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Strategic Management

(c) Macmillan

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Strategic Management

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    1. (c) Macmillan & Tampoe 2001 1 Strategic Management Macmillan and Tampoe OUP

    2. (c) Macmillan & Tampoe 2001 2 Case Examples Hard Times for Marks & Spencer

    3. (c) Macmillan & Tampoe 2001 3

    4. (c) Macmillan & Tampoe 2001 4 Critical Strategic Issues Why did the directors and managers not see the trouble ahead? What response should they make to ensure survival? How do they retain their image as ‘a good investment’ and ‘value for money supplier’? How do they retain confidence of the City? How do they stem the loss of customers? How should they set about the recovery process?

    5. (c) Macmillan & Tampoe 2001 5 What are the strategic issues? What is M&S’s core competence? Should it abandon its proven competence and approach to business? How does it choose a new approach? Should it continue with the ‘St Michael’ brand? Can it sustain both food and clothing? How will it counter threats to its new approach? How will it position itself vis-a-vis its chosen competition?

    6. (c) Macmillan & Tampoe 2001 6 Recapitulation of the case (1)

    7. (c) Macmillan & Tampoe 2001 7 First Steps to Recovery Chairman and chief executive leave Got external consultants to suggest strategy for future Divided the roles and appointed a chief executive Went in search of a new chairman Repudiated its long-term relationships with suppliers Set up specialist outlets in its flagship stores Announced redundancies Closed overseas branches Regrouping to fight another day!

    8. (c) Macmillan & Tampoe 2001 8 Question 1 – possible causes of M&S difficulties in 1999 Dominance of a single individual Sir R Greenbury Shifts in demographic balance Greater affluence among buying public now seeking status through clothes Quality of pre-prepared foods at supermarkets as good as M&S but cheaper and more convenient to buy M & S image too dour – not appealing to emerging generation – too associated with their parents and grand parents – ‘uncool’

    9. (c) Macmillan & Tampoe 2001 9 Question 2 - Core Competence of M&S Probably in its sourcing methods Gave it the ability to deliver high value, reliable, consistent quality Investors and customers trusted it Its quality of management was ranked very high Consequently ‘what was good for M&S was good for the Nation’ feeling Epitomised the best and most honest face of commerce

    10. (c) Macmillan & Tampoe 2001 10 Question 3 - Lessons about strategic leadership Combining chairman and CEO can have issues of succession, lack of counter-balance, objectivity and confer superman status to a successful person A failure to question relevance and test validity of a vision and formula that had remained unchanged for almost half a century Lack of strategic sensors to alert company to future failure Decision making too centralised for the business to be responsive in a fast moving fashion-conscious market

    11. (c) Macmillan & Tampoe 2001 11 Question 4 – The Recovery Strategy Peter Salsbury inherits a sinking ship His prime objective is to refloat it He is faced with classic turnaround situation Proposed steps (page 318) are typical for this situation Refocus the business, correct shortcomings, shed costs, secure survival through customer focused effort

    12. (c) Macmillan & Tampoe 2001 12 Question 4 – Recovery Actions Changes proposed have to be implemented by the same people who presided over the diminishing performance Decentralising decision-making and delegating authority to the store managers – but can they cope being unaccustomed to this level of autonomy? Moving mindset of staff from ‘wholesaler’ to ‘retailer’ where selling is a necessary art could prove difficult Issue is how can the mindset and ethos of the staff and managers be tuned to the new challenges in a period of uncertainty with associated impact on morale and motivation?

    13. (c) Macmillan & Tampoe 2001 13 Question 5 – hindsight! Overhauled its buying and distribution Clothing production moved off-shore saving Ł110 millions Buying to go global, saving Ł80 millions Internal buying reforms to match change in procurement strategy Sale or securitisation of non-trading properties to raise Ł400 millions First bout of 600 redundancies and closure of European branches Challenge is getting best from staff and pleasing customers

    14. (c) Macmillan & Tampoe 2001 14 Question 5 – hindsight 2 In January 2000 Profits falling steeply Share value less than half its peak in 1987 UK retail sector going through sticky patch M & S brand name losing loyalty At bottom end of market losing out to supermarkets and discount stores At top end outmanoeuvred by nimbler fashion conscious stores Seems as though Mr Salsbury’s changes are not having the desired effect on the bottom line

    15. (c) Macmillan & Tampoe 2001 15 Question 5 – hindsight 3 Time for a new broom. company gets new chairman Luc Vandervelde from a French food retailer – Promodes Creates corporate governance issues with reward package (two year contract) and being made executive chairman contrary to other top M & S executives who had one year contracts imposed on them Does this demote Mr Salsbury? Will this create leadership problems with chairman and chief executive both attempting to steer the ship?

    16. (c) Macmillan & Tampoe 2001 16 Question 5 – Mr Vandevelde’s M&S ‘the M&S brand is less tarnished overseas’ ‘selling own brand is the right model’ ‘no retailer today can afford not to be global if he wants to survive’ Roger Holmes from Kingfisher’s electrical division moves in as Chief Executive of UK Retailing in January 2001 Mr Salsbury leaves the company Further 4400 jobs will be lost Most overseas stores will be closed so that company can focus on UK Sales of clothing, footwear, gifts and home furnishings have fallen 7%

    17. (c) Macmillan & Tampoe 2001 17 Question 5 – Mr Holmes Acts He says problems stem from ‘products’ but also from ‘the way we were displaying the product and laying out the store’ I.e., M & S needs to learn retailing skills His strategy is to regain core customers by delivering significant improvements in product appeal, availability and value M & S will move away from clothing with more space being used to sell food, home furnishings and beauty products Retailing improvements – store refurbishment, segmentation by lifestyle ranges Working with suppliers Further internal business structure reforms

    18. (c) Macmillan & Tampoe 2001 18 Question 5 – under new management Executive chairman – Luc Vandevelde Chief Executive – Roger Holmes Role split Chairman and Finance director to focus on corporate restructure Holmes to focus on UK retailing Will any of this make a difference?

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