared with the FTSE 100, which is the share index for the top 100 UK listed companies. This shows that M&S is well below the index standard and has only in the last year begun to climb to be on a par with the other 100 leading companies. Marks & Spencer five-year share price index as compared with the FTSE 100 Figure 1 More recently, M & S has been slowly strengthening with the launch of new brands such as the casuals collection, Per Una, the designer range, Autograph and the re-vamping of he children's section headlined by clothes inspired by the footballer David Beckham in 2002. This has led to significant improvements in sales and financial performance. This brief history sets the scene for our financial and strategic analysis of the company that so many of us have shopped in but know very little about. Why is the department store so popular?

And how was the Marks & Spencer heritage brought about? And why for almost a five-year period originating in the mid 1990's did the company which most people thought could never tumble from it's pedestal fall into economic turmoil and almost lose the good name it had spent so long establishing? The purpose of this report is to determine how Marks & Spencer function as a business, to give an insight into company procedure and strategic ways of conducting business, and to take a look at how their finances are managed. This report will give an overall view of the company and will provide conclusions and recommendations for the company to consider in its future strategic planning.

In order to answer these questions this report will utilise five key areas of analysis: The Industry / PEST (political, economic, social and technological) analysis, the business strategy over the past five years, an evaluation of the company's financial strategies and evaluation of their effectiveness, and a SWOT (strengths, weaknesses, opportunities and threats) analysis. The main focus of attention will be placed on how Marks & Spencer has brought the company into the 21st centaury. In the latter part of the 20th centaury M & S appeared blinded by tradition and insisted on following a standard set of rules to conduct business laid down by the founder, Simon Marks at the end of the 19th centaury. The staff at Marks & Spencer were often unavailable or looked miserable as if doing their jobs was a chore. The shop floors were looked dreary in comparison to modern-day department stores such as Debenhams, which could showcase a feat of design technology on London's Oxford street, or the House of Fraser, which revamped their stores for the Millennium. Other key issues that have affected and continue to affect Marks & Spencer, which will be discussed in this report, are: SS The introduction of the Euro.

The companies that manage a smooth transition will have the competitive edge. Re-training will be needed. How to price products, how the Euro might affect suppliers and whether the company's computers, software and tills could cope with the Euro. SS Marks & Spencer Financial Services - six million customers and a product range encompassing credit, life and pensions, savings and investment and insurance products.

SS Female Equality, (M&S was winner of the Female FTSE 100 award). SS Marks & Spencer schemes for work placements, and giving homeless people the skills and experience necessary to find full time employment. SS Strong ethical and environmental initiative. The ways M&S products and services affect people, the environment and animal welfare. The greatest challenge for them is the sheer diversity of raw materials, production process, chemicals and countries of operation involved in producing M & S goods.

SS Marks & Spencer trial of a virtual sales assistant and the roll out of self-service tills. SS Reduced contractors for warehousing from four to two. SS New Director of Human Resources and Marketing SS Marks & Spencer plans biggest ever launch of seasonal collections. Financial SS World's leading retailer 2003 - Dow Jones Sustainability Index SS Invests at least 1% of pre-tax profits into community projects every year SS Encourages employees to give to charities, they then add 10% matching the Governments 10% to all their donations. It is important in this report not only to be aware of what are the underlying internal and external influences effecting Marks & Spencer but most importantly to provide recommendations and strategic and finical plans for the company, which, if followed would ultimately benefit them in the long run.

This report will therefore, analyse the company position at present and specify how recommendations can be implemented and what results can be expected, including prepared forecasted ratios and a time table or agenda for action, specific annual objectives and polices and finally recommended procedures for strategy review and evaluation. Retail Industry - Sector Background The retail industry in which Marks & Spencer operates is, in some parts of the United Kingdom one of the largest if not the sole manufacturing industry adding lb 7 billion of value annually according to the National Strategy for the UK Clothing and Textile Industry (Department for Trade and Industry 2002). One of the biggest concerns that British retailers are facing is the increased competition from foreign investors into the country such as the Spanish clothing company; Zara, Japan's Uniq lo or the recent take over of Asda by the American giant Walmart. Labour and raw materials in overseas countries such as Eastern Europe or South East Asia is far cheaper then domestic production in the United Kingdom, who also face high inflation, which is proving a problem for Marks & Spencer who pride themselves on sourcing domestically and upholding an ethos of British tradition. For example in 1985 pre-tax profits rose 68% from lb 181.2 m to lb 304.1 m on sales up from lb 1.9 billion to lb 3.2 billion but inflation rose by 40%, so there was only really a 28% real profit growth. Clothing spending has under preformed spending on all consumer goods, as people are tending to spend their disposable income on more luxury items such as televisions, stereos and holidays.

