TRANSFORMING AN ORGANIZATION

MARKS & SPENCER ORIGINS

 In 1882, Michael Marks, a Polish refugee, arrived in the
north of England and began “hawking” merchandise.
 In 1884, Marks met Isaac Dewhirst, a wholesaler of goods
who gave £5 credit to obtain stock.

“Don’t ask the price,

it’s a penny.”
MARKS & SPENCER ORIGINS

In 1894, Mark formed a partnership with Thomas Spencer.

Thomas Spencer

Sheffield the Moor, Norfolk Market 1897

MARKS & SPENCER ORIGINS

In 1917, Spencer retired and a

new board was formed, which
included Simon Marks and Israel
Sieff.

During World War I, Chaim

Weizmann had a remarkable
influence on both Simon and
Israel. He encouraged their
commitment to the benefits
and applications of
technology. He also stimulated
in them a sense of social
responsibility.
MARKS & SPENCER ORIGINS

 During the 1920s, Simon Marks was determined to transform the

company into a national chain store group using principles learned at
Sears Roebuck. Involve control of merchandise generated by a central
organization with systems acutely sensitive to consumer demand.
 In 1926, Marks & Spencer became a public company.
 In 1928, the St. Michael trademark was registered.
 In 1931, a new food department was opened, selling fruit,
vegetables, and canned goods.
 By 1956, costs rose disproportionately, prompted Marks & Sieff to
institute a “simplification program followed by a good housekeeping
campaign.
MARKS & SPENCER ORIGINS

 By 1960, Marks & Spencer was 100% St. Michael and was
becoming a national institution.
 In 1972, a company was formed jointly with People’s
Department Stores Ltd. Of Canada.
 In 1975, the first European store was opened in France.
 Lord Rayner assumed chairmanship in 1983, this trend toward
internalization accelerated with the purchase of Brook
Brothers.
 In 1985, the Chargecard was lunched.
 By 1994, Marks & Spencer’s business overseas had grown to
£940m with a profit of over £60m, from £269m and £30m.
SIR RICHARD GREENBURY’S QUIET REVOLUTION
 In 1953, Greenbury joined the Marks & Spencer as a
junior management trainee.
 In 1962, he joined the Baker Street head office and
served in management and executive positions in
buying areas.
 In 1970, he was appointed as director.
 In 1986, he was made chief executive officer under
Lord Rayner.
 By April 1991, he was appointed to chairman of the
company.
SIR RICHARD GREENBURY’S QUIET REVOLUTION

FOLLOWING GREENBURY’S INITIATIVE

 Processes and Procedure
 Paper works reduced, unnecessary tasks eliminated
 “Faster, more efficient communication” and people with “greater
responsibility and job satisfaction throughout the business”
 Product Side
 More accurate buying
 Significant savings to the end-of-season cost of reduction- major benefit
 Innovative Product Development
 “Outstanding Value” Campaign
 Permanent lower prices offered
 Volume deals with suppliers
 Development of the new out-of-town/edge of town stores
 Enlargement of major high street stores
SIR RICHARD GREENBURY’S QUIET REVOLUTION

FOLLOWING GREENBURY’S INITIATIVE

 Financial Services
 Loans, unit trusts, and Personal Equity Plans(PEP) were established
 Entry to Life Insurance market at 1995
 Trading Overseas as Retailer
 Western Europe
 Hong Kong
 Japan
• Too- high property prices
• Employment practices and wages out of line with poor labor
productivity.
Transformations in the Company
 Management Structure and Responsibility
 Personnel and Welfare
 Process and Procedures
 Digital Transformation
 Product Range
 Store Operations
 Estate and Store Development
 Financial Services
 International Trading
MARKS & SPENCER TOP MANAGEMENT STRUCTURE AND
RESPONSIBILITIES
Clinton Silver-deputy chairman- and Keith Oates were joint
managing directors, reporting to Sir Richard. The remaining board was
composed of 13 executive directors. Silver called Greenbury’s accession
to chairmanship a “watershed” in board’s structure and style.
Greenbury strengthened the subcommittee structure and expanded the
board membership as a way of developing younger executives.

