Case Study – 2000 + 10% word report – Individual Assessment

Question:

Background:

Case Study – 2000 + 10% word report – Individual Assessment

Purpose: This assessment is designed to allow students to analyse an organisation’s strategic management practices and evaluate these against best practices as proposed by modern theorists. This assessment relates to learning outcomes. This assessment relates to learning outcomes a, b and c.

Submission: Upload a soft copy – Word .doc or .docx – to Moodle and Turnitin

Topic: Macro environmental analysis (PESTEL, G &D). Industry analysis (life cycle stage of the industry, Porter’s 5 forces analysis). Company analysis (resources -based model, VRIO Framework). Competitor analysis.

Task Details: Students are to compare and contrast the organisations strategic management practices and outcomes against current research in the area and evaluate how closely the organisation’s experience fits with the theory. Students are to develop their analysis and findings into a professionally presented report.

Contents of the report

Introduction – brief description of the company and the industry of which it is part and the main challenge(s) being faced- i.e. why are you being asked to analyse the case.

Macro environmental analysis – factors which are changing or impacting on the company and/or the industry– include some discussion as to what they mean for the company.

Industry analysis (for each industry if more than one)

• brief description of the life cycle stage of the industry
• Porter’s 5 forces analysis – conclusion regarding attractiveness

Company analysis: resources and capabilities – core competencies – include some discussion of which ones are/will be most effective in achieving strategies and objectives or are most important to identified environmental factors – macro and/or industry. VRIO Framework.

Competitor analysis: draw conclusions about main competitive threats (if any) (link back to 5 forces analysis)

Strategy analysis:

• Identify strategies – Corporate Level and/or Business level if possible
• Analyse if working or not – why / why not
• Suggestions for improving current strategies or suggestions for new strategies – link back to analysis and explain why you think they will work
  • Conclusion – summary, recommendations, prediction for future of the company/industry

Research Requirements: Students need to support their analysis with reference from the text and a minimum of eight (8) suitable, reliable, current and academically acceptable sources – check with your tutor if unsure of the validity of sources.

Presentation: 2000 +10% word report format – Word .doc or .docx. Title page, table of contents, executive summary, introduction, suitable headings and sub-headings, recommendations/conclusion, reference list (Harvard – Anglia style), attachments if relevant. Single spaced, font Times New Roman 12pt, Calibri 11pt or Arial 10pt.

Marking Guide: The marking rubric will be used to mark the assessment using the following criteria:

Analysis 30% Research – extent and application 30% Recommendations/conclusions 20% Presentation 20%

Total mark will be scaled to a mark out of 20

The potential cases: The specific case study will be provided in Moodle in week 1. The followings are the list of potential cases:

• Southwest Air
• Mark & Spencer
• VirginAldi
• London Zoo
• Raffels Hotel
• Toyota
• Coca – Cola
• Hewlett – Packard o Lego

