Kim Holland

Marks and Spencer Case Study

Kim Holland

Identify and Explain five strengths and weaknesses of Marks and

Spencer
Marks and Spencer plc has long been the flag ship of the high street and has been noted as
Britains biggest high street retailer (Telegraph.co.uk. (2015) Marks & Spencer has no
place in the modern world, which is why its recovery should be celebrated. (Online).
Telegraph.co.uk. Available from:
http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11513251/Marks-and-
Spencer-has-no-place-in-the-modern-world-which-is-why-its-recovery-should-be-
celebrated.html. (Accessed 02/04/2015), and has even been referred to as an official national
treasure with its ups and downs monitored as closely as reforms in the NHS or interest rate
guidance from the Bank of England. (The Independent. (2013) Why do we treat Marks and
Spencer like a national institution? It's just another shop. (Online) The Independent. Available
from: http://www.independent.co.uk/voices/comment/why-do-we-treat-marks-and-spencer-
like-a-national-institution-its-just-another-shop-8835286.html. (Accessed 23/09/2013).
Marks and Spencer have been trading for 136 years, from the beginning of those penny
market stores [Boteju. D (2016) Marks and Spencer Case Study. BUS1004. Introduction to
Management. Northampton University. Northampton University n.d/11/2016. Available from
Blackboard (n.d/11/2016)], to the organisation to which all commentators and analysts turn
to when reporting whether the high street is having a good or bad season of sales (ibid). To
focus on the reasons for this astounding growth and continuation, as well as the reasons for
the current almost continuous struggles, it would be important to look at the strengths first.
The reasoning for this derives from the fact that the possible strengths of Marks and
Spencers could also be their weaknesses.
One of the major strengths of the Marks and Spencer conglomerate was their supplier and
product base. This supplier base which Simon Marks invested in were always the the same
UK-based suppliers and he meticulously ensured that goods were exactly to specication.
Marks ensured that the relationship he built with suppliers was mutually beneficial, and he
went on to build a reliance on Marks and Spencer plc within the supplier grouping (ibid).
This reliance was important, as The traditional view in M&S was that supplier relationships
should be like a marriage: for better or worse. During the prosperous years, suppliers
profited from their M&S relationship, and during the leaner years they cut their margins to
make a contribution to the success of the supply chain. [CIPS.org (2006). Marks & Spencer
(M&S). (Online) CIPS.org. Available from: https://www.cips.org/Documents/Study%20and
%20qualify/L6-03%20Nov08%20MandS%20CS%20CIPS%20paperbank
%20169312%20061008.pdf. (Accessed n/d/2006)]. Through this, Marks ensured that a
common symbiotic team goal was established, within the broader family business sense.
Having UK based suppliers had many advantages: short lines of communication, no currency
risks, easily enforceable quality control as well as ensuring high quality of hygiene and
safety (ibid), within the suppliers premises.