The September 11 attacks in America caused a slump in the more luxurious end of the clothing market and the surge of discount stores such as Peacocks, Primark and TK Maxx means that people are seeking more value for money for causal every-day wear. The UK clothing sector is highly saturated, the large shops and chains controlling around 75% of the market, the top five players being Marks & Spencer, British Home Stores, Next, Arcadia and Littlewoods employ almost 220,000 workers between them. It has been proven in the years 1995-2000 that the Italian clothing and textile industry has vastly outperformed the British, French and German industries. The Department for Trade and Industry in the United Kingdom has realised an importance to analyse exactly how the United Kingdom is functioning in the clothing industry and published a nationally strategy report for the UK Textile and Clothing Industry in the Autumn of 2001.

The right Honourable Stephen Byers MP, Secretary of State for Trade and Industry realises in his forward to the strategy that", The TCSG (Textile and Clothing Strategy Group) initiative has helped focus minds on what has to be done if we are to succeed. It has led to the development of an agreed agenda. The key to success, however, is for the industry itself to take this agenda forward. My department will look very constructively at the recommendations in this report and will provide a full response to the TCSG.

We shall ensure that we continue to work with the industry, and the TCSG, to help bring about the improvements necessary for the UK's textile and clothing industry to become an ever more effective player in the world economy". There is much that the Government can do to help create a climate for success but ultimately, those who work within the industry must make the changes necessary to face the future with confidence. The report outlines the sector's future and helps companies to realise more efficient production methods by recommending them to diversify into new markets and develop new products. The report came out at a crucial time when the clothing industry was and still is in decline and is backed by Stephen Byers, MP Secretary of State for Trade and Industry and James McAdam, Chairman for the Textile and Clothing Strategy Group. The report realised a need to look to other, more successful countries, especially Italy and has consequently, in April 2003 released a second economics paper, A Comparative Study of the British and Italian Textile and Clothing Industries. This report is of particular importance as it underlines the thinking behind new products at Marks & Spencer and is provided by Linda S pala and other M & S colleagues.

Industry / PEST Analysis As both domestic and international clothing, food and financial retailer Marks & Spencer needs to be aware of the wider macro-environmental issues affecting the clothing and textile industry. It is not enough for the company to be primarily concerned with internal micro-environmental influences. In order to create an effective business strategy it is essential that M & S analyse key influences that are not under their control concerning Political, Economic, Social and Technological aspects of the environment in which they operate. POLITICAL In the past three years the UK government has been concerned with the state of the textile and clothing industry. The Department for Trade and Industry has the task of promoting, influencing and helping one of the most significant British industries, which in the recent past has been in a state of decline.

Increased competition from successful foreign countries and the influx of investment into the British market has meant that unless a competitive strategy is realised British company's profits will continue to decline, worsening the state of the economy and taking away key domestic output. The National Strategy for the UK Textile and Clothing Industry (DTI 2001) has realised that the strongest source of competition to stores such as Marks & Spencer is from foreign rivalry and the outsourcing of manufacturing, "often, new competitors have a lead start over the UK manufactures because of cheap labour costs, less stringent health, safety, environmental or labour regulations and, in many cases, substantial assistance from national or regional governments whilst themselves hiding behind penal tariff and non tariff barriers". Marks & Spencer's is a large company with a consolidated profit at the end of the last financial year of lb 480.5 million and a strong tradition of sourcing in the UK, but with production costs ever rising they are forced to source overseas. DTI recognizes a strong responsibility towards educating the future clothing and textile leaders of tomorrow. The UK fashion scene has been looked down upon in recent years with many graduates seeking positions in foreign companies. There has been a lack of funding into education and as a result The Department for Trade and Industry has developed three core training and development clothing and textile projects and is involved with another two "in order to increase productivity, competitiveness and sustainability".

1. The Strategic Training for Apparel and Textiles Project (STAT) This is the most significant programme relevant to the textile and clothing sector that DTI runs in conjunction with the Department for Work and Pensions (DWP). They aim to improve the skills base of the industry including technical, managerial and operating training. DWP has allocated lb 1.8 million for this project.

The project provides employers the funds and training necessary to give employees the skills needed to implement business change, development of their workforce and the improvement of future productivity, competitiveness and employment prospects within the industry. STAT began in April 2001 and has since contacted over 6000 companies. Eighteen companies have been accepted onto the STAT programme and are receiving up to lb 28,000.2. CD-ROM For Schools A grant of lb 142,000 has been awarded from the DTI's innovation Budget to fund this project. The CD-Rom aims to make the prospect of joining the clothing and textile industry more appealing to school leaves with the use of an appealing interactive role model. The under 16's CD-Rom has already been developed and tested and is proving a success and the post 16 programme is under development.

