Describe the strengths and weaknesses of Marks & Spencer's past internationalization strategies. The company has recently announced plans to begin international expansion again. Given its previous experience internationally, what strategies for success should it follow?
Marks and Spencer is an iconic British retailer which was founded by Michael Marks in the year 1884 with a single market in Leeds. It came to be known as ‘Marks and Spencer’ after getting into partnership with Thomas Spencer in 1894. Their main emphasis was on quality and to promote British goods. In order to sustain the brand reputation, the company worked closely with suppliers to ensure the highest levels of quality control.Currently, Marks & Spencer (from now on M&S) is an international retailer with 718 locations across 34 countries. The group sells clothing, footwear, gifts, home furnishings and foods under the St. Michael trademark in U.K. The group also owns the clothing retailer Brooks Brothers and the Kings Super Markets chain in the United States of America. All international stores are operated under franchise, with the exception of some stores in the Republic of Ireland and Hong Kong which remain in company ownership.
In this essay we will investigate how different theoretical strategic models account for the success and failure of Marks and Spencer. Some of the positive factors of M&S have been mentioned as follows.
The company had introduced a no quibble refunds policy. This helped to build astanding for good customer relations though the comfort and convenience of shopping with M & S was emphasised by providing a friendly and helpful service.
In addition to the planned strategy the success of M & S can also be described in terms of the core competences. As stated by Pearson “a core competence is a combination of capabilities such as advanced technologies and superior management skills, which provide a firm with a leadership position in the development of core products” (Pearson 1999, p170). In the case of M & S their core competences were the brand strength, close working relationship with suppliers and great customer services;
As we all know that M&S was the U.K’s first retailer business since 1984 as a legend. This first mover advantage had made them to conquer the hearts of the entire UK customers. This had made them to establish a strong brand and good customer relationship. Since the early stage M&S was using St. Michael’s logo which made them to establish in their home country and globally.
Now a day we can see that the senior citizens are most found of M&S because of its long lasting stability from the past. Their long lasting and stable base had made them to expand their brands internationally with out any market study. M&S had been in this field for the past 130 years which had made them a strong base internationally in the retail market. For example they were able to start their stores in Canada, parts of continental Europe, Central Paris, France, Belgium and Ireland.
The main negative factor with M&S was by focusing on the exports and countries entered, M&S found their main failure was because of not having proper research and not looking on the pre-conditions of the target market. They have looked at the other retailers and exported their product. However both of their businesses were entirely different in retailing. This in turn can be said as lack of vision. For example with the partnership of Daiei in a wide agreement M&S exported goods to Isetan in Japan between the years 1970 and 1978.
The first store based internationalization occurred in 1972 when a stakeholding was purchased in three Canadian clothing retailers. The other chains which were operating mainly in international activity were D’Allairds, People’s and Walkers (re branded as M&S store). In the starting M&S were having 275 stores in Canada and even started D’Alliards excursion into New York State in late 1980’s. Because of the dramatic fluctuation of its fortunes, this was not a profitable venture. In 1990s they had to cut their store numbers and sold off D’Alliards in 1996. Subsequently in 1999 the entire operation in Canada was closed which caused them a loss of £25 million and £24 million goodwill write off. The entire chain was closed and this was noted basically due to poor economic performance of the business.
M&S had also faced a slew of problems with the choice of partner. They entered alliances with different partners in different countries which resulted in closure of stores or even temporary exit. The Portuguese franchise agreement was terminated in 1999; similarly they changed partners in Israel and Turkey.
However, last but not least, the maintenance of standards was also a franchise issue that they least bothered to address. Apart from that, some partners were given multiple countries to run e.g. Al-Futtain Sons in the Middle East. At the same time joint ventures also happened, Hungary is run by an Austrian/Hungary partnership. This information conveys that they had an improper structure in their organisation.
Ultimately we have seen the key components of Marks and Spencer’s weakness and strength, we may now investigate how different theoretical strategic models account for the success of Marks and Spencer. This will set out how the company emerged from its humble beginnings and what challenges it has faced in its more recent history and present market today. Using this analysis complete option for the company’s future strategies will be set out and examined for the most sufficient models.
As we all know that the main steps that a company should look before entering into a new market is to do the market study. They should look for various methods like PESTEL; SWOT; Porters five forces; STP and many more strategies which will help them to make a long term analysis of the business. This will help them to know how they will be successful and how they should enter in to a new market. By this they can have much more expansion of their business all over the world than they are now in today’s market. The culture in which M&S functions and other businesses are is entirely different from each other. So, M&S should not look on others strategies and work on it. They should do a proper analysis of the feasibility of their own business in the foreign market.
The next important is that about the pricing strategy and the management structure. M&S should change according to the changes in the economy. Now days there are many competitors in the market to overcome in the pricing of materials on the market. Every one is much concentrated on reducing the price to secure their market place. For example: Primark could be said as the only retailer in UK to introduce low cost price with good quality materials for all types of materials. The organisation structure is not good enough as the managers are not able to control to the stores in many places.
While taking about the withdrawal of their business and employee disputes in France, it could be seen that M&S do not have a good HR department. M&S didn’t tell the employees anything about the closing down. This did have made a bad impact on the international market. They should involve employees in their business for some activities and slightly in decision makings process because they are the main core which helps for the smooth functioning. This will make the employees to have a good relation and to work more for the company.
Moreover, M&S supplies only British goods all over the country. This had made them not to grow or expand in much international market. M&S should not only sell British goods but should also have other suppliers of goods internationally. This will help them to grow globally and have a goodwill in the global economy.
While concluding, it has been seen how strategy plays a major role in determining the success of a business in relation to its market. In the case of M&S we have witnessed how its development has come to appreciate all of these aspects but not always with the correct timing. Marks and Spencer’s biggest challenge for the future is now to keep a solid hold on what has worked in its past and indeed what has caused it great difficulty. It is only by keeping a fine balance between its planned strategy and the preservation of its core competencies that it will be able to retain its customer base and once again begin a program of expansion.