1.1 STRATEGY EXPLAINED
13
Finally, it must be realized that past and current success is no guarantee of success in the future. Compa-
nies are not guaranteed, or entitled to, continued prosperity. They must adapt and change in a dynamic envi-
ronment. For all sorts of reasons, many fail to do this and disappear. Some close down; others are acquired.
Another featured chapter case, Marks & Spencer plc, is an excellent example of a previously outstanding
company that has lost its way in recent years but which appears to have recovered (Case 1.2).
Case 1.2
Marks & Spencer plc
UK
M
arks & Spencer (M&S) is a well-known and respected
high-street retailer in the UK. The early growth of
M&S was built around clothing, and its reputation owes
much to the popularity of its underwear! M&S introduced
us to Lycra and Y-fronts. It built a second reputation for
foods, pioneering chilled fresh varieties and bringing the
avocado pear to the UK mass market. Always gradually,
other ranges such as cosmetics, homeware, gifts and fur-
niture have been added systematically. A home-delivery
service for furniture has been expanded to include other
items. Every shopping centre developer wants M&S to
open a store, as they always attract customers.
The original foundations of the business lay with a
young, Jewish immigrant and his Leeds market stall.
Michael Marks had a poor grasp of English, a clear dis-
advantage for a trader in a noisy street market! Oppor-
tunistically, he turned his disadvantage into a strength.
He had a sign on his stall: Don’t Ask The Price – It’s a
Penny, and for a penny he provided the widest range
and best quality items he could find. This philosophy of
value for money has pervaded through the generations
and been sustained with innovation and change – but
the focus on value has never been lost. The market stall
led to a store, and then to stores on most high streets in
Britain. The Spencer in the name came from Marks’ first
business partner, an accountant. However, the Marks
family became related to the Sieff family through mar-
riage, and it is these two families together who have
controlled the business through most of its history. In-
deed, Simon Marks (strategic leader from 1916 to 1964,
and the man who really established and cemented in
place Marks & Spencer’s high street dominance), and
his successor Marcus Sieff, have both been described as
‘retail geniuses’
The strategy of M&S then, is concerned with diver-
sification of their product ranges within these broad
product groups but, at the same time, seeking to spe-
cialize where their own St Michael label could be used
effectively. All M85 products have traditionally carried
the M&S name and quite often, the St Michael brand,
At the beginning of the new millennium, a decision was
made to reduce the emphasis on using the St Michael
brand name and emphasize the company name more
prominently. M&S seeks to innovate while upgrading
and adding value to its existing ranges. Over the years,
M&S has found that many of its long-established stores
in town and city centres are simply too small. An expan-
sion programme has therefore developed along several
lines. Adjacent units have been acquired when practical
and new larger stores created, especially in new out-of-
town shopping centres; if land has been available, build-
ings have been extended; and new sales floors have
been opened up by converting stockrooms and moving
stock to outside warehouses. This brings its own logistics
problems. Satellite stores – smaller branches some dis-
tance away from the main branch – have been opened
in certain towns. These satellites typically carry complete
ranges – it could be men’s fashions, ladies’ clothes or
children’s items. The choice depends on the square
footage available and the local prospects for particular
lines. In a similar vein, in towns considered too small to
support a full branch, specialist stores, perhaps just for
food, have been opened. M&S Simply Food stores at
railway stations and motorway services are very popular.
The selection of products within the whole M&S range
varies between stores.
Other strategic changes are:
Constant improvements in displays, partly to present
products better, and also to get more items into the
stores. ‘Sales per square foot’ is a vital measure of
success
• Electronic point-of-sale (EPOS). Information technol-
ogy has been harnessed to improve productivity and
to enable M&S to respond more quickly to market
changes, particularly relevant for fashion items.
Thanks in part to technology, M&S staff costs as a
percentage of their turnover are less than those of
many competitors, but the quality of service has
remained high
. The development of support financial services, such
as unit trusts, building on the success of the M&S
Chargecard, the third most popular credit card in
the UK. This business has now been divested.

