Strategic Analysis of M&S: Leadership, Change, and Sustainability

This report provides a comprehensive strategic analysis of Marks & Spencer (M&S), examining its methods of development, including organic and inorganic growth strategies, store format changes, and the strategic alliance with Ocado. It evaluates the leadership styles of Archie Norman and Steve R...Read More

Strategic management

TABLE OF CONTENTS
Introduction......................................................................................................................................3
Methods of development.................................................................................................................3
Leadership styles.............................................................................................................................4
Change management........................................................................................................................6
Sustainability...................................................................................................................................8
Conclusion and recommendations...................................................................................................9
References......................................................................................................................................10

Introduction
Marks & Spencer is a British multinational retailer which is headquartered in London,
UK and has specialization in sale of clothing, food products, home products, which are primarily
of its own label. The total group revenue of the company is £10.2 billion out of which the
clothing and home revenue was valued at £3.2 billion and the food revenue was valued at £6
billion. The total gross profit before tax was valued at £67.2 million and the international and
service operating profit was £110.7 million. Marks & Spencer has a total of 1519 global stores in
62 international markets. The total number of employees of the company are over 78,000. The
vision of the company is to be a stand against which others are benchmarked and the mission is
to create aspiration al quality which is accessible to everyone (Marks & Spencer 2020). This
strategic report will aim at using strategic tools for analysing methods of development used by
M&S and to evaluate the leadership style at M&S. Apart from this change management models
will be critically examined and the future sustainability strategy will be determined, along with
future recommendations.
Methods of development
In terms of organic growth, in which Marks & Spencer has achieved higher output by
improving the sales internally for a very long time, the growth has been diminishing in recent
years in comparison to the external or inorganic growth. Organic growth does not include any
profits attributed from acquisitions or mergers that Marks & Spencer has undergone but instead
the percentage of sales and expansion that the company has attained by the internal resources of
the company (Jin, Miao and Park, 2018). The major aftereffects of poor performance and
declining sales were the major store culls since 2015, a change in the format and the use of the
stores and opening new stores as a part of diversification strategies. Post 2016, various stores in
UK closed that included traditional clothing and food shops and end of season sale outlets. The
store cull costed Marks & Spencer around £200 million in implementation. The culls included
loss making stores in various European markets across Belgium, France, China and the
Netherlands. In the years 2017 to 2018, various smaller stores were closed including various
oldest presence in towns. This would make a total of 100 stores closed by 2022 due to the
declining corporate profits. The company has been facing a continuous declining net profit since
2016. When it comes to store format, major changes were made by changing the usage and
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introduction of full line stores, food halls, home stores outlet stores, and online services (Leite,
2020). Change management strategies include progressing on transformation, outperformance
and focus of food sector, reengineering of home and clothing and positioning Ocado retail
robustly for growth. In order to cover the losses due to the coronavirus pandemic, the strategies
like planned cost reductions, actions for stabilising the cash flows, securing additional headroom
and liquidity for future years and management of extra home stock and clothing. The strategic
alliance with Ocado, which was a major change management strategy by Marks & Spencer took
place in February 2019. The total cost incurred by Marks & Spencer to form the partnership by
acquiring a 50 % stake in Ocado retail was £750 million (Scott and Walker, 2017). Marks &
Spencer formed a joint venture with Ocado retail for strategic significance of getting a broader
customer base and increasing the expertise in food innovation. The other major strategies that
Marks & Spencer has implemented to increase organic growth are the strategic priorities of
transformation of leadership, building accountability, to become a digital retailer, reshaping the
customer profile ranges in the home and clothing. Also, focussing on international growth,
development of high-quality real estate, and doing cost savings and modernising the supply
chains (BBC, 2019).
Leadership styles
In context of Marks & Spencer, the organisation is led by two most influential and
visionary leaders, that are, Archie Norman as the chairman and Steve Rowe as the chief
executive officer. Under their leadership, Marks & Spencer has gone through major changes in
terms of restructuring and international expansion (Fiaz, Su and Saqib, 2017).
