Corporate Governance and strategy

Running head: CORPORATE GOVERNANCE AND STRATEGY
Corporate Governance and strategy
Name of the student
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CORPORATE GOVERNANCE AND STRATEGY1
Executive Summary
This report had examined the current issues and problems faced by Marks & Spencer
which is one of the major brands in the United Kingdom retail industry. The clothes
offered by the brand was not attractive to the consumers as the company had failed to
keep up with the latest designs in the market. It has resulted in the decrease in sales
volumes by 0.8% in the year of 2017. The research methodology has used a positivist
approach to quantify the data collected using statistical tools. The results suggest that
consumers are not satisfied with the company offerings and change in product quality
and style is required. The action plan and recommendation had suggested strategies for
gaining back their sustainable competitive advantage in the market.

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Table of Contents
Introduction........................................................................................................................4
1.1 Introduction..............................................................................................................4
1.2 Background of the United Kingdom Retail industry.................................................4
1.3 Problem Review.......................................................................................................6
1.4 Research objectives.................................................................................................7
1.5 Research questions.................................................................................................7
1.6 Research hypothesis...............................................................................................7
Literature review................................................................................................................8
2.1 Introduction..............................................................................................................8
2.2 Ansoff Matrix............................................................................................................8
2.3 New Product Development......................................................................................9
2.4 Brand Extension.......................................................................................................9
2.5 Sales Revenue.......................................................................................................11
2.6 Literature Gap........................................................................................................11
2.7 Summary................................................................................................................12
Discussion of secondary and primary research undertaken...........................................13
3.1 Research Onion.....................................................................................................13
3.2 Research Philosophy and approach......................................................................13
3.3 Research design....................................................................................................14
3.4 Data collection and analysis..................................................................................14
3.5 Sampling techniques..............................................................................................15
3.6 Ethical considerations............................................................................................15
3.7 Limitation of the study............................................................................................15
Critical review of results...................................................................................................17

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4.1 Introduction............................................................................................................17
4.2 Descriptive statistics..............................................................................................17
4.3 Inferential statistics.................................................................................................30
4.4 Discussion..............................................................................................................32
Recommendation and Action plan...................................................................................34
5.1 Conclusion.............................................................................................................34
5.2 Action Plan.............................................................................................................35
5.3 Recommendation...................................................................................................36
References.......................................................................................................................37

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Introduction
1.1 Introduction
This report aims to examine industry life cycle of an organisation in the global
market to reflect on their existing corporate strategy. It also aims to examine the current
corporate governance of the chosen organisation and develop an action plan to mitigate
any natural disaster of catastrophic proportions. The study has also provided
recommendations by addressing the failures in corporate governance. The study has
proposed to examine the implementation of new product development strategy to
mitigate the decline in sales among organisations to gain back their competitive
advantage in the United Kingdom Fashion retail sector. Marks & Spencer has been
chosen as the case study which has been critically analysed to understand the
corporate governance issues within the company.
1.2 Background of the United Kingdom Retail industry
The fashion industry in United Kingdom has changed significantly in the past
decade and has moved through stages of fast fashion, new trends, designer dupes,
high streets and ecommerce. The online apparel market in the United Kingdom account
for more than 24 per cent of the total market where £11.6 billion worth of products were
purchased from digital purchases (Daly 2019). The total sales in the industry was
around £48.1 which shows that almost one fourth of the total sales volume was
contributed by the retail market. There has been significant decline of high street stores
as majority of the consumers go for convenience and easy accessibility.
The analysis of more than 1000 brands in the UK market, it can be seen that
traditional players have dominated search volumes (Daly 2019). Amazon was the top
searched online retail outlet followed by Next. John Lewis fell behind all the high street
retailers. Companies like New Look have taken a hit where they have lost more than
33% of the search volumes and Marks & Spencer have received a search volume of 43
million (Daly 2019). In the last five years, there has been a significant decline in the
department stores, lingerie, footwear and fast fashion. The demand for fast fashion has

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increased significantly as they are known for their single-wear, quick and inexpensive
clothes. The analysis of the search volumes of the strong brands in the United Kingdom
portray the following picture:
Figure 1: Search Volumes
Source: (Daly 2019)
It shows majority of the online retail brands and existing traditional brands have
been trying to improve their online presence. There are multiple new emerging brands
in the list that have become key players in the market. Marks & Spencer has witnessed
the switch from high streets to digital platforms where smaller brands like Asos and
Boden are benefitting from this change. Moreover, BREXIT has significantly impacted
the clothing industry where there has been relative decrease in consumer confidence
which has negative affected the demand in the industry (Ibisworld.com 2019). The
pound has depreciated and as most of the clothing retail brands source their products
from other countries, their product margins have also been negatively affected. Barriers
to trade with other countries in EU may cause increase in cost due to the additional

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tariffs which may be imposed on these companies. It is expected to result in inventory
stockpiling due to time delays (Ibisworld.com 2019).
The analysis of the current industry market, the total revenue of the clothing
industry was £44bn with an annual growth of 2.2 per cent (Ibisworld.com 2019). The
clothing retail brands are going through harsh operating environments which is
characterised by intense pressure of downward pricing, increase in overheads and
fierce external competition. The weak growth of the consumer disposable income has
negatively affect the consumer confidence which is expected to result in strained
expenditure among the consumers.
1.3 Problem Review
Mark & Spencer has been going through trouble during the last few years where
their profit margins are decreasing sharply (Wood and Butler 2018). The competition
from the ecommerce segment has intensified the market where the consumers are
provided with variety of options and they can easily choose from the different brands by
comparing prices. Moreover, the company holds more than 300 stores which is difficult
to manage and increases their overall cost of operation (Wood and Butler 2018).
Moreover, there is a lack of parity among of the various stores where some are too
small, shabby and outdated where there are few which are too big to manage
effectively.
Moreover, the clothes offered by the brand is not attractive to the consumers as
the company has failed to keep up with the latest designs in the market. It has resulted
in the decrease in sales volumes by 0.8% in the year of 2017 (Jahshan 2019). Mark &
Spencer have seen decline in their profit margin in three consecutive years where the
pre-tax profit in the year of 2019 was £523.2 million in compared to the pre-tax profit of
£580.9 million in the previous year (Jahshan 2019). It depicts a year on year drop of 9.9
per cent of the total savings. In terms of group revenues, the company experienced a
year-on-year decline of more than 10 per cent (Jahshan 2019). The above data clearly
indicates problems with corporate governance with the organisation and the research
aims to address the problem faced by Mark & Spencer in sustaining a higher profit
margin and sales revenue.

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1.4 Research objectives
The objectives of the current study has been developed based on the chosen
corporate strategy:
 To examine the role of product development strategy in improving sales revenue
in Marks & Spencer clothing
 To examine the different elements of product development and how it affects the
sales parameters
 To recommend possible product development strategies for addressing declining
sales volumes
1.5 Research questions
RQ1. What is the role of product development strategy in improving sales revenue in
Marks & Spencer clothing?
RQ2. What are the different elements of product development and how it affects the
sales parameters?
1.6 Research hypothesis
H0: Product development strategy will not help in improving the decline in sales volumes
in Marks & Spencer clothing
H1: Product development strategy will improve the sales volume with arrival of new
product designs in Marks & Spencer clothing