Analyzing the Impact of Corporate Strategy on Annual Profits: A Case Study of Marks & Spencer

CORPORATE STRATEGY AND
GOVERNANCE

Table of Contents
TITLE :- To analyse the issue in corporate strategy that leads to fall in annual profit. A case
study on Marks & Spencer...............................................................................................................1
CHAPTER 1: INTRODUCTION....................................................................................................1
Background of the research.........................................................................................................1
Significance of the research.........................................................................................................2
Research aim and objectives........................................................................................................3
Research questions.......................................................................................................................3
Purpose of the research................................................................................................................3
CHAPTER 2: REVIEW OF THE LITERATURE..........................................................................4
.........................................................................................................................................................6
CHAPTER 3: RESEARCH METHODOLOGY.............................................................................8
Primary method...........................................................................................................................8
Secondary method.....................................................................................................................10
CHAPTER 4: CRITICAL REVIEW OF RESULTS OF THE RESEARCH................................12
Review of result on the basis of primary research.....................................................................12
Review of result on the basis of secondary research.................................................................21
CHAPTER 5: RECOMMENDATION AND ACTION PLAN....................................................23
Recommendation.......................................................................................................................23
Action Plan................................................................................................................................25
CONCLUSION..............................................................................................................................27
REFRENCES.................................................................................................................................29