However, the company has been facing a declining sales and net profit since the past
three years due to operational problems, the leaders are aiming at countering the issues at the
company through the transactional management. Steve Rowe has been serving the company
since a very long time and in various capacities from a Saturday boy, working on the shop floor
to joining the board of directors and becoming the new CEO. After taking up the position he has
brought many changes in the company by reducing the size of the operational committee to half,
taking care of additional responsibilities of the present employees such as reward systems, high
use of delegation techniques to the employees, driving the focus to customers (Gandolfi and
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Stone, 2018). These changes have been highly appreciated by the management and completely
new departments have been established along with additional responsibilities, he has giver high
autonomy and freedom to the employees and has focussed on achieving the company goals
through effective mobilisation of the resources (Velikorossov and et.al., 2020.
The three major leadership styles incorporated in the entire lifecycle of the company are
situational, transactional and transformational. In situational leadership, the leaders encourage
employees to choose and apply the best leadership style that works for the company. In
transformational style, which is being implemented recently in Marks & Spencer, leaders
identify changes, create vison and gain high employee commitment and participation to
implement the changes. Through transaction leadership style, highly enthusiastic and motivate
people are fostered who work in a well structured and directed environment. The success is in
this leadership style is focussed on attaining the success and targets through the use pf rewards
and penalties. In case of transactional leadership, both Archie Norman and Steve Rowe, both the
leaders tend to value order and structure for manging the multinational corporation and all the
international projects that are led by the company (Al Khajeh, 2018). They have a leadership and
management style that require self-motivated employees and have laid down reward systems
such as employee engagement initiatives, corporate gifts like vacations and holiday packages,
employee discounts, bonuses, recognition schemes like employee of the month. Also, various
retirement and pension benefits, medical and travel benefits etc are given to employees. The
compensation system is highly competitive and loyalty schemes are highly popular along with
employee recognition, engagement and motivational practices (Hansen and Pihl-Thingvad,
2019).
The company focuses on getting the best talent for their organisational through effective
workforce planning, talent acquisition and career development, which are highly emphasised by
Steve Rowe. The importance of this leadership style is that it is that it is highly transparent about
how things are working and how business procedures are taking place. It is clear that what rules
and regulations are to be followed and who to report to. The flow of communications is centrally
structured and quite effective. This leadership style has led to higher productivity and motivation
among employees, which is highly needed to counter the problems the company is facing in
recent times (Sanda and Arthur, 2017).
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Change management
Change management is referred to manners and the methods through which a company
implements major changes within the organisation in both the external and internal processes.
This is done primarily through a structured approach for beneficial transition and mitigation of
disruption. Marks & Spencer has undergone various changes since its inception such as
restructuring, expansion, store culls, mergers and acquisitions, technology implementation etc
(Rosenbaum, More and Steane, 2018).
For analysing the changes in Marks & Spencer in recent years, change kaleidoscope
strategic tool will be implemented, which was developed by Balogun and Hope Hailey as a tool
for combining and arrangement of different logical highlights of an organisation through outer
and inner rings. The outer ring in the kaleidoscope indicates various contextual features of the
organisation such as preservation, scope, time, capability, diversity, power, readiness and
capacity. On the other hand, the inner ring describes implantation choices or design consisting of
change path, start point, style, targets, change levers and roles. Change kaleidoscope can be
utilised productively by Marks & Spencer for selecting the proper implanting actions. It offers a
wide range of implementing actions and contextual feature analysis. Awareness of change is
significant aspect that is encouraged for implementing this tool. Marks & Spencer needs to
evaluate all its contextual hindrances as well as enablers for change in terms of evaluating its
change competency and take decisions about implementing the choices of path, the start point,
target, style, roles and interventions (Haggblade and et.al., 2017).