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But the weakness of only having UK suppliers eventually began to erode into the profit base,
as its allegiance to British suppliers simply became too costly and Marks and Spencer plc
was slow to follow its rivals lead into sourcing cheaper goods from low-cost countries
(Ibid). Sourcing these cheaper goods would have ensured that Marks and Spencer remained
competitive in the times of recession, as well as possibly showing new fashion trends.
Another strength was through their quality commitment and total quality management or
TQM. This commitment was one of the fundamental principles followed by Marks and
spencer from the start of its conception. Deming. E in 1951 (noted by SCHERMERHORN. J.
R. (2011) Introduction to Management. 11th ed. Hoboken, New Jersey: Wiley & Sons.)
referred to TQM as an organisation wide commitment to continuous improvement, product
quality, and customer needs. Marks ensured that this continuous improvement was also part
of his fundamental principles by ensuring suppliers used the most efficient, simple operating
procedures. TQM was the cornerstone of Marks and Spencer. But the weakness within Marks
and Spencer was that TQM does not just relate to produced goods but also to the customer
management relationship and the distribution of finished goods and services (Ibid). With
the change in directorship and society itself, comes the change in customer relationships and
customer seen value. Marks and Spencer did not fully quantify the change in value and as
late as the 1990s Marks and Spencer plc had no tting rooms, took no credit cards, rarely
held sales and ignored the loyalty card schemes sweeping British retailing. Although the
loyal customer base saw fit to work through the above, one chief executive, Sir Richard
Greenbury, decided that to control costs there would be fewer full-time sales assistants.
Although this led to an inability in stores to meet the service levels required (Ibid). As
Marks and Spencer prided itself for the high service levels of customer satisfaction, this was a
major weakness.
Sustainability was an early and continuous strength for Marks and Spencer. The fundamental
principles ensured that their suppliers always used the most modern and efficient production
techniques. But, it was the contribution to the sustainability of the UKs textile industry,
which had such an impressive result. It was noted by CIPS.org (2006) that for many years
M&S helped to keep the UK textile industry not just alive, but prosperous. But., although
sustainability should always be viewed as a strength, Marks and Spencers sole investment in
the UKs textile industry became detrimental to its price value, especially since the retail
industry is so highly competitive, coupled with the fact that Marks and Spencer focussed on
not only apparel, but also food and household items.
The Management style of Marks and Spencer, from the onset was personal, top-down and
autocratic (Boteju. D (2016). This together with the family nature (Ibid), produced a
strength in the form of a winning formula, in the time when autocratic bureaucracy was the
norm and classical management approaches was the tried and tested solution. Each CEO
(Chief executive officer, the highest ranking person in a company and who is only
answerable to the Board of Directors) had considerable power by their being appointed as
both Chair and CEO. The Chair was the head of the Board of Directors, and often sets the
style of leadership of the Board, which could then filter down through the organisation. The
Chair also acts as an intermediary between the CEO and the Board. Having both these
positions enabled Marks and Spencer to thrive, as the vision and formal hierarchy of
leadership allowed a clear direction and unfettered direction. Top down management allowed
the organisation to realise a focussed use of resources from the individual managed

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application. This focused use of resources led to the store managers following a central
direction on merchandising, layout, store design and training. Every Marks and Spencer plc
store was identical in the procedures it followed. This was a strength as it led to (and
continuously re-created) a consistency of image and guarantee of Marks and Spencer plc
standards (Ibid). But the weakness in the autocratic, top down leadership was highlighted by
the fact that store managers were severely restricted in how they could respond to the local
needs of customers and that the gaze of store managers was toward head ofce and not to the
stores next door to them in the high street. (Ibid). Not only were they waiting for direction,
but the autocratic leadership led to little disagreement with directives from the top, so
policies and decisions remained unchallenged even when executives or store managers were
concerned about negative effects. (Ibid). When there was a cut back in the numbers of full
time sales assistants, management was not confident in showing the current CEO that this
was effecting sales, so the customer satisfaction surveys were not shown.
The final strength which will be mentioned was the family nature of the firm. It was noted in
the case study that, There was a feeling of camaraderie and a close-knit family atmosphere
within the stores, with staff employed whom the managers believed would t in and become
part of the family. Family businesses should have a natural advantage, as the goal is to help
the family business, it becomes more of a way of life rather than a livelihood. Trust,
solidarity, and common values is also a factor when running a family business, and this was
seen within the supplier base and the staff. The family nature enable the family values of
Marks and Spencer to become a cornerstone of the British belief, with even their advertising
promising that they are a family store. But the weakness of being a family business becomes
apparent in the stagnated culture. With the any new staff being hired on the premise of a
good fit, this can lead to a lack of creativity and innovation. What does get reproduced is
more of the same. Without creativity and innovation, the culture can become stagnant and as
George Davies was noted as saying The biggest challenge for anybody coming into M&S is
to free it from its constipated culture (Ibid).

Discuss to what extent you regard the following as key factors in accounting for
Marks and Spencers relative underperformance over the last 20 years:
Leadership; Corporate Culture and Corporate Governance.

Leadership
The leadership of Marks and Spencer, as mentioned before, was a classical management
approach, with a mixture between an autocratic and bureaucratic style. The Classical
approach is based around the common assumption that people at work rationally consider
opportunities made available to them and do whatever is necessary to achieve the greatest
personal and monetary gain (Schermerhorn. J, 2011). This approach is centred around the
thought that employees have only economic and physical needs, this advocates high

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specialisation of labour, central decision making and profit maximisation. Please see the
Table below: procured from Schermerhorn. J (2011).

