Executive Summary
This paper is a summary of how Marks and Spencer (M&S) developed its management style to transition from a traditionally managed, loss-making company to a successful, international, multichannel retailer. The paper also discusses the various planning processes used by M&S, and the leadership styles adopted within M&S.
Although late, but M&S successfully transitioned from a strict hierarchical management structure to a flatter organization that encourages open communication and collaboration among employees and management.
Earlier, planning processes within M&S involved only the senior management. Decisions were taken on a reactive basis and experimented with, which often led to failures. Today, M&S uses a proactive approach to strategize their goals and plans. These strategies involve everyone from the top management to the general employees and sales people. Everybody has a common goal, and creatively contribute towards it.
The leadership is visionary. This is unlike the military regime followed by traditional M&S.
Introduction
With the end of the Multi-Fiber Arrangement (MFA) quota system in January 2005, competition in the global garments industry increased considerably, with a downward pressure on prices . Along with economic recession, these are driving garment firms to streamline their supply chain for more effective operations. More businesses are realizing the benefits of working with a handful of large and capable suppliers located across the globe .
The garments and apparel industry is rapidly adopting technology to gain competitive edge and sustain market holds. For example, in the US apparel industry, to meet the growing demands of consumers companies are increasingly integrating technology in their strategies. This is primarily for two things – (1) to expand production sharing operations and transfer more labor-intensive operations to low-wage areas (2) to put in place a quick response system and invest in new technology to upgrade marketing, manufacturing and distribution systems . Apparel retail brands like Burberry are taking the digital route to provide highly personalized interaction to their customers. Product promotions to discounts for customers are on their digital platform .
M&S is a leading UK retailer of food and general merchandise. The company has a market leading position in Womenswear, Lingerie and Menswear.
Founded in 1884, the company today has over 1330 stores worldwide. The mission of the company is to sell high quality, great value products to their customers through multichannel .
Going forward M&S plans to transform their infrastructure by consolidating themselves as a leading international, multichannel retailer. In clothing and home market, M&S plans to focus on stylish design, quality and newness, with better availability and more choice. The company plans to further strengthen their international supply chain .
New Organization Structure
Today at M&S, half of their Board members are independent non-executive directors . This indicates the importance being given by the company to unbiased, impartial and creative contributions required for the success of the company. Independent non-executive directors bring with them special knowledge related to their fields, and wide experience. They act as constructive critic in evaluating the external and internal factors affecting the company performance . By bringing in more number of independent non-executive directors on Board, M&S has indicated their genuine interest in making M&S a successful international brand and align themselves with their stakeholders’ interests.
M&S today is a flatter organization with two-way lines of communications collaboration among employees. There are less number of layers in the management. It is clear from different activities organized by the company that they recognize the need to create an environment where employees would want to work. Managers are there to support employees and facilitate their performances . To This effect, M&S recently launched scheme was to inspire and motivate their section managers who are the beating heart of M&S. At M&S, 3,500 section managers manage 92% of M&S sales floor employees . M&S has also initiated performance-related pay to encourage employee contribution. They come up with innovative schemes to create an environment of innovation and creativity among employees .
M&S today is a more agile organization with a customer focused overarching strategy that is communicates well to all its stakeholders. M&S has strategies customized to their UK needs and other global operations. All these indicate they now keep the customers at the center of all their activities and development.
M&S Operations
At M&S the planning process of their operations were mostly reactive in nature and experimented with. For example, in 1998, when they planned to expand into Europe & America, the top management decided continue with their age old practices of using only British suppliers and stick to their set store layout and designs. This did not fare well for them. For the obvious reason that there was a huge difference in culture between these new markets and the UK. They should have customized the strategy .
When Vandevelde became the chairman, the first thing he did was to focus on the heart of their business, i.e. their retail and financial services operations in the UK. This was important for M&S to get back their fundamental strengths. He stopped all non-core and loss-making activities. This was needed to get the right capital structure and make their balance sheet look good and generate greater value for their shareholders.
That spirit has been continued by his successors. M&S takes advantage of its core USP by taking great pride in selling high quality products through M&S retail outlets and M&S websites. 98% of all their products carry the M&S name.
Right from the leadership team to the M&S sales person work hard to integrate their Plan A and live up to their promise of delivering high quality to their customers:
Through an effective management of their financial resources M&S is generating good returns for their stakeholders. For example, from 28 fabric mills, M&S has brought down to 8 mills from which they currently source their fabric. This has improved their efficiencies and margins.
Customers’ need is at the center of M&S’ Plan A, therefore to meet customer demands they are maintaining their channels and supply chain infrastructure. The M&S Customer Insight Unit (CIU) analyzes 60,000 responses a month. These are then used with market research to understand customer needs and behavior.
Innovation is at the heart of M&S growth. Through collaboration M&S is coming up with new products to strengthen their brand and protecting these creations as intellectual properties. During the year 2015, M&S launched 1,700 new products.
As a responsible company, M&S is sourcing its raw materials responsibly and using natural resources effectively. They installed the UK’s largest single roof-mounted solar panel array on one of their distribution centers, which will generate electricity equivalent to power 1190 houses annually.
M&S believes to be successful it is important to build and nurture relationships with their customers, suppliers and the communities they operate in. In order to reduce food wastage, M&S sends surplus food to redistribution partners like FareShare and Community Shop. Shoppers at the cusp of food poverty can have these surpluses.
Human resource which is at the heart of M&S operations, is paid due attention for developing them and their knowledge. 38% of M&S Board are women. 79% of people at M&S are proud that their contribution to Plan A matters .
M&S Leadership Style
Commanding: This the classic military style management that heeds no attention to the employees thoughts, thereby diminishing job satisfaction . Initially, M&S followed a traditional way of managing their business. Innovation and idea generation was not encouraged among employees. Orders flowed down from the top management to every employee. There was a high level of control and strict hierarchy in the company. Employees feared to express thought patterns that were different from the management for raising anger among the senior management. Whatever the senior management thought and decided was sacrosanct in the company .
Visionary: This type of leadership only provides a new set of shared dreams or goals with the team without providing any definitive path to follow to realize those dreams. Thus the team is free to explore, innovate, experiment and take calculated risks. Realizing the goal is what matters ultimately . In June 2014, M&S launched their third stage of Plan A 2020. The goal of Plan A 2020 is to put sustainability at the heart of M&S brand and corporate strategy. Recognizing the huge task at hand of engaging all stakeholders, M&S leadership has selected a 10-point sub-set for employees to focus on. Every employee in M&S is committed to fulfil these priorities .
Conclusion
Processes and decisions comprise strategies. Success, however, depends on the people who implement these strategies . M&S by bringing in outsiders brought about a cultural change that was vital for the success of a total management change within the company. Today, the company is on its way to becoming an international multichannel retailer.
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