MARKS & SPENCER

Marks & Spencer

Marks & Spencer

Introduction

The company started in Leeds in 1884 when Michael Marks, a Russian immigrant, set up a “Penny Bazaar” from which no item cost more than one penny. Ten years later Tom Spencer joined Michael Marks in partnership. By 1901 the business had 12 shops and 24 stalls in covered markets. This target and positioning continued and by 1926 the business was operating from 125 stores. At this point the company changed its status to that of a public company. The families of the founding members played a key role in the development of Marks & Spencer for the next 58 years until for the first time in 1984 a non-family chairman and chief executive was appointed as successor to Lord Sieff (Michael Marks' grandson). By the 1980s the company had become one of the UK's most widely held in terms of shareholdings, with more than 300,000 shareholders, and one of the UK's leading retailers of food, men's, women's and children's fashion. These products formed the core business together with home furnishings, accessories and financial services which were introduced in 1985. arks and Spencer Group (M&S) is a leading retailer of clothing, foods and home ware in the UK. The company operates in about 41 countries worldwide with UK as its primary positioning. It is headquartered in London, UK and employs about 75,000 people. The company recorded revenues of £9,022 million (approximately $18,113 million) during the financial year (FY) ended March 2008, an increase of 5.1% over 2007. The operating profit of the company was £1,211.3 million (approximately $2,431.9 million) during FY2008, an increase of 15.8% over 2007. The net profit was £821.7 million (approximately $1,649.7 million) in FY2008, an increase of 24.5% over 2007.

Organizational Structure

Marks & Spencer conforms to the typical centralized structure which is a feature of UK multiple retailers. The business is a highly centralized business. Merchandising and buying decisions are made centrally and goods then distributed to stores. In order to support the company's returns policy, whereby goods purchased at one store can be returned to another store, a uniform pricing policy exists. The company has no manufacturing capacity in the UK and is a purely retail business. The strength of its relationships with suppliers, many of which are UK based, enables the company to operate on the lines of a vertically integrated company.

Change Management

When, in Autumn 2010 I needed a case study on organisational change, without too much deliberation I chose Marks and Spencer. This was because the company seemed to me to be well-known, well-loved and in very public trouble. A few months later, the then Managing Director, Roger Holmes, came to give a public lecture at my university, of which he is an alumnus. In the question session at the end of his presentation I asked why he thought that his company enjoyed quite such high levels of public support, and why people wanted it to recover and regain its status as a national ...