14
CHAPTER 1 WHAT IS STRATEGY AND WHO IS INVOLVED?
. International growth in, for example, France, Bel-
gium, Canada, the USA and Hong Kong. The devel-
opment has been gradual, with one of the objectives
being to introduce new types of competition. Some
mistakes have been made as part of the learn-
ing process and sales in some countries have been
disappointing, but the risks have been contained in
order not to threaten UK interests. China was added
to the list in 2008. More recently, there have been
some withdrawals and attempted withdrawals.
In the 1930s, M&S pioneered a new form of inventory
control when it designed perforated tags in two identical
halves. Half was torn off at the point-of-sale, dropped in
a box and then sent to the Baker Street (London) head of-
fice, where it was used to direct store replenishment. Over
time, this enabled M&S to introduce sophisticated replen-
ishment from out-of-town warehouses and reduce the
in-store stockrooms in favour of more direct selling space.
M&S possesses a number of identifiable strategic
resources which have been instrumental in meeting
customer key success factors, and thereby providing long-
term profitable returns for shareholders. They include:
Physical The wide range of value-for-money,
resources own-brand products,
The sites and store displays.
Intangible Image and reputation;
resources Staff knowledge, expertise and
commitment to service
Capabilities/ Supply chain management.
processes
years, somewhat controversially, M&S has included more
and more goods sourced overseas, sometimes for partice
ular quality issues, but mostly for lower costs. In general,
where they have been successful, the arrangements with
suppliers have been long-term and non-contractual. They
are based on mutual trust and common understanding
M&S is actively involved in product specification, input
management (to their suppliers), quality control and
production scheduling. M&S is frequently the supplier’s
most important customer. Why has it worked so effec-
tively? The M&S reputation for fair dealing – with its sup-
pliers, customers and employees – has, for many years,
been seen as too valuable to put at risk.
But, at the end of the 1990s, this long-established
business was suffering declines in sales and profits. Crit-
ics argued that too many product ranges were no longer
the winners that people associated with the company,
and its management needed strengthening at all levels.
Interestingly, this setback occurred in the decade when
the company had, for the first time in its history, a chief
executive who was not a descendant of one of the
Marks or Sieff families.
Simply, Marks and Spencer had:
• taken its eye off its customers and become over-
reliant on its image and reputation,
. become too reliant on (typically UK-based) suppliers
whose costs were relatively uncompetitive in global
terms
• allowed margins to increase gradually, tarnishing the
longstanding value-for-money image;
• lost some of the fashion element in its key clothing
ranges
While there have been, and continue to be, strategic
changes, the fundamental principles or values on which
the business grew and prospered have remained con-
stant until the last few years. These are:
. High-quality, dependable products, styled conserva-
tively and offering good value for money,
Good relations with employees, customers, suppliers
and other stakeholders;
© Simple operations;
e Comfortable stores,
. Financial prudence (most properties, for example, are
freehold – they have typically not been sold and leased
back to fund expansion, but this policy changed when
the company struggled financially in recent years).
The foundation for the unique (St Michael) products and
competitive prices was the M&S system of supply chain
relationships, a considerable proportion of these being
with UK manufacturers for much of its history. In recent
Peter Drucker (1985) had earlier summarized M&S as
probably more entrepreneurial and innovative than any
other company in Western Europe these last 50 years…
may have had a 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.’
Was it conceivable that this visible and successful
business was under real threat for the first time? Clara
Freeman (2000), at that time an M&S executive, admit-
ted that M&S ‘lost the pace, lost the focus … no-one
saw it coming. It was the classic management story –
everything is going swimmingly and you don’t tinker
with a successful formula. After sales and profits de-
clined, M&S put the magnifying lens on the business
and asked what was wrong. Staff and customers told us
that the quality was not as consistent as it used to be,
and the service needs to be better than it is.’