3. Flexible Solutions for the Provision of Training for the Textile Industry This project has been awarded a DTI grant of lb 178,134. This project assists the provision of training for the textile industry through distance learning. National Textile Training Organisation (NT TO) is leading on the project and is in association with the Confederation of British Wool Textiles (CWT) KLITRA (National Training Organisation for Knitting, Lace and Narrow Fabrics), Lancashire Textile Manufacturers Association (LTM A) and the Textile Finishers Association (TFA). All information on Government funding projects for the clothing and textile industry has been taken from the DTI website: web ECONOMIC According to the Mintel 2002 report entitled Clothing Retailing in UK, there are as many as 140 different clothing chains in the United Kingdom (excluding the leading players, Marks & Spencer, Next, BHS, Arcadia and Littlewoods). There is also market dominance from foreign competitors such as Henne se & Mauri tz, Benetton and TK Maxx who gross sales some where in the region of $50 - $600 million.

Consumer spending across Europe has been relatively strong in recent years but the clothing sector has remained static were forecasts would have expected clothing retailers in general to performance more strongly. Since the recession in the early 1990's, recovery has been steady although there was a downward slump in 1995 and early 1996. During 1997 there was strong consumption expenditure. GDP fell in 1999 due to strong domestic demand. During 2002-2003 there has been a slowing of private consumption. Wages and house prices in the United Kingdom have risen since 1998, which has meant that inflation has fallen from 3.4% in 1998 to 1.5% in 1999.

Prices in the retail sector have deflated throughout 1999 and 2000. SOCIAL Since the start of the 20th century, the UK population has increased by more then 50% and is expected to peak between 2020 and 2030. The UN projected that the population would decline by 3.9% to 56.7 million by 2050. With an ageing population, clothing retailers need to begin to target the older market. Currently, the most targeted market is the 15-25 year old female with high street shops such as Topshop, Miss Selfridge, New Look and River Island in abundance. According to Mintel the proportion of 65+ year olds in the population has risen from 15% in 1980 to 15.6% in 2000 and is expected to rise to 16.1% by 2010.

The median age of the population is forecast to rise from 38 years in 2000 to 40.7 years in 2010. Marks & Spencer should continue to do well in the next 5-10 years as they have a broad range of clothes to fit all ages and the most successful age range of buyers is middle - old - age. Consumer spending is rapidly slowing down as figure 2 shows % Change 1996 1997 1998 1999 2000 1996/00 Clothing 25,163 26,483 27,814 28,958 29,807 +18.5 Annual % Change +6.1 +4.9 +5.0 +4.1 +2.9 NA Source: ONS / Mintel Retail Intelligence, 2002 TECHNOLOGICAL The Information Technology revolution is fast descending upon us, it is impossible to avoid. Companies need to research the effects of globalisation.

Globalisation means that a single country can no longer exist in isolation. They need to be aware of what the rest of the world is doing in order to stay competitive. Many super markets have already introduced a fast track system where customers can scan in their products whilst they shop and not have to waste time at a check out, they simply hand over their scanner and pay for their goods. Any items that have not been scanned bleep as they exit the store.

Companies need to be aware of the effects of E-commerce strategy. Many companies have made the successful shift to online websites and customer ordering facilities. Often what people mistake is that E-commerce is simply an online payment transaction between a business and their customers, in fact E-commerce or E-business encompasses a much wider range of strategic functions. Dave Chaffey in his book E-business and E-commerce management points out that "electronic commerce is all electronically mediated information exchanges between an organisation and its external stakeholders". Marks & Spencer has an extremely clear and informative website with both company information and an on line catalogue which customers can order from (web).

Information Systems, "a system designed to produce information that can be used to support the activities of managers and other workers", are crucial in a company the size of Marks & Spencer. An example of the problems faced by huge amounts of reporting and the Information systems solutions that are possible can be derived from a Marks and Spencer Information Systems Seminar. "Operational IT is supported by databases, providing integrated reporting. Information provision is split into two kinds: executive information systems, which are paper-based, fixed-format and old; and management information systems, which report-centric and parameterized.

There are five separate IT groups in the company, one for each of the divisions. Reporting is a big problem in the company: there are a multiplicity of reports provided, all slightly different, from different sources; maintenance is a nightmare. There is a discrepancy between reports in many cases (20% in the example shown): how do you make a single decision? Their solution is data warehousing: they feed information into a single system, providing for a single source of information, with standardised reports and common training possible".

