Research Korner: Globalization & M & S

Globalization and M&S

Globalization and M&S Globalization will not be an easy thing for Marks and Spencer since it would mean a drastic change to business operations. Marks and Spencer, the very large British retailer, has probably been more entrepreneurial and innovative than any other company in Western Europe these last fifty years, and may have had greater impact on the British economy and even on British society, than any other change agent in Britain, and arguably more than government or laws (Jackson et al., 2000). Marks and Spencer was once the most admired of British retailers. The profitability of the British retail sector in the 1980s and 1990s was the envy of the world. There were many explanations some of which are none too flattering such as collusion over prices and artificial barriers to new store development by competitors, but in general the view was that the British had managed the phenomenon of own branding better than their international rivals. Retailers selling products under their own names tend to position them on price and as bargains. When first introduced into European markets own brands were seen as generics, plainly wrapped and were very low priced. Quality was not always high. In the 1920s and 1930s Marks and Spencer was predominantly a textile and home wear retailer (Chun et al., 2003).   Food was sold but the offer was somewhat different from that today, including for example substantial sales of broken Kit Kat biscuits, a leading brand of chocolate wafer from confectionery manufacturer Rowntree. Simon Marks in particular seemed unconvinced that food held much of a future for Marks and Spencer nevertheless a food development department had been created. What has become known as a human relations policy at Marks and Spencer dates to the 1930s. A personnel department began in 1933 and a welfare department in 1934 whose role extended to the well-being of previous employees (Drucker 2003). Employees today enjoy subsidized meals, services such as hairdressing and chiropody, discount schemes, and a profit sharing scheme. Membership of trade unions among Marks and Spencer employees was and is very low. The company was a household name, a British institution, yet Marks and Spencer had rarely advertised in its century and more of trading, although it was highly involved in the community, committing £4 million to good works. The company name was synonymous with middle of the road reliability, the epitome of Britishness perhaps, the only retailer in the world with a triple A credit rating. It had grown from a single market stall through a phase as a variety chain and on to dominate the British high street with its department store like outlets. The customer pulling power of a Marks and Sparks meant favorable terms for the company in any new retail developments. Its human relations policies and career prospects attracted and retained good quality staff. Marks and Spencer's positive attitude to staff was reflected in their staff's positive attitude to customers. Marks and Spencer had used the fact that their products were manufactured within the UK as part of its marketing (Foss 1997).   The amount of work that was actually done in the UK had declined with some garments reputedly being part made overseas to be imported for finishing so as to claim they were made in Britain. Realizing the claim was no longer credible and the cost advantages of sourcing in lower labor cost areas, Marks and Spencer had rationalized their UK suppliers. So why is Marks and Spencer regarded as an icon? Well it was because 12 million people shopped there every week for the simple reason they trusted them. That was the truth, even if they did not always buy. Experts knew from the figures that only about 8 or 9 million people would make a purchase. But they came every week and back the following week because of a tremendous reputation which had been built up over many, many years (Engwall & Morgan 1999).  The label on a garment can change people's perceptions of it. It is fashionable at the moment to knock Marks and Spencer even though they still dominate the British clothing market and it can affect the way people feel about the product. Recently one newspaper cut the Marks and Spencer label from a number of garments and sewed in those of some competitors. They asked shoppers to compare these with garments with the Marks and Spencer label still inside. The shoppers preferred those with the false labels. The company launched a financial services business that grew rapidly. People bought savings products, unit trusts, and even pensions from what had once been mainly a clothes shop. Yet the company itself found its success in its home country almost frustrating. Each new venture in Britain seemed almost doomed to succeed while, try as it might, its success overseas had been patchy. Current managers of the company’s explicit strategy were focused on globalization. The primary role of a CEO is probably to continue to satisfy the shareholders with the same rate of growth in their shareholding values in the decade to come as they had become used to in the last decade. Where then other than outside the UK was such growth to come from? Globalizing a retail business had been an objective of many before including Woolworths and Safeway, but few made as much money away from their home markets as they did from the original business. Worse, the original business was almost bound to suffer as it was milked for the funds to support global expansion (Davies & Ward 2002). References Chun, R, Davies, G Da Silva, R & Roper, S 2003, Corporate reputation and competitiveness, Routledge, London.   Davies, BJ & Ward, P 2002, Managing retail consumption, John Wiley & Sons, Chichester, England.   Drucker, PF 2003, Innovation and entrepreneurship: Practice and principles, Harper & Row, New York.   Engwall, L & Morgan, G (eds.) 1999, Regulation and organizations: International perspectives, Routledge, London.   Foss, NJ 1997, Resources, firms, and strategies: A reader in the resource-based perspective, Oxford University Press, Oxford.   Jackson, P, Lowe, D, Miller, D & Mort, F (eds.) 2000, Commercial cultures: Economies, practices, spaces, Berg, Oxford, England.

Globalization and M&S

Globalization and M&S Globalization will not be an easy thing for Marks and Spencer since it would mean a drastic c...