TITLE :- To analyse the lack of awareness/analysis/ change in competition that leads to major fall in annual profits
of company “ A case study of M&S.
CHAPTER 1: INTRODUCTION
Corporate strategy can be defined as directions through which a company can attain its
desired long term objectives (Wu and Lu, 2012). In present scenario, using a corporate strategy
can help a business firm in managing or directing operations. On the other hand, there are many
fresh approaches related to this kind of scheme which kept its focus over requirements and needs
so that a company can easily make changes in strategy (flexible) to run business in a successful
manner with ease. Basically, a corporate strategy includes a few things like vision, mission
which aid them in attaining long term goals and objectives. Including this, corporate governance
is being considered as a system of rules, practices and processes by which a firm is directed and
controlled. Corporate governance basically consists with balancing the interests of a company's
stakeholders, such as shareholders, management, customers, suppliers, financiers, government
and the community. Away with this, if it is talked about strategic drift then it can be said as a
concept of strategic management which basically refers to decisions that has been made by a
companies like Marks and Spencer to run with the changing business environment. With the help
of this, maximum benefits could be gained by a business firm. Different situations and
unexpected challenges are very common aspects that may arise anytime when driving and
developing strategic change within Marks and Spencer.
Alterations can be made in corporate governance related strategies by Board of directors
of the company. Along with this, corporate governance is identified as a system of practices,
processes and rules by which a company is controlled and directed (Saeidi and et. al., 2015). It
significantly involves balancing the interests of firm's different stakeholders such as customers,
suppliers, management, government, financiers, shareholders and the community. In present
investigation report, Marks and Spencer's corporate strategy has been chosen as an issue that
raised questions on their costly restructuring decisions. This led overall performance level to
reach to a diminishing level.
Background of the research
Marks and Spencer, a British multinational retailer came in existence in the year of 1884
and it was found by Sir Michael Marks and Thomas Spencer. Company is also listed in London
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Stock Exchange is having more than 980 stores in all over world (57 countries). Recently, it was
announced that M&S still feeling the heat as winter approaches, when it is considered as one of
largest clothing store. It is being found that, this took place because, of costly restructuring
corporate strategy to sustain at marketplace. This led Marks and Spencer to think on different
reasons and this took place because organisation was focusing upon future and it was directly
depended on whether it was able to change and develop. Because of this, Marks and Spencer's
image got disrupted in all over the world which impacted and took this company anything close
to a viable (M&S still feeling the heat as winter approaches, 2019).
On the other hand, it was being considered as one of long-term business strategy that was
capable of threatening any of the retailers operating in the in all over world. This issues is being
taken under this report where transformation of business model was needed for Marks and
Spencer, to become successful in existing market so that its sales which came on decline stage
would reach to an increasing stage. Apart from this, it has also been analysed that approximately
every step which was being taken by Marks and Spencer, went wrong and that led business firm
to decrease its market share (Rummler and Brache, 2012). On the other hand, it is being found
that Marks and Spencer's idea of restructuring themselves led them to face a number of issues
like 62% fall in annual profits. Because of this, it's reputation came to a diminishing level which
reduced their sales as well. On the other hand,
Significance of the research
Investigation over different topics can help researcher in gathering appropriate
knowledge and it may also aid in developing effective knowledge as per need and requirements
of learner. It is being analysed that, Marks and Spencer was doing business with same ethics and
norms in existing market where other rivals were using online tools to grab attention of
consumers and were offering really same quality based products and services with cheaper rates
(Saeidi and et. al., 2015).
It is being analysed that, Marks and Spencer's corporate strategy went wrong and took
sales to a declining stage and this happened because of heavy restructuring where, in May,
Marks and Spencer's annual report showed a few results of poor clothing sales; at the same time,
the cost of extensive store closures mounted. Pre-tax profits went down from 62% to £66.8m
after a £514.1m bill for restructuring that included £321m to pay for the first phase of its store
closure plan (M&S feeling the heat as winter approaches. 2018). One in three of its core clothing
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and home stores are scheduled to disappear within four years. All this scenario impacted
negatively on all over performance level of Marks and Spencer because of their poor clothing
sales and the decisions which were made by them led the whole organisation to deal with a
number of problems like customer's neglected.
Research aim and objectives
Aim:
The main of this research is “To analyse the lack of awareness/analysis/ change in competition that leads to
major fall in annual profits of company “ A case study of M&S.
Objectives
 To determine the competitive market of M&S
 To analyse the financial performances of M&S
 To assess the effect of the competitors actions on M&S
Research questions
 What can be considered as the competitive market of M&S
 What is financial performances of M&S
 What are the effect of competitors actions on M&S
Purpose of the research
Main intent behind conducting overall investigation is that Marks and Spencer was
loosing its market share because of wrong decision makings and because of increasing
competition. On the other hand, it has also been analysed that Marks and Spencer has struggled
to offer same price on products which was being offered by its rivals like PRIMARK, ALDI,
LIDL and so on. This impacted negatively on their performance level.
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 CHAPTER 2: REVIEW OF THE LITERATURE
This section of research on set topic plays a crucial role where scholarly papers are being
used to gain knowledge as required by the company. It is being analysed that this aspect of the
research proposal is mainly related with the research questions. In this different number of
authors and scholars have given their opinion about the topic. Report is enclosed with four
different objectives and these are mentioned below as:
Competitive market of M&S:
According to the point of view of Clark, corporate strategy and governance is a strategic
management plan consist of internal rules in order to operate business operations in ethical and
sustainable manner (Nasir and Subari, 2017). The main purpose behind concept of corporate
strategy and governance is to make managers and leaders of a business entity accountable to
shareholders. The corporate strategic management plan also help business organisation in
managing its business activities in ethical and sustainable manner.
As per this research project, the chosen organisation is facing issues in their corporate
strategic management plan. In this regard, it is important for managers and leaders of Marks &
Spencer to understand the role of corporate governance. It will help them in overcoming this type
of issues, which eventually leads in improving their profitability in a dynamic business
environment.
The corporate strategy and governance also concerned with balancing individual societal
and shareholders aims and objectives. It is formulated by board of directors with a motive to
improve overall performance of a business entity in a competitive business market. Corporate
strategy and governance also ensures transparency between employees, which leads in creating
positive relationship between managers and workforce of a business entity (Muzwardi, 2015).
So, it is essential for a business organisation to formulate corporate strategic management
plan in order to achieve their specific goals and objectives in an ethical manner.
Benefits of corporate governance within Marks & Spencer
As per the point of view of Nicholas, corporate strategy and governance help a business
entity in maximising their profitability, which leads in achieving competitive advantage in a
business market. In this regard, Marks & Spencer is facing major decline in their profitability
due to their corporate strategy issue. In this context, it is necessary for the chosen organisation to
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overcome this issue as there are many benefits of corporate strategy and governance, which will
help them in achieving their specific goals and objectives. The benefits of corporate governance
within Marks & Spencer are discussed below as:
(a) Enhancing performance: The corporate strategy and governance is a strategic
management plan, which help business entities in determining ways to take effective decisions
regarding management of business operations. This leads in enhancing overall performance of a
business organisation. In this regard, it is essential for Marks & Spencer to formulate effective
strategic management plan in order to balance potential of their employees and stakeholders,
which eventually leads in maximising their profitability.
(b) Transparency: Corporate strategic management plan also help business entities in
keeping transparency with their employees regarding their policies. This will help them in
achieving employees loyalty and also in satisfying interest of their stakeholders. In this context,
it is important for the chosen organisation Marks & Spencer to modify their corporate strategic
management plan in accordance with the skills and competence of their employees. This will
help them in making effective workforce in a dynamic business environment.
(c) Minimises risks and mismanagement: The corporate strategic management plan
also help business organisations in utilising their resources effectively and efficiently, which
leads in sustaining their productivity (Post and Preston, 2012). In this regard, it will help Marks
& Spencer in operating their business activities in accordance with the continuously changing
business environments, which eventually leads in monitoring risks.
(d) Improve reputation: Corporate strategy and governance boost reputation of a
business entity in a business environment. As corporate strategic management plan help business
organisations in keeping interest of their stakeholders, which enables people to feel more
confident while working with organisation. In this context, it is important for Marks & Spencer
to balance potential of its employees as well as shareholders in order to enhance its overall
performance.
(e) Fewer fines and penalties: The corporate strategy and governance help business
entities in operating their business operations in ethical and sustainable manner. In this regard, it
will help the chosen organisation Marks & Spencer in taking specific steps to stay compliant
with local, state and federal rules and regulations. This will leads in gaining competitive
advantage in a business environment.
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