(See Appendix 2 for a detailed description of data warehousing) Business Strategy Over The Past Five Years Since 1998 Marks & Spencer has been working hard to regain the good name they had been establishing for almost 100 years and which was nearly lost during a five-year period in the mid 1990's due to falling profits, resulting from bland clothing designs, missed customer perception, dreary and tired shop fronts, unhelpful staff and the over investment in international M&S stores in Europe, Canada and the USA. Marks & Spencer has long adhered to the principles laid down by their founder Lord Marks but so many of the principles that the company so strongly believes in were not being followed or ignored. 1. To offer our customers a selective range of high quality, well designed and attractive merchandise at reasonable prices. 2. To encourage our suppliers to use the most modern and efficient techniques of production and quality control dictated by the latest discoveries in science and technology.

3. With the co-operation of our suppliers, to enforce the highest standard of quality control. 4. To plan the expansion of our stores for the better display of a widening range of goods and for the convenience of our customers.

5. To foster good human relations with customers, suppliers and staff. This section aims to look at he Marks & Spencer business strategy over the past five years from 1998-2003 and will contain an evaluation of the appropriateness and effectiveness of the strategies and their implementation. After having researched and analysed M&S company strategy there appears to be five evident areas that the company is targeting strategically. 1. Management and employee restructuring 2.

Re-vamping of clothing ranges and introduction of new lines 3. Strong ethical and environmental initiative 4. Strong training and award programmes - sense of duty to the community 5. Global Sourcing Principles MANAGEMENT AND EMPLOYEE RESTRUCTURING In 1999 Sir Richard Greenbury announced his retirement one year earlier then expected. He had been chairman and chief executive of Marks & Spencer until February 1st 1999 when Peter Salsbury took up a temporary position as head of the retailing giant.

Greenbury's reputation had been damaged by the slump in M & S profits announced earlier in the year, which led to a slide in share values and may be cited as a reason for his early retirement. Greenbury commented in an interview with the BBC "I feel that my contribution is complete and that now is the right time for me to retire, as the business is clearly entering a new era". Whether this statement is to be believed or if Greenbury primarily felt he could no longer help the failing business is subject to opinion but in the book The Rise and Fall of Marks & Spencer, author J. Bevan makes the point that Mr Greenbury was thought of as a "level four manager", within Jim Collins management evaluation criteria. Jim Collins, one of America's top management gurus who wrote for the Harvard Business Review in January 2001 describes managers in terms of levels.

A level four leader has, "Big egos, strong, charismatic personalities and do well in times of crisis. Political examples would be Churchill, Thatcher and Truman... but they lack the destructive quality of level five business leaders who 'make good companies great' with sufficient humility to put the company ahead of their personal ambition. Level four leaders often fail to set up the company for enduring success, after all, what better testament to your own personal greatness than that the place falls apart after you leave?" In 1999 when most of the management reshuffling took place, 31 of Marks & Spencer's top 125 top executives announced they were leaving. These job cuts cost the company lb 10 million in remuneration packages, which saw the company eventually cutting almost 200 senior managers and divisional directors in a bid to streamline the company and create a tighter management team. Management director, Andrew Stone and executive director James Benfield both took early retirement at the end of 1999.

The positions were abolished as part of an overhaul of M & S management structure designed to help turn around the fortunes of the store group who issued two profit warnings in 1999. The company said its new board structure would result in "faster, more customer-focused decision making". The Marks & Spencer's group has reduced the number of people on its board from 23 to 16 in the last two years, with Keith Oates, the group's former deputy chairman, resigning after a bitter battle with Mr Salsbury over who should succeed Richard Greenbury. In 1999 three main business units were created, UK retail and Financial Services. "The streamlined structure is designed to reduce bureaucracy, give clearer lines of communication and accountability, and provide shorter reporting lines to the board of directors". At the end of the management-restructuring programme the number of senior managers has been reduced, with 3 directors, 11 divisional directors and 17 executives being relived of their posts.

Peter Salsbury, chief executive argued that "decision making will be devolved, enabling us to respond more effectively to our customers and to compete better in all our markets". Marks & Spencer's head office in London still has a very tight grip on the whole company process from design to distribution. M & S has only recently developed their first marketing department, which other companies perceive to be the norm. M & S in the past has "developed around individual product lines, rather than developing a corporate marketing strategy more closely linked to consumer tastes".