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Figure 1:Change Kaleidoscope
Source: Julia Balogun. 2020
Using the change kaleidoscope, it lets Marks & Spencer to understand the reason for the
choices of design needed or required specifically in a specific context. This change management
tool is applied by the change agent group for solving change problems via enablers and
hindrances, detecting the path change design. In terms of Marks & Spencer, the major changes
required are in terms of changing the styles. The first element is education and delegation, by
which a small group discussion of change is supported from the employees. The second is
collaboration, there is need for high employee involvement in decision-making and third is
employee participation and direction. In terms of change target, there are three, outputs, values
and behaviour. In terms of change levers, the cultural web identifies the organisation culture and
the present change barriers. Major interventions into power structures, organisational structure,
routines and rituals are highly significant to develop changes successfully. The change start point
that Marks & Spencer can adopt is bottom-up change, which is initiated from the bottom level
employees to the top management. The change path, usually of four types: adaptation, evolution,
revolution and reconstructions. Marks & Spencer has to adopt revolution path as it needs major
changes from the core to deal with the issues like store culls and declining sales since past 6
years. All the organisational features have to be considered during the change implementation,
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which are: time, scope, diversity, preservation, capability, power, capacity and readiness of the
employees (Elley-Brown, Pringle and Harris, 2018).
The changes needed in terms of time are a long-haul advancement and no changes in
Marks & Spencer in terms of emergency. The scope changes will influence entire structure and
move towards democratic changes with management group being spilt. For preservation, no
radical but gradual changes will be implemented and focus will be on creative change thoughts.
For diversity where management might split into support or contradiction of changes, expert
gatherings. The capabilities of Marks & Spencer are democratic in order to bring changes rather
than authoritative model. In terms of capacity, Marks & Spencer will be investing a fair chunk of
profits for reinvestment over a gradual period of time. The readiness for change in Marks &
Spencer is good and the representatives of any association and management are participating in
bringing changes. In terms of power, the workforce did not restrict the changes as their
participation level remains high in Marks & Spencer (Haggblade and Babu, 2017). The major
change in leadership style was transactional as practiced by Archie Norman and Steve Rowe,
while changes introduced are more democratic in nature where employee participation and
creativity and autonomy will be implemented.
Sustainability
Marks & Spencer has been a major multinational corporation which have taken up the
issue of sustainability across the globe through its CSR initiatives, objectives, major actions and
for giving out to the society. The company believes in sustainable fashion, as per which the
company takes care of every material and process involved in the manufacturing of the garment
produce by ensuring that nothings go to waste and protecting the planet as a business retailer
(Schaltegger and Wagner, 2017). In terms of protecting the forests, they have taken imitative to
slow deforestation. Marks & Spencer has also planned for plastic ban and made innovative ways
to reduce the usage of plastic by helping out the customers to recycle and reuse. The animal
welfare standards of the company are high and all the food products of the company are
produced with utmost care for the animal welfare. For sustainable fashion, Marks & Spencer has
always focussed on quality of its products and garments by sourcing and using long lasting eco
friendly materials for the betterment of the customers. In terms of csr strategies and goals, there
has been a target of 80% reduction in the emissions in the market method by 2030 and 90% by
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2035 (Marks & Spencer 2020). In terms of electricity, 86% of the electricity the is bought at the
Marks & Spencer stores, warehouses and offices across the globe are sources from on site
generation or green tariff renewable source. Majority of the business operations of Marks &
Spencer have gone carbon neutral through a combination of reduction, procurement of renewable
energy, purchase and retire of high-quality carbon offsets. As a part of the united nations climate
neutral initiatives, Marks & Spencer procures 10% of all its offsets via the procedure of clean
development mechanism. By 2025, Marks & Spencer aims at reducing the refrigeration in terms
of gas emissions by 80% for all the stores that operate in the UK. Marks & Spencer has focussed
on 100% recyclable packaging while using plastic materials in the UK by the year 2022 and
contributing to the nationwide targets of reding plastic packaging by 2025 in the food sales
packaging and the home and clothing packaging (Marks & Spencer 2020). The company has
aimed at eradication of poverty though edible food chain supply. It has focused on workforce
diversity, sale of healthy food choices to customers, using more energy efficient methods in
business operations in order to implement sustainability development in terms of people, product
and planet (Dong and et.al., 2019).