The problems with following this theory is that there becomes: a reliance on experience (In
the case of Marks and his son, this was a positive, but subsequent replacements meant that
that experience was not always present although it was assumed.), a failure to realise that
employees have social needs (this is detrimental to the team mentality), unintended
consequences (this can occur when rules and regulations are so blindly followed that the
original value is lost or misunderstood, this can corrode the corporations identity), and static
conditions (this occurs when there is a theory that the organisation is not effected by external
influences no benchmarking will occur). The reliance on the hierarchical and Scalar
structure, see below,

[Slideshare.com. (n/d). Fayols General Administrative Theory. (Online)

Slideshare.com. Available from:
http://image.slidesharecdn.com/fayolsgeneraladministrativetheory-131219224052-
phpapp01/95/fayols-general-administrative-theory-15-638.jpg. (Accessed n/d)]

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could have a detrimental effect as it can be inflexible in, particularly in a period of change
where certain objectives are not met as they were not communicated from above, although
seen as essential from below. Another problem with this structure is that as the organisation
increases there may be co-ordination problems. These problems were highlighted when staff
were laid off and customer service value then fell and when there was a massive restructuring
of the stores at a time when trade and footfall was already low.
The autocratic and bureaucratic nature of the leadership style negatively influenced the
corporation (see Leadership and Management styles below). There was the inability for staff
to voice their opinions, especially in matters concerning their local areas and what they felt
their customers wanted. Personal innovation and creativity was not encouraged and this led to
a fall in their competitiveness within the retail market. Since the leadership of Marks and
Spencers had enormous power of decision making (due to being both the CEO and the
Chairman of the Board), there was no accountability for decisions made, or alternative
solutions produced in times of crisis 9such as benchmarking). The value in Marks and
Spencer was being eroded through inadequate decisions, too much control and power, and an
innate arrogance that what worked before will work again. This arrogance, meant that
contingency planning was not seen as necessary and the sub culture of central directives,
meant that employees had learnt to only look to the top for solutions.

[Wordpress.com (2012). Leadership and Management Styles. (Online). Wordpress.com.

Available from: https://leadersyndrome.files.wordpress.com/2015/03/deltanomix-
leadersyndrome-leadership-and-management-styles.pdf. (Accessed 09/08/2012)]

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The autocratic leadership style is a strong, all - encompassing feature. Since leadership is
directly influential towards corporate culture and corporate governance, this could be the
major factor in Marks and Spencers relative underperformance.

Corporate Culture
Corporate culture is defined by The BBC as the way things are done around here This
means the way in which the attitudes, beliefs, values and norms of the firm are visible and
evident and shared by all employees in the organisation [The BBC (2014). Corporate
Culture. (Online). The BBC. Available from:
http://www.bbc.co.uk/bitesize/higher/business_management/business_enterprise/internal_org
anisation/revision/5/. (Accessed n.d/2014)]
The Corporate Culture of Marks and Spencer was seen by George Davies, who was the
saviour of the apparel line, as being constipated (Boteju. D, 2016). This constipation
originated from the complete bureaucratic and autocratic control of the corporation. In effect,
Marks and Spencer had become stifled in its own rigidity. It was noted by Robbens and Judge
2007, in Schermerhorn. J (2011), that When beliefs and values are held without challenge
for a long period of time, they are even less likely to be questioned. McGregors Theory X
and Theory Y (see below), noted by Schermerhorn. J (2011), explained that rather than
human machines, managers should give more attention to the social and self actualising
needs of the people of work. The Theory X is relevant in control and command situations,
such as Marks and Spencer, as these supervisory behaviours create passive, dependant and
reluctant subordinates, who tend to do only what they are told to or required to (Ibid).
McGregors Theory X and Theory Y