RE-VAMPING OF CLOTHING RANGES AND INTRODUCTION OF NEW LINES In 2003 Marks & Spencer is Europe's leading clothing retailer. Due to the fall in profits and market share during the late 1990's, M&S has had to step up their efforts in the non-apparel side of the business and become highly diversified in their food, home wear and financial activities. The clothing range is extensive, covering women's, men's and children's wear and appeals mainly to the middle-to-upper-end of the mass market. Marks & Spencer has had to withdraw from company owned foreign operations in continental Europe which has created a lot of negative publicity in the last two years, which means M&S has had to concentrate on domestic output and the introduction of new design ranges and strengthen their focus on a more quality, affordable product. Along with the heavy management restructuring programme has come Yasmin Yusuf who joined M&S from UK fashion retailer Warehouse to the newly created creative designer position. It appears that with new blood brings creative new ideas that have been injected into the bland image that M&S became stuck in for almost five years.

Older consumers hated the stereotype that they were forced into with nothing more in availability then dull browns, greys and blacks. In 2001 George Davis of Next and Asda fame was brought in to design, manufacture and supply a new woman's range entitled Per Una. Mr Davis is not an M&S employee and was brought in specifically as a consultant to inject some funk into the ever-waning company. The Per Una range only accounted for 2 per cent of over all selling space whilst Davis had negotiated a favourable cash sum for himself but what mattered was that there was finally, after so many years in the dark there was a distinctive aura of sophistication and glamour and when customers came to browse the collection they were reminded of the early stylish days of Next and the success of George at Asda. The executives at Marks & Spencer knew only too well that whilst the Per Una range had injected some excitement back into the company, they needed a range of every-day casuals at affordable prices that would once again hear the cash tills ringing and the customers laden with heavy green and white bags.

This came in the autumn of 2001 when Steve London, Business Unit Director and Yasmin Yusuf put together the perfect label, which almost doubled sales in the first two weekends. The range was profitable but was still "at a price almost any-one could afford". STRONG ETHICAL AND ENVIRONMENTAL INI ATIVE Marks & Spencer has a strong sense of duty towards the community and makes and effort to be environmentally and ethically aware. Luc Vandeveld sights three key strategic principles that will be a primary focus for 2003.1.

Take care and act responsibly in delivering high quality products and services 2. Create great places to work 3. Help make our communities good places in which to live and work. Mr Vandeveld comments on corporate responsibility "despite the tough conditions we " ve faced in recent years, theses values persisted and are deeply ingrained in the way we run our business. Everything we do is influenced by the notion of good corporate behaviour". Since the 1930's Marks & Spencer has been establishing a strong ethical and environmental code of conduct.

In 1933 chairman Simon Marks commissioned Flora Solomon to set up a staff welfare programme providing pensions, subsidised canteens, health advice, hairdressing, rest rooms and camping holidays. Since then and until the present day Marks & Spencer has a combination of charitable and ethical efforts. The company website (web) gives us a good chronological time line throughout the years. 1934 Marks & Spencer established a scientific laboratory to improve products. 1941 Staff raised funds for the war effort.

1959 Marks & Spencer became the first British retailer to introduce No Smoking rules. 1970's Donations of unsold foods to local charities started, and reusable plastic trays for food deliveries to stores are introduced. 1975 Scheme for recycling unwanted coat hangers is introduced at all stores. 1980's Marks & Spencer became a founding member of Business in the Community following urban riots, based on philosophy of 'healthy high streets need healthy back streets'. 1985 Marks & Spencer Charge card launched. 1991 First ranges of organic foods introduced.

1992 Marks & Spencer published its first brochure detailing environmental activities. 1994 Reusable packaging systems for delivering clothing to stores introduced. 1995 First Environmental Code of Practice covering the chemicals used in clothing production introduced. 1996 Fleet of liquefied and compressed natural gas food delivery vehicles launched. Marks & Spencer becomes a founding member of the Business in the Environment Index, and is the highest ranked retailer. 1999 Marks & Spencer published its Global Sourcing Principles.

2000 Marks & Spencer joined the Ethical Trading Initiative. 'Count On Us' healthy option foods launched and pilot ranges of organic cotton clothing introduced. Children's Promise Millennium campaign raised lb 21 m for disadvantaged children. 2001 Company-wide employee representation forums known as Business Involvement Groups launched.

Marks & Spencer announced targets to work towards fruit, salad and vegetables free from pesticide residues. Included in first and subsequent revisions of FTSE 4 Good ethical company index. 2002 First major UK retailer to sell and use free-range eggs in all food products. Launch of fuel efficient 'Urban Delivery Vehicle of the Year'. 'Rainbow of Hope' Queen's Golden Jubilee campaign in support of national I-CAN charity. Ranked as retail sector leader in worldwide Dow Jones Sustainability Index.

Opening of first new format Simply Food stores. 2003 Ranked in top 24 companies in Business in the Community's first Corporate Responsibility Index. First Corporate Social Responsibility publication A keynote that can be learnt from the strong emphasis Marks & Spencer has placed on corporate governance is that in this day and age where the company no longer runs as a private company, you as business have a responsibility to your shareholders, and main stake holders in the company. One of the fundamental issues in the past has been a lack of research into what the customer, the shareholder and employee want.

