Optimal International Strategy for Marks & Spencer
Current International Presence
Marks and Spencer commands about 18% of the British retail market, 21% of men’s suits market as well as 33% of women’s underwear market. Besides, the company controls almost 40% of the British underwear market and 15% of the clothing market in the U.K. Thus, it is the only retail firm in Europe to control a double-digit market share. Lastly, Marks and Spencer dictates about to 4.4% of the food market share in the aforementioned market. Consequently, the company has gained a leadership role in the UK’s retail industry, thereby acquiring formidable reputation worldwide.
The company is involved in textile production that contributes to 48% of its income. Food production constitutes 40% as well as warehouse products comprise about 12% of the total company income. Besides, M&S also engages in financial services segment, which accounted for about 3% of the firm’s profits in 1998 (Chislett, 2009). British based multinational company operates in many countries across Europe and Americas, thus, currently serving more than 21 million customers. It has over 800 outlets in the UK excluding the international locations targeted in the company’s expansion strategy.
Optimal International Strategy for Marks & Spencer
For a long time, the business environment in the U.K market had been categorized as “saturated.” Therefore, in its bid for internalization, it became vital for Marks and Spencer to exploit the foreign markets. As a result, the company adopted market expansion strategies, which would result into higher profitability levels. The internationalization process for Marks and Spencer started in the early 1940’s through an experimental merger. First and foremost, the company started by exporting its brand “St. Michael” to foreign markets. In 1955, the exported brands abroad were worth approximately $1,146,000 (Chislett, 2009). However, I would recommend that Marks and Spencer should adopt the following optimal international strategies and structure to compete effectively in the global markets.
Networking is a basic strategy used for managing the internationalization of markets. It entails a combination of flexibility, self-government, the degree of control and competence achievement. According to Alon (2006) a network approach combines three factors such as resources, actors, and activities. Networking relationships can assist the companies during the internationalization process. For instance, the M&S is a large organization that has global networks with international undertakings.
Moreover, networking enables the company to understand the local market and customer tastes using local employee feedback in terms of customer trends and best practices. For instance, M&S networking activities should be focused on building a relationship with the local employees via training and motivations that facilitated good service to customers. Consequently, the local employees will provide customer information and feedback, as well as share best practice and communication with the headquarters.
Another crucial strategy for Marks & Spencer is to develop a positive relationship as well as a long-term partnership with its suppliers. The suppliers are essential components of any organization because they greatly influence the company and its operations. Therefore, it is vital for M&S to ensure it can identify the best suppliers for its products. Furthermore, M&S should establish a positive approach for supplier management. Therefore, the company has the option of changing the suppliers in case others are not able to deliver as required (Alon, 2006). The company has the advantages that ensure it with an unfailing supply of materials.
Acquisition and Franchising Agreements
In its internationalization process, Marks & Spencer should focus on the acquisition as a viable method for expansion. This can be incorporated through opening stores in different economies that were performing well. Therefore, the top management of Marks & Spencer should make use of the local expatriates and open various franchise subsidiaries. For instance, the company can open franchises in various countries such as Cyprus, Canada, Belgium, Germany and Spain among others. The most significant economic aspect of the internationalization strategy used by Marks & Spencer is that the company invest more in low per capita income or countries with a small population density. It is for a reason that the company’s intention is to increase its market share in the global arena by forming strategic alliances with all its suppliers and retailers (Czinkota & Ronkainen, 2004).
The internationalization of M&S can be achieved through the adoption of a hybrid franchise model. This will comprise critical components of trademark franchising and business format franchising models of conducting business. The business format franchising model is more formal in conducting business while the trademark franchising model is highly effective in supplying of commodities. As a result of the two hybrid models of business franchising, Marks & Spencer will be able to manage its turnover levels. Besides, the company should develop short and long range diversification strategies and plans that will be crucial in opening more outlets all over the globe.
According to Chislett (2009), managers of any company should take a strategic approach to the issue of diversification and internalization. Although, the company has been highly successful in its internationalization strategy in the U.K, the top management of M&S should not stereotype any business environments. However, the management of the company should be more informed to understand that various business environments operate in varying degrees under different conditions.
In its diversification and internationalization strategy, M&S should highly regard joint ventures as the most appropriate business model. The use of a joint venture can be used in the U.K outlets to address the diverse political climate. Besides, the company should make a contractual agreement with suppliers and retailers for the marketing of its merchandise. Besides, local retailers have vast information and knowledge of the local market, hence making it easy to understand the market. For example, in Spain M&S can form a joint venture with Cortefiel Company, and develop partnerships with leading local clothing dealers.
The issue of joint ventures is closely intertwined with the cultural diversity of the host country. This is because before M&S forms any joint venture, it is vital to understand the values, language, tastes and preferences of the residents. The information will help the company in decision-making and evaluate the strategic decisions to undertake before making any direct investments. Therefore, understanding of the indigenous culture avoids the issues of cultural imperialism and imposing foreign culture on the locals.
Organizational Culture at Marks and Spencer
The presence of an “organizational culture” steers an organization in the right direction. Furthermore, an organizational culture helps to transform businesses positively. However, I would make the following recommendations that can be used to develop a positive organizational culture at Marks and Spencer.
First of all, I will carefully diagnose the problem and determine the need for cultural change. I will begin by studying the organizational culture and structure, and carefully identify the possible sources for cultural change. This will help in addressing the concerns expressed at the individual, group, and organizational levels, thereby reducing resistance to change.
As a new shift in the organizational culture, the company should use incentives and rewards. The use of rewards will initiate high levels of commitment and accountability, thus, avoiding any resistance to the new culture. For any cultural change to yield a positive response, there is a need to create incentive plans to reward employees, who successfully embrace the change to accomplish their tasks. Rewarding employees creates a win-win situation for the organization and the employee. It also acts as a source of motivation to other employees who desire to be rewarded (Burke, 2010).
Since the process of cultural change is dynamic, the company should embrace active participation and involvement of all employees. I will recommend the company to develop a bottom-up approach to ensure the adoption of a culture is wholesome and impacts positively on the company.