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(Bing.com (n. d). McGregors Theory X and Y Management Styles. (Online). Bing.com.
Available from: https://www.bing.com/images/search?q=mcgregor
%27s+theory+x+and+y+management+styles&view=detailv2&id=68474B89D87B18FAFAE
99CA5CE74A83EBCADA4F1&selectedindex=5&ccid=N7fJ8cdP&simid=60799970349645
8629&thid=OIP.M37b7c9f1c74f55df26189cac4b73ac38o0&mode=overlay&first=1
(Accessed n/d)
Marks and Spencer had a corporate culture which discouraged honest discussions, this was
evident when a manager decided to not show the negative results of a customer survey to the
CEO, this was to avoid irritating the CEO. This is unethical behaviour which related from the
repressive style of leadership. The Chron noted that, a strong and positive corporate culture
can maintain high morale, empower workers to make decisions and develop a team spirit that
fosters collaboration and innovation. The flip side to that is the detrimental effect that weak,
negative corporate cultures have on the bottom line. It leads to a selfish atmosphere where the
best employees flee and everyone looks out only for their own interests. [The Chron (n/d).
How a Weak Negative Culture Erodes a Firm's Competitive Advantage. (Online). The Chron.
Available from: http://smallbusiness.chron.com/weak-negative-culture-erodes-firms-
competitive-advantage-67277.html. (Accessed n/d)]. The article goes further to say that, a
negative business culture can also have an effect on product quality (Ibid). Since Marks and
Spencers main vision was on quality control this aspect of corporate culture is particularly
devastating to its entire identity. Without the customers trust in the quality of its product,
Marks and Spencer could alienate is traditional customer base. Quality encompasses, not
only the standard of the product (in regards to price, cut and cloth), but the modernity as well.

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Marks and Spencers corporate culture was rigid, inflexible and resistant to change because
the leadership believed that since the company was successful, there was no need to change.
The Corporate culture also dictates how much risk a business is willing to take when it comes
to research and development, customer interaction, and any other activity which involves
risk. Marks and Spencer had managed, in the beginning, to incorporate a culture of family
ideals together with promoting a sustainable responsibility towards its products. This culture
became eroded when the risks and necessary change were not implemented accordingly,
leading to a competitive disadvantage (in regards to sourcing from cheaper overseas
suppliers) and a constipated culture (still functioning within the restraints of an out of date
system of management within a modern new world).

Corporate Governance
Corporate Governance refers to the mechanisms, processes, and relations by which a
corporation is managed, directed, and controlled. It also encompasses the rules, policies, and
systems whereby authority within corporations is exercised and maintained. An effective
governance framework would have appropriate regard to the: contribution of individual
directors; effectiveness of the board and board performance; way in which governance is
applied throughout the Organisation; and the strength of the relationships the Organisation
fosters with its stakeholders [ Companydirectors.com.au. (n/d). What is corporate
governance? (Online). Companydirectors.com.au. Available from:
http://www.companydirectors.com.au/Director-Resource-Centre/Governance-and-Director-
Issues/Corporate-governance. (Accessed n/d)]. Please see the image below:

[Blogspot.com (n/d). Corporate Governance Framework. (Online) BlogSpot. Com. Available

from: http://2.bp.blogspot.com/_a-
StadBVwe8/TDQyVSCe5YI/AAAAAAAAAAM/W0L_kHEax24/s1600/OldCorporateGover
nanceChart.jpg. (Accessed n/d)]
The Corporate Governance Framework at Marks and Spencer was not adequately regulated.
The CEO had enormous power by also holding the position of the Chairman of the Board of

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Directors. This top down structure was further weakened by the fact that in regards to ethical
business practices, it is not considered best practice for these two powerful positions to be
joined into one. This becomes apparent when decisions are made without full disclosure to
the shareholders, and the risk and performance management is not adequately reviewed. If
the CEO is also the Chair, then any decision could not be vetoed by the board, even in the
situation when the decision would not prove beneficial to the company. The separation of
these positions is important for all shareholders as the separation of the chair and CEO roles
increases the boards independence from management and thus leads to better monitoring and
oversight. Because the CEO manages the company and the chair leads the board in
overseeing (hiring, compensating, and replacing as necessary) the CEO on behalf of
shareholders, holders of this view see a conflict of interest if one person occupies both the
CEO and chair roles [ Harvard.edu (2011). Separation of Chair and CEO Roles. (Online).
Harvard.edu. Available from: https://corpgov.law.harvard.edu/2011/09/01/separation-of-chair-
and-ceo-roles/. (Accessed 01/09/2011)]
The complete control of leadership, led to the corporate governance being unable to monitor
the business effectively, leading to an almost complete blind spot, in relation to the position
the company was now facing within the competitive market. Corporate Governance was also
unable to affect a greater, innovative and more vibrant Corporate Culture as the stagnation
came directly from the top.