1.1 STRATEGY EXPLAINED
15
In 1999, the current chairman and chief execu-
tive, Richard Greenbury, announced he would retire
early and, after a very visible and acrimonious internal
wrangle, a new chief executive (Peter Salsbury) was ap-
pointed from inside the business. Later, a new execu-
tive chairman, Luc Vandevelde, previously the head of a
major French supermarket chain, was recruited. Several
ranges were quickly revamped and successful stock tri-
als accelerated. M&S began to use more demographic
and customer data to determine the product ranges for
each store – previously stores of roughly the same size
had carried similar ranges, regardless of their location.
Sales did not pick up as rapidly as had been hoped, and
rumours of possible takeover bids appeared in the press.
Salsbury resigned as chief executive, to be replaced by
Roger Holmes, recruited from Kingfisher.
Under Holmes, product ranges were changed again.
Clothing was to be designed and individually branded
for people who prefer classic styles and for those who
prefer the latest fashions. Leisure clothing has become
more prominent with identifiable branding such as Blue
Harbour (for men). At the same time, the branded Per
Una range – designed and sourced by George Davies,
the entrepreneur responsible for the growth of the Next
chain and the introduction of the George clothing range
to Asda – was added. This was a joint venture deal with
Davies; an unusual approach for M&S, but it secured
the services of a leading designer and it has been very
successful. David Beckham has endorsed a range of chil-
dren’s clothing in the past. A number of stores have now
been sold and leased back to raise cash. A new format
for furniture and furnishings, designed by Victor Radice,
recruited from Selfridges, was trialled. More and more
products are sourced overseas. Staffing levels are tighter
than in the past. Sales and profits -and the share price –
all improved, but not dramatically. Holmes vowed that
the company would never be complacent again.
In 2004, the entrepreneur Philip Green – owner of
Arcadia and, at the time, BHS-made a bid for the com-
pany, but the M&S board rejected his offer. Some insti-
tutional shareholders were willing to accept it, though.
The board was provoked, however, to make changes.
Van de Velde left, along with Holmes and Radice. The
new CEO was Stuart Rose, who had previously been re-
sponsible for the turnaround at Arcadia before its sale
to Philip Green. Radice’s new home store format was
dropped and Rose negotiated to sell M&S financial ser-
vices business
Stuart Rose described his approach in an article pub-
lished in the Harvard Business Review in 2007
. He had seen his immediate priority to be improved
stock control – and, in turn, the supply chain: an in-
creasing number of sub-brands had led to a growth
in inventory
• The new store format pioneered by Radice was
quickly abandoned but, generally, store layouts were
improved up and down the country.
@ Financial services were divested and a new deal was
struck with George Davies.
. It was apparent that Rose needed to improve the
product, improve the stores and improve the service –
really, the challenge for every retailer all the time!
But, first, it was necessary to be clear just why M&S
was as successful as it was there was complacency
about a number of things.
• In the past, M&S had come to rely on consultants,
arguably an over-reliance, and there was now to be
more emphasis on in-house solutions.
© The senior management team was to be strength-
ened, although some would be leaving, and more
decisions would be devolved to the store manage-
ment teams, albeit within clear parameters.
e Service quality would be pushed, with stronger HR
policies for staff in the stores
The company needed to become more demand-led
and less supply-driven than it had traditionally been.
With clothing, there would be three distinct price
and quality bands – good, better and best – to give
a different market position and appeal. In addition,
there are Autograph designer brands, especially
with male fashion. This proved successful as clothing
market shares improved.
• New brand advertising featured recognizable mod-
els such as Twiggy and Myleene Klass.
. There was continuing innovation – including, for ex-
ample, machine washable men’s suits and branded
electronics products.
• Energy efficiency and organic foods were targeted.
Had Rose succeeded? The decline was definitely halted
and the turnaround begun. One prescient headline pro-
claimed ‘Out of intensive care but not yet fighting fit’.
Profits and market shares, especially for clothing, were
improved. In 2007/2008, pre-tax profits exceeded the
1 billion threshold for the first time in ten years. The
shares had performed well. Rose was something of a
hero; Philip Green was almost forgotten.
But then the 2008 economic squeeze began to hit
the high streets; many retailers were affected to varying
degrees. M&S was robustly honest about anticipated
profit fall-backs in the future and this became headline

16
CHAPTER 1
WHAT IS STRATEGY AND WHO IS INVOLVED?
high that he understood the business and may be able
to restore genuine growth to the clothing side.
References
Drucker, P.F. (1985) Innovation and Entrepreneurship,
Heinemann
Freeman, C. (2000) Interview, Management Today,
January
Rose, S. (2007) Back in Fashion – How We’re Reviving a
Business Icon, Harvard Business Review, May
news. Food sales were most at risk as M&S was still
seen by many as treat food rather than the main weekly
shop. The head of Food left. A year later, M&S intro-
duced mainstream branded products, such as Bovril,
Coca-Cola and Kellogg’s for the first time in its history
in order to broaden its offer and appeal. Generally, this
has worked with foods but sales of electronic products
(including brands such as Sony) have not been stun-
ning. Rose himself did not escape without criticism –
many shareholders were unhappy that he had been
made executive chairman as well as CEO and would
have preferred that the two roles remained split.
In 2010, it was announced that Marc Bolland had
been recruited from Morrisons to replace Rose as CEO-
many had assumed there would be an internal promo-
tion this time. A new chairman was also appointed and
Rose finally left M&S stronger than when he found it in
2011. At this time, the business was doing better than
many other big high street names but it was capable of
further improvement. Fashion ranges had changed – to
separate smart from casual, traditional from designer
and budget from more expensive offerings. M&S was
still, though, perceived as a ‘UK retailer that exports’,
rather than as an international retailer. It had around
350 stores in 40 countries and a programme of expan-
sion overseas was ongoing. Bolland held the CEO post
for six years and then stepped down in early 2016. In
the context of the recession and retailing generally, the
M&S performance was robust if not outstanding. The
number of stores had grown as progressively more spe-
cialist Simply Food stores were opened. As to turnover,
55 per cent was food; 45 per cent general merchan-
dise, including fashion. The growth in the food side of
the business had covered for a relatively disappointing
performance by the clothing side. Bolland’s replacement
was an internal promotion, Steve Rowe, who had been
with the business for over 20 years. Expectations are
Questions
1 Why do you think Marks & Spencer’s fortunes
changed as quickly as they did? How could such a
decline have been avoided?
2 Is it realistic to claim they will never be complacent
again? If so, what is required to engineer this?
3 (If you are an M&S customer. ..) Did you notice
many changes during recent years?
Task
Research the attempted bid by Philip Green for Marks &
Spencer. Do you feel the outcome was the best all-round’?
VES
The ‘five Ps’ of strategy
More than anyone else, Professor Henry Mintzberg has been responsible for drawing attention to alternative
views and perspectives on strategy, all of them legitimate (see Mintzberg et al. (1998), for a fine summary ci
his work on this topic).
Figure 1.1 illustrates Mintzberg’s ‘five Ps’ of strategy:
• Perspective – this is the big picture discussed above
• Pattern – making sense of the past, bringing the organization to its
• Position – a clear understanding of the present
• Plan – looking ahead and trying to discern a clear picture of possible courses of action
• Ploy (or Tactic) – activities at the little picture’ level in a dynamic and competitive world.

