1. Executive Summary
This report includes the comparison of the management and the leadership style used by Marks & Spencer and River Island. A primary research is been carried out to analyse the management of both the company. It involves a brief description of M&S and River Island and then evaluating the SWOT Analysis of both organisations in order to compare its strength, weaknesses, opportunities and threats with each other. It also analyse the different management approach adopted by M&S and River Island. Organisational structure of both company and how company communicate within their respective organisations is also been explained. This report also describes the Corporate Social Responsibility and Ethics of Marks & Spencer and River Island.
In the world of Globalisation, organisations have to face different challenges in general management functions. Most of the companies are going bankrupt in this competitive world. Other companies, who are on the verge on bankrupt, are in search of merging with other companies. For example, few years back Nokia was going to bankrupt due to extreme competition and lack of innovation in the smartphone market. But after merging with Microsoft, Nokia is back on the track with their windows smartphones. Management of the company are always the primary cause of success or the failure of the company.
The main aim of this report is to analyse both the organisation (Marks & Spencer and River Island) and to help Caifu Investment Ltd in selecting any one of those company for investment. River Island is a high street clothing brand, whereas M&S deals in clothing as well as food market. As Caifu Investment Ltd has an ambition to invest in the high street fashion industry; this report will focus only on clothing market of M&S.
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3. Company Profile of Marks & Spencer
Marks & Spencer is in operations from over the last 129 years, founded by Michael Marks and Thomas Spencer in Leeds, United Kingdom. M&S have 766 stores in UK and over 418 international stores operating in 51 countries across Europe, Asia and the Middle East. It employs over 81000 people throughout the world (Corporate.marksandspencer.com, 2014).
M&S are specializing in selling clothing and high quality foods with its 5 core principles of Quality, Value, Service, Trust and Innovation. Not only in-store, but it also provides convenient services to people for shopping online or by phone as well in order to provide best shopping experience to all the customers.
M&S is the first British retailer to make a pre-tax profit of over £1 billion in 1998 (Corporate.marksandspencer.com, 2014).
Turnover of the company for the year ended 30 march 2013 was £10,026 million which is increasing year by year. But the company’s net profit is tremendously declining as it made only £458 million of net profit in last year, whereas it made £821 million of net profit in the year 2008. More than 80% of the company’s revenue is generated in UK and is further splits between food (54%) and Clothing / General Merchandize (46%) (Corporate.marksandspencer.com, 2014).
4. Company Profile of River Island
River Island is in operation from over the last 60 years and is considered as one of the most successful companies on the high street of fashion retailing. Bernard Lewis founded it in 1984, starting from a small shop in the East end of London trading as ‘Lewis Separates’. However, since it has went through several name changes such as Chelsea Girl, Concept man and then finally River Island in 1988. River Island has nearly 300 stores across UK, Europe, Asia and the Middle East with employing around 10000 employees throughout the company (River Island, 2014).
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River Island has recently opened 14 new stores (7 of them in UK and 7 overseas), renovated 8 stores and also relocated their flagship store of London and Liverpool to larger premises. Due to this investment, the company’s pre-tax profit has been increased in 2103 by 12.5% as compared to previous year. River Island has recorded pre-tax profit of £97.8 million in 2013, while turnover of the company edged up 0.4% to £802.3 million (River Island, 2014).
5. SWOT Analysis
High Quality Products
Strong brand equity
Good customer service
Stores all over high streets in UK
Success in targeting high class consumer
Social responsible brand.
Long-term relationship with its suppliers.
Clothing range for all the age group.
Unique and fashionable products
Price is good
Excellent store standards
Fitting room is located on first floor to increase foot fall on both the floor of the store Increasing profit year by year
Celebrity endorsement and events
Clothing style is not focusing on young consumers.
Lack of innovation in fashion
Prices are higher as compared to competitors.
Fail to expand in some countries (USA, France).
Do not provide trial/fitting rooms to customers.
Low brand recognition
Low Market share
Not diversified globally
Few stores on the high street of UK
Low capital for expansion as it a private firm.
Growth in E-commerce
Improving the offer of clothing ranges
Focusing on customer segmentation
Developing new markets (India, China)
Renovate/ Redecorate the stores.
Growth in E-commerce
New Formal clothing line for business customers.
Emerging markets and expansion abroad.
Increase capital by listing it as public sector company.
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External changes (government, customer behaviour, politics etc.) Decreasing market share
Increase in e-commerce provides more option to consumers.
External changes (government, customer behaviour, politics etc.) Increase in e-commerce provides more option to consumers.
By evaluating SWOT Analysis of M&S and River Island, the decision to invest in which company will be very easy for Caifu Investment Ltd. After the investment, Caifu can still use this SWOT analysis in the development of the chosen company.
6. Management of M&S and River Island
Management in an organisation is the process of planning, organising, leading and controlling resources in order to achieve its goals and objectives (Robbins and Coulter, n.d.).
Management of the company are always the primary cause of success or the failure of the company. Different companies have different management style and approach to manage their organisation. The most common management style is as follows:
The management style of the M&S is consultative, where leader will consult with others before making any decisions. There will be a group influence in the final decision; even though the leader makes the decision (Robbins and Coulter, n.d.).
The management approach of M&S can also be a mixture of consultative and autocratic approach. This approach generally arise in the middle level management (e.g.: managing director, marketing director) of the organisation, where managers are quite expert in decision-making in their field and they know what they are doing. M&S is a big multinational corporation and have a variety of management style, so management approach is dependent on whether the decision are made on hierarchical scale or by the bottom level managers of the company.