References
The BBC (2014). Corporate Culture. (Online). The BBC. Available from:
http://www.bbc.co.uk/bitesize/higher/business_management/business_enterprise/internal_org
anisation/revision/5/. (Accessed n.d/2014)
Bing.com (n. d). McGregors Theory X and Y Management Styles. (Online). Bing.com.
Available from: https://www.bing.com/images/search?q=mcgregor
%27s+theory+x+and+y+management+styles&view=detailv2&id=68474B89D87B18FAFAE
99CA5CE74A83EBCADA4F1&selectedindex=5&ccid=N7fJ8cdP&simid=60799970349645
8629&thid=OIP.M37b7c9f1c74f55df26189cac4b73ac38o0&mode=overlay&first=1
(Accessed n/d)
[Blogspot.com (n/d). Corporate Governance Framework. (Online) BlogSpot. Com. Available
from: http://2.bp.blogspot.com/_a-
StadBVwe8/TDQyVSCe5YI/AAAAAAAAAAM/W0L_kHEax24/s1600/OldCorporateGover
nanceChart.jpg. (Accessed n/d)
Boteju. D (2016) Marks and Spencer Case Study. BUS1004. Introduction to Management.
Northampton University. Northampton University n.d/11/2016. Available from Blackboard
(n.d/11/2016)

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The Chron (n/d). How a Weak Negative Culture Erodes a Firm's Competitive Advantage.
(Online). The Chron. Available from: http://smallbusiness.chron.com/weak-negative-culture-
erodes-firms-competitive-advantage-67277.html. (Accessed n/d)
CIPS.org (2006). Marks & Spencer (M&S). (Online) CIPS.org. Available from:
https://www.cips.org/Documents/Study%20and%20qualify/L6-03%20Nov08%20MandS
%20CS%20CIPS%20paperbank%20169312%20061008.pdf. (Accessed n/d/2006)
Companydirectors.com.au. (n/d). What is corporate governance? (Online).
Companydirectors.com.au. Available from: http://www.companydirectors.com.au/Director-
Resource-Centre/Governance-and-Director-Issues/Corporate-governance. (Accessed n/d)
Harvard.edu (2011). Separation of Chair and CEO Roles. (Online). Harvard.edu. Available
from: https://corpgov.law.harvard.edu/2011/09/01/separation-of-chair-and-ceo-roles/.
(Accessed 01/09/2011)
The Independent. (2013) Why do we treat Marks and Spencer like a national institution? It's
just another shop. (Online) The Independent. Available from:
http://www.independent.co.uk/voices/comment/why-do-we-treat-marks-and-spencer-like-a-
national-institution-its-just-another-shop-8835286.html. (Accessed 23/09/2013).
SCHERMERHORN. J. R. (2011) Introduction to Management. 11th ed. Hoboken, New
Jersey: Wiley & Sons
Slideshare.com. (n/d). Fayols General Administrative Theory. (Online) Slideshare.com.
Available from: http://image.slidesharecdn.com/fayolsgeneraladministrativetheory-
131219224052-phpapp01/95/fayols-general-administrative-theory-15-638.jpg. (Accessed
n/d).

Telegraph.co.uk. (2015) Marks & Spencer has no place in the modern world, which is why its
recovery should be celebrated. (Online). Telegraph.co.uk. Available from:
http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11513251/Marks-and-
Spencer-has-no-place-in-the-modern-world-which-is-why-its-recovery-should-be-
celebrated.html. (Accessed 02/04/2015)
Wordpress.com (2012). Leadership and Management Styles. (Online). Wordpress.com.
Available from: https://leadersyndrome.files.wordpress.com/2015/03/deltanomix-
leadersyndrome-leadership-and-management-styles.pdf. (Accessed 09/08/2012)

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