A family business believed they could progress successfully into the 21st centaury conducting business as they had always done. After resisting change for so long Marks & Spencer now prides themselves on their CRS (Corporate Responsibility) division. (See appendix 1 for more information) TRAINING AND AWARD PROGRAMMES Marks & Spencer has a strong training and award scheme which is essential for the company as they are given the responsibility of training the potential leaders of the business, therefore, it is in their best interests to instil in their employees the fundamental skills and company ethos that will take them successfully into the future. M&S has a well-established graduate training scheme for school leavers and degree graduates. "All graduate trainees receive a varied programme. You receive system training to enable best use of internal applications as well as training in your specialist area.

To start the programme you will have your own development plan following a needs analysis, with regular reviews. The overall programme is designed to last 6-12 months, but is driven by you. Therefore, your needs are met in a flexible way". Marks & Spencer offers 600 ready for work placements.

This is a scheme that was founded in January 2001 after research conducted by Bain & Company in 1998 indicated 'homelessness was not a priority for business but was for consumers'. This programme allows homeless people the chance to gain sound employable business skills by offering 600 two-week work placements in 13 cities in the UK and Eire. Marks & Spencer not only recognises this programme as a pathway for homeless people but also "as an opportunity to access a new pool of highly committed and motivated employees, as well as a way to developing the inter-personal skills of existing employees". You can see how successful this programme has been as, "To date over 270 placements have been offered at Marks & Spencer, 152 individuals have started placements, 60 people were advised to apply to Marks & Spencer, 23 people have been employed by Marks & Spencer, 4 people have found jobs with other employees within 8 weeks of finishing a placement. Placements have made a real difference to people's lives...

'When people have confidence in you, you have confidence in yourself - I value myself more... I didn't think there was life after homelessness but they gave me the opportunity, a second chance' Michael, Ready for Work trainee. Now employed in the post room at Marks & Spencer via Chambers Employment Agency and now living in his own flat". GLOBAL SOURCING PRINCIPLES The Big Issue writes on a number of ethical and environmental topics, recently in 2003 writing about the global sourcing policy at Marks & Spencer. "Marks & Spencer's mission statement promises environmental responsibility, animal welfare, ethics and a commitment to society and they are known to have positive policies towards their staff". This has come after the well-published trouble that M&S ran into in the late 1990's with regards to child labour allegations.

A World in Action television programme documented a factory in Morocco where M&S bough clothes made by girls as young at 13. M&S pleaded ignorance that child labour was in practice but has since then placed a vigilant effort on factory work conditions as most noted in the M&S Global Sourcing Principles report. Marks & Spencer now funds "educational programmes in Morocco in twenty-five factories supplying their clothing. The work-force, mainly women are offered free literacy and innumeracy classes". During the 1990's when sales and profits were falling, Marks & Spencer were forced to terminate contracts with suppliers in the North of England, causing hundreds of job loses and have had to source outside Europe in search of cheap labour. The move was inevitable and since then the company's financial position has improved.

Financial Strategies and Effectiveness Marks & Spencer's clothing business grew by 10% last year increasing their market share lead by 0.75 to just over 11%; this was primarily because of a significant improvement in all aspects of the quality, appeal and display of products. Marks & Spencer were doing well until the fourth quarter when many of their London stores significantly under preformed in the formal wear range. Women's wear has seen the fastest growth due to the Per Una, Casuals and Autograph collections, which have injected new life into stores. The core secret of M&S's new found success is that they now have the ability to change and refresh ranges more frequently, introducing a new collection almost every month. One of Marks & Spencer's largest financial strategies has been in segmenting the clothing ranges they offer to better meet the changing needs of their customers.

They no offer three main clothing ranges, a key essential range targeted to the mass market at an affordable price, the George Davis range, Per Una and a more expensive Autograph range signature by leading fashion designers. Marks & Spencer realised the need to segment the market further. M&S's core customers were spending lb 1 billion annually on sports clothing so they introduced a new sports collection in 2002 into 120 of their UK stores. The range featured clothes inspired by leading sporting figures such as Brendon foster, Darcy Bussel, Jason Robinson and Ellen MacArthur.

Last year Marks & Spencer set quality targets to achieve at least two fabric and garment innovations a year. In 2002 they created the machine washable crinkle blouse and their new easy iron 100% linen. Men and children's wear has always been a slow growth at Marks & Spencer. The introduction of the Blue Harbour collection, casual wear inspired by the cold crisp waters of the USA's East cost have contributed to a growth of 1.3 percentage points to 8.5% of the share of the men's casual market in 2003. This Autumn M&S plans to further increase their share of the men's market by launching the SP collection into 200 stores. This range wants to target "dads who are lads at heart and who are looking for a more urban contemporary range".