CHAPTER 1_WHAT IS STRATEGY AND WHO IS INVOLVED?

news. Food sales were most at risk as M&S was still
seen by many as treat food rather than the main weekly
shop. The head of Food left. A year later, M&S intro-
duced mainstream branded products, such as Bovril,
Coca-Cola and Kellogg’s for the first time in its history
in order to broaden its offer and appeal. Generally, this
has worked with foods but sales of electronic products
(including brands such as Sony) have not been stun-
ning. Rose himself did not escape without criticism —
many shareholders were unhappy that he had been
made executive chairman as well as CEO and would
have preferred that the two roles remained split.

In 2010, it was announced that Marc Bolland had
been recruited from Morrisons to replace Rose as CEO —
many had assumed there would be an internal promo-
tion this time. A new chairman was also appointed and
Rose finally left M&S stronger than when he found it in
2011. At this time, the business was doing better than
many other big high street names but It was capable of
further improvement. Fashion ranges had changed — to
separate smart from casual, traditional from designer
and budget from more expensive offerings. M&S was
still, though, perceived as a ‘UK retailer that exports’,
rather than as an international retailer, It had around
350 stores in 40 countries and a programme of expan-
sion overseas was ongoing. Bolland held the CEO post
for six years and then stepped down in early 2016. In
the context of the recession and retailing generally, the
M&S performance was robust if not outstanding. The
number of stores had grown as progressively more spe-
cialist Simply Food stores were opened. As to turnover,
55 per cent was food; 45 per cent general merchan-
dise, including fashion. The growth in the food side of
the business had covered for a relatively disappointing
performance by the clothing side. Bolland’s replacement
was an internal promotion, Steve Rowe, who had been
with the business for over 20 years. Expectations are

The ‘five Ps’ of strategy

More than anyone else, Professor Henry Mintzberg has been responsible for drawing attention to alternativ
legitimate (see Mintzberg er al. (1998). for a fine summary

views and perspectives on strategy, all of them |
his work on this topic).

high that he understood the business and may be able
to restore genuine growth to the clothing side.

References

Drucker, PF. (1985) Innovation and Entrepreneurship,
Heinemann.

Freeman, C. (2000) Interview, Management Today,
January.

Rose, S. (2007) Back in Fashion — How We’re Rewiving a
Business Icon, Harvard Business Review, Mey.

Questions

4 Why do you think Marks & Spencers fortunes
changed as quickly as they did? How could such 2
decline have been avoided?

2. sit realistic to claim they will ‘never be complacent
again’? If so, what is required to engineer this?

3 (If you are an M&S customer. . .) Did you notice
many changes during recent years?

Task

Research the attempted bid by Philip Green for Marks &
Spencer. Do you feel the outcome was ‘the best all-round’?

Figure 1.1 illustrates Mintzberg’s “five Ps’ of strategy:

© Perspective — this is the ‘big picture” discussed above

© Pattern — making sense of the past, bringing the organization to its

e Position —a clear understanding of the present

Plan — looking ahead and trying to discern a clear picture of possible courses of action

© Ploy (or Tactic) — activities at the ‘little picture’ level in a dynamic and competitive world.