Whereas on the other side, River Island have adopted democratic approach that involves empowerment. “River Island will have to thank their young team of designers, buyers and in-house stylists,” said by Richard Bradbury, River Island’s managing director (Holland, 2013).
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The management of the River Island has given the power to their designers, stylist to make the decision regarding the product on their own. Management of the company also arrange an event every two week for their employees known as “Style Challenge”, where employees will compete with each other for the best style award with different themes every time. This helps River Island to come up with various unique and fashionable clothing products in the market. Hence River Island have decentralized decision making approach in the management, whereas M&S have a quite centralized decision making approach but it depends upon the decision of the different levels of management.
Due to lack of personal interaction between the top-level management and bottom level employees in an organisation, it is very difficult for all of them to communicate with each other effectively. Therefore it is very important to have planned structure of the organisation in order to have two-way communication throughout the organisation (Klauss and Bass, 1982).
M&S have implemented various changes in their organisational structure in last few years. Figure 1 below shows the old structure and new structure of organisation of the M&S. New structure of M&S is more flat as compared to previous one, which enables M&S to have two-way communication between top-level management and low-level employees. With this new structure, employees throughout the business have more responsibility than before and enable them to take quick and effective decision whenever required. Effective communication in the organisation also helps top-level managers to understand the need of their employees, whereas it also helps employees to understand their goals and objectives that lead to growth in the productivity of the company.
Figure 1: Organisational Structure of M&S
River Island is a private company owned and managed by Bernard and his family members. So the organisational structure of River Island is like Bernard and his family members are on the top and it is further been divided like a different chain such as top-level executives to regional managers to store managers to deputy managers etc. River Island has chain type of organizational communication network, which is quite moderate in terms of speed and accuracy. Hence River Island and M&S both have different organisational structure but the communication in organisation is quite efficient and reliable in both the companies.
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Figure 2: Organizational communication network
8. Corporate Social Responsibility
Social responsibility of the company is to engage in social actions in response to do the right things and act in ways that benefits the society beyond its legal and economic obligations (Ravi Raman and Lipschutz, 2010).
For example, Dixons Retail (a chain electronic retailer such as Currys, Pcworld in UK) provides free recycling service of electronic products to their customer. So consumers don’t have to worry about their old electronic products and get it recycled for free of cost.
However M&S and River Island also obey their social responsibility towards the society. M&S have launched a programme called “PLAN A” in January 2007, by setting up 100 commitments in order to achieve the ultimate goal of becoming world’s most sustainable retailer. To do this end, M&S are working together with suppliers to combat climate change, use sustainable raw materials, decrease waste, and trade ethically (Corporate.marksandspencer.com, 2014).
They have now increased their commitment to 180 for “PLAN A“ programme which is need to be achieve by 2015. M&S also stated that their stores, warehouses, offices in the UK are now carbon-neutral.
On the other hand, River Island has also adopted some strategies in order to operate their business in such a way that it will benefits to environment and also to lead consumers for healthy and better lifestyle. River Island reported that they have constituted the use of renewable energy resources in to their operations and reduced the levels of product packaging. They also recycle and reuse the biodegradable materials whenever possible (River Island, 2014).
Overall both the organisation is involved in social responsibility but after analysing, M&S have been proven more effective in terms of their positive contribution to the society.
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Ethics in an organisation means principles, values, beliefs that define whether the behaviour and the decision of the companies are right or wrong. Sometimes managers have to considered and understand the ethical issues involved in decision-making process of the company before taking the final decision (Minus and Bassiouni, 1993).
M&S is considered as world most ethical companies in the world in the retail industry (Ethisphere.com, 2014).
M&S have around 2000 suppliers in over 70 countries and all these suppliers are bound to a set of principles to work with M&S. All the suppliers are necessarily required to comply with these principles such as local and national laws that includes: working hours and conditions, rates of pay, health and safety, minimum age of employment and the time of employment Corporate.marksandspencer.com, 2014).
River Island also working effectively with their suppliers and official agencies in safeguarding and providing the rights and required working condition to the workers. All the suppliers of the river island are contractually committed to their world wide ethical policy. River Island will terminate the contract if any of the suppliers violates their policies. To support their policy, River Island’s technical team regularly visits the factories to examine the working condition and the need for improvement. River Island also became the member of Ethical Trading Initiative (ETI) in 2008 (River Island, 2014).
Hence both the organisation, M&S and River Island are committed to certain code of ethics that make sure the process of the company are carried out in a right way and without violating the principles, values and the beliefs.
After analysing the management of Marks & Spencer and River Island, here by I concludes that both the organisation have quite different management style and leadership. Investing in Marks & Spencer can be a good option as M&S have a good reputation as a brand image in the UK, but at the same time River Island have got quite unique fashionable products for all the segment of age group. Both the organisation almost has the same opportunities and threats in the market. Organisational structure of both the company is also quite reliable for internal communication but M&S have shown some significant improvement in their structure that enable them to smoothly communicate throughout the organization. Both the organisation has generously contributed towards CSR for the society, but M&S is been considered as one of the best Ethical retail company from last few years.
Ultimately, Caifu Investment Ltd should invest in Marks & Spencer because of high brand equity in the UK and diversified business across UK, Europe, Asia and the Middle East. M&S are also planning to open 250 more international stores and increase profit by almost 40% in the coming three years. M&S are also considered as world’s most ethical retail company, this would be very important factor for Caifu Investment Ltd to invest in M&S. After considering M&S as alliance, Caifu should also take required action to convert those weaknesses into strengths that are mentioned in the SWOT analysis. It is also very important for Caifu and M&S to take the advantages of those opportunities and try to tackle those threats as well.
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