Underwear, accessories and footwear all continue to do well but they are still updating the ranges continuously with new ranges such as 'survival' which improved sales during the run up to father's day and Christmas. Marks & Spencer is making a strong effort in technology and innovation, an area in which the UK excels. They upgraded the quality and style of their Italian Leather shoes, and introduced the Air flex shoe, with its innovative air system offering enhanced cushioning and comfort. They have also developed 100% cotton air tech shirts that remain crease free all day and the machine washable suite, which was developed two years ago, has this year received the Queen's Award for enterprise and is their best selling suite.

Marks & Spencer has under preformed in their children's wear department and are working hard to regain market share. Apart from school wear M&S will not be catering for the 13+ age group in casual wear by September 2003. One of M&S's greatest successes comes from the David Beckham DB 07 range which models children's clothes on clothes the footballer wears and has exceeded all sales expectations. The DB 07 range will have two major launches each year for three years and is broadening its scope from a sports based look to included fashion items. The key to recovery is "develop quality clothing 'designed for kids, trusted by mums' - clothing which will appeal to children, but at the same time embrace the safety and style concerns of their parents.

Our focus is now back on the design process and on product quality". Marks & Spencer is a relatively stable company that can be considered as 'blue chip', those companies with a good reputation and historic performance. They are listed on the London Stock Exchange and are members of the FTSE 100, (100 leading UK companies). What Marks & Spencer has to be aware of is how wider-macro-environmental issues will have a strong impact on profits and share prices and not just solely focus on consumer demand and improving the business ascetically. A prime example on how macro-environmental issues (which you have no control over) will affect your industry was this Easter 2003 with the war in Iraq. During this period M&S predicted a 5% growth in sales since Luc Vandervelde took over as chairman and chief executive and helped reshape the business.

However, on March 20th the war broke out and on the 31st March in the financial times, Alan Brown, chief investment officer at State Street Global advisors announced, "their advice is not to trade on these violent swings". The market had become volatile and people had stopped trading their shares and buying luxury items. If you look at the below FTSE 100 graph you can see that during mid March and April there is a sharp decrease in share price due to the drop in oil prices and the loss that was made in the retail sector. Investors were loosing faith in the stock markets and were unsure of how long the was going to last. It is not just in the United Kingdom that moral is low, all across the world the stock markets have dropped to their lowest point in over a decade. FTSE 100 Even at this early stage in the war "top policy makers were warned that they should promise to take swift and concerted action such as cutting interest rates if the Global economy weakened further".

This was the sharpest decline in business since the period that followed the September 11 2001 attacks on the US. If you look at he following page at a Marks & Spencer stock analysis, which took place during six weeks during the war you, will be able to see just how much this event impacted the share price. In 1991 when the 11 countries of the European Union joined the Euro Marks & Spencer has stores in 10 out of the 11 countries and knows only too well about the complexities this brings. M&S main business is conducted in the UK, which has still yet to convert to the Euro. Training in the currency is crucial and M&S has produced videos in six different languages and has had to install 11,000 new tills. They have also had to introduce dual pricing so those who are not familiar with the Euro can compare the prices with their own currency.

The result of the Euro means that customers can compare prices more easily between countries and companies will be forced to respond with even more competitive prices. Swot Analysis It is important that Marks & Spencer considers what the company strengths, weaknesses, opportunities and threats are. In an extremly undifernciated industry with out heavy brand loyalty customers switch freely, shopping from one store to another. STRENGTHS Marks & Spencer is a long established retailer with a core of loyal customers. The brand is well recognised and with the introduction of a wide variety of clothing ranges such as Per Una, Autograph, Blue Harbour and DB 07 there is much variety to choose from.

M&S has done well to pull away from the bland image that was portrayed in the mid 1990's. M&S have managed to inject new life into the company by enlisting a new design team who have brought the company successfully into the Millennium. They have also contracted famous people such as David Beckham, Zo"e Ball and Darcy Bussel to promote and endure the store has proved a key marketing tactic. Marks & Spencer has a strong non-apparel side to their business, selling food, home wear and financial services. The food section and also the Simply Food stores outperformed the market last year and because of frequent changes and re-targeting plans the food range should continue to perform well in the years to come.