Conclusion and recommendations
In conclusion, Marks and Spencer has been focusing in strategic management through
consistent and periodically assess the strategies for attaining long term success. The organic
growth of Marks & Spencer has been slow due to closure of various stores and their changing
formats. In terms of leadership styles, Steve Rowe has been adopting a transactional leadership
style in the company through employee engagement initiatives, corporate gifts like vacations and
holiday packages, employee discounts, bonuses, recognition schemes like employee of the
month. The change management strategies were elaborate through the change management tool
of change kaleidoscope. The major sustainable strategies were highlighted such as sustainable
fashion, carbon neutrality targets, energy efficiency, reduction in emissions, procurement and
sourcing through green methods etc. Major recommendations for Marks & Spencer in context of
strategic management are focussing on overall growth and investing on diversification and more
joint ventures to gain higher customer market share. Marks & Spencer should implement a
democratic leadership style so that the employees feel like a part of the system instead of
transactional leadership style which eliminates individuality and limits the amount of innovation.
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References
Books and Journals
Al Khajeh, E.H., 2018. Impact of leadership styles on organizational performance. Journal of
Human Resources Management Research, 2018, pp.1-10.
Dong, C., Li, Q., Shen, B. and Tong, X., 2019. Sustainability in Supply Chains with Behavioral
Concerns.
Elley-Brown, M.J., Pringle, J.K. and Harris, C., 2018. Women opting in?: New perspectives on
the Kaleidoscope Career Model. Australian Journal of Career Development, 27(3),
pp.172-180.
Fiaz, M., Su, Q. and Saqib, A., 2017. Leadership styles and employees' motivation: Perspective
from an emerging economy. The Journal of Developing Areas, 51(4), pp.143-156.
Gandolfi, F. and Stone, S., 2018. Leadership, leadership styles, and servant leadership. Journal of
Management Research, 18(4), pp.261-269.
Haggblade, S. and Babu, S., 2017. A User’s Guide to the Kaleidoscope Model: Practical Tools
for Understanding Policy Change (No. 1879-2017-5330).
Haggblade, S., and et.al., 2017. What drives policy change? Evidence from six empirical
applications of the Kaleidoscope Model (No. 1878-2017-2512).
Hansen, J.A. and Pihl-Thingvad, S., 2019. Managing employee innovative behaviour through
transformational and transactional leadership styles. Public Management Review, 21(6),
pp.918-944.
Jin, H., Miao, Y. and Park, S.T., 2018. A Case Study of Marks and Spencer lost China. Journal
of Industrial Convergence, 16(2), pp.15-23.
Leite, B.T.D.S., 2020. Marks & spencer out of fashion the case of an outdated brick and
mortar (Doctoral dissertation).
Rosenbaum, D., More, E. and Steane, P., 2018. Planned organisational change
management. Journal of Organizational Change Management.
Sanda, A. and Arthur, N.A.D., 2017. Relational impact of authentic and transactional leadership
styles on employee creativity. African Journal of Economic and Management Studies.
Schaltegger, S. and Wagner, M., 2017. Managing and measuring the business case for
sustainability: Capturing the relationship between sustainability performance, business
competitiveness and economic performance. In Managing the business case for
sustainability (pp. 1-27). Routledge.
Scott, P. and Walker, J.T., 2017. Barriers to ‘industrialisation’for interwar British retailing? The
case of Marks & Spencer Ltd. Business History, 59(2), pp.179-201.
Velikorossov, V.V., and et.al., 2020. Strategic management.
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Online
Change Kaleidoscope, Strategic change. Julia Balogun. 2020. Available through:
<http://xqdoc.imedao.com/1533d1f4e7d13ee3fe246a36.pdf>
M & S sustainability report 2020, Marks & Spencer 2020. Available through: <
https://corporate.marksandspencer.com/stories/blog/mands-plan-a-report-2020-making-
sustainability-part-of-our-family-of-businesses>
Marks and Spencer and Ocado in home delivery deal talks, BBC, 2019. Available through:
<https://www.bbc.com/news/business-47373215>
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