Marks & Spencer has many prime store locations across the United Kingdom. Many shops are either on busy high streets or in thriving shopping malls. Many are place in conjunction with Tesco's stores. Consumers can shop for their every-day groceries in Tesco and then pop into M&S for more luxury items or to browse the clothing ranges. WEAKNESSES Marks & Spencer's ventures in the rest of the world have been poor recently and as a result they have had to close all their stores in Canada and Europe and have recently sold the Brooks Brothers establishment in the USA for the knock down price of $225 billion. The group has decided that due to un-profitability in these countries they will cut their losses and concentrate on their UK stores.

This is a shame as the company spent so much time and money establishing these overseas holds. M&S is still looking for a suitable buyer for their Kings Supermarket stores in the US. Until 2002 M&S trading was going from bad to worse with operating and pre-tax profit margins falling sharply for a third consecutive year. A possible reason for this is that M&S let their stores slide. They were convinced that their good name couldn't be faltered and so spent little time in updating their clothing ranges and re-furbishing their stores but it has come the time when change is inevitable and instead of doing a little each year in improvements M&S has to spend millions of pounds and has to implement an extreme overhaul if they are to prosper in the future. OPPORTUNITIES There are many opportunities open to Marks & Spencer in order for the company to make a full recovery.

One of the most significant is a severe re-furbishing programme, which they have just started to implement. M & S felt that they were dealing with too many suppliers and have streamlined their managerial workforce and are now planning to cut their four suppliers to just two, which will deliver a saving of approximately lb 20 million. Marks & Spencer has achieved a 1.3 percentage point improvement in the clothing bought-in margin, and have continued to realise gains from consolidating their supply base and increasing the proportion of clothing produced over seas. Marks & Spencer's financial services have strengthened and are ahead of last year. The growth has been slow in this area due to M&S accepting all major credit cards but there is an opportunity for improvement. They are already in the process of piloting a scheme to introduce a new credit card that also acts as a loyalty card and they have branched out to offer wedding and travel insurance.

M&S will be focusing on creating ideas that tie in with specific dates such as Valentines Day or Christmas which offer a single product comprised of food, clothing and home ware. The company will also be targeting high street and railway stations next and opening more simply Food stores. The most significant opportunity for profit that will come to M&S in Spring 2004 at the Metro centre in Gateshead with the opening of a new Stand-alone home concept store 'Marks & Spencer lifestore'. THREATS Marks & Spencer have to be careful with their re-structuring programme, as there are threats, which may impede or slow down their recovery and growth.

The restructuring programme has yet to deliver sustained recovery so even though the progress made so far is exciting, M&S still has to continue and persevere before they notice a significant difference. The rapid change that the company is undergoing may only serve to further alienate core customers by becoming too trendy and fashion conscious. By re-structuring the focus and target of the business may have an opposite effect which Marks & Spencer needs to be aware of, they may inadvertently increase the competition from more focused specialists, who may begin to worry that M&S will become leaders of the market and push them out. Conclusions and recommendations for the company to consider for the future. Marks & Spencer suffered badly during the mid 1990's and is still trying to increase market share and strengthen their brand image.

In the last three years M&S have put a lot of enforcements in place and have implemented a strong recovery strategy. What must be learnt from this report is that you need to always be aware of your competitive advantage, always look to the future and not to the successful way company procedure was conducted in the past. Consumers have ever changing tastes and needs and unless their hunger is satisfied they will simply go elsewhere. What Marks & Spencer's need to do now is continue with their restructuring programme. It will be extremely costly and the company may not see significant profits for up to five years. They need to establish good brands with quality and competitive pricing.

Marks & Spencer comments "in order to remain competitive we have been working with our suppliers to relocate much manufacturing abroad and consolidate our supply base. This work over time, has enabled us to offer our customers a combination of better quality products, delivered faster to market, at lower costs". Marks & Spencer need to continue to be strong in their food department. Research showed that many customers don't shop at M&S for the bulk of their food but go there to purchase more luxury items because they know there is a high quality and standard.

M&S needs to build on this way of thinking by continuing to be the best. At the moment they are introducing 1000 new food lines each year and improving 1000 existing lines. For example" last October we renewed our entire range of Indian foods which enabled us to improve their sales by 26% in the second half of the year". If you look at he below graph you will see what customers perceive the perception of M&S food to be. It isn't enough these day to just sell food or clothes, as retailers Marks & Spencer has the difficult job of not just making a profit but also of being socially responsible to their stakeholders in all ethnic and environmental issues. The CRS (Corporate, Social, Responsibility) department is of key importance at Marks & Spencer.

Child Labour allegations in the 1990's almost ruined the company, now M&S is active on such issues as; using 100% free range eggs in all produce, not selling fish from depleted areas as certified by the Marine Conservation Society, Friends of the Earth rate their actions on pesticides as ahead of all other UK retailers.