The board had a considerable committee structure. Two of most

active and visible were the Information Technology Review
Committee(ITRC) and the Capital Expenditure Committee (CEC), both
chaired by Keith Oates. The CEC was formed to analyze requests for
capital and to allocate Marks & Spencer’s annual capital budget.
MARKS & SPENCER TOP MANAGEMENT STRUCTURE AND RESPONSIBILITIES

Oates had instituted a dynamic revenue and capital operating

plan process for the whole business.

A new management accounting system showed product

profitability and return on capital by product group. Operating plan
preparation each spring resulted in financial plan for the new financial
year covering all revenue cost areas. The plan was formally reviewed
on quarterly basis by board.
MARKS & SPENCER CULTURE
The emphasis of the business organization is on efficiency
and teamwork. In 1975, great deference was given to senior
management. In 1994, junior managers spoke more confidently of
their own initiatives and views. Both formal and informal
communication was aimed at ensuring a wide understanding of
current issues.

The mood of Marks & Spencer was “restless

dissatisfaction.” They were also very concerned to protect the
company’s public image.
MARKS & SPENCER PERSONNEL AND WELFARE
To work at Marks & Spencer was to work for Europe’s most
admired company. In 1994, Marks & Spencer still had some of the
best benefits of any company in UK.
In his response to his concern with inefficiency caused by
excess numbers and bureaucracy, Greenbury delayered and
then led a downsizing.
“The structure was shaped like a diamond, big in the
middle,” said Greenbury.
“We encourage the building of a career profile. Our goal
is to have staff at every level with a broader range of skills to
provide us with more flexibility,” according to Clara Freeman,
divisional director of personnel.
MARKS & SPENCER PRODUCT RANGE
 Clothing  Food
 Women’s Outerwear  Fresh
 Women’s Undergarments  “Ready-prepared” recipe dishes
Lingerie  Sandwiches
 Women’s Shoes
 Menswear
 Men’s underwear
 Suits
MARKS & SPENCER PRODUCT RANGE
MARKS & SPENCER PRODUCT RANGE
MARKS & SPENCER PRODUCT RANGE
MARKS & SPENCER PRODUCT RANGE
MARKS & SPENCER BUYING
The focal point for procurement of both goods and general
merchandise was the Baker Street buying team, whose
departmental heads were typically located three organizational
levels from the executive board.
The traditional category “buyer” did not exist in Marks & Spencer
the function was split between:
The Merchandiser which covered the logistical and financial role.
The Selector, product development role, a key in developing
their St. Michael brand ranges.
The Technologist, responsible for setting the product
specification with the suppliers and the development of new raw
materials and manufacturing methods.
MARKS & SPENCER BUYING

Merchandiser
 Day-to-day financial planning and operational responsibilities

 Management of selling price structure, margin and cost reduction

 Management of supply base, planning production and

commitment and negotiating cost prices

 Manage store stocks

 Catalogue and communication of layout and priorities

MARKS & SPENCER BUYING

The increasingly sophisticated use of information technology to

track demand at the store level had improved the buying tools
available to the merchandiser and enhanced the roles of managing
the supplier base and merchandise distribution.

In spite of the new tools providing immediate and accurate

information, visiting stores and suppliers to see for oneself what
was happening was still an essential part of the job. The ‘why’
could only be answered this way.
MARKS & SPENCER BUYING

Selector
 Product development

 Creation of each season’s range

 Responsible for the “look” of the product itself

 Monitoring fashion trends in conjunction with the design

department that pursued a common group policy
MARKS & SPENCER BUYING

Technology
 Direct liaison with suppliers and their procurement of raw
materials

 Audit of supplier systems and quality

 Tracked leading edge textile and agribusiness technology around

the world
MARKS & SPENCER BUYING

Design

The general merchandise buying departments were also

supported by a 30-member specialized central design staff, who
researched and forecasted major fashion trends.

Most importantly, they developed Marks & Spencer’s biannual

overall design directions and themes that ensured consistency of
look across all departments in line for the season one year ahead.
MARKS & SPENCER BUYING

Relationships with the Supplier Base

Marks & Spencer saw its future growth linked with the needs of
a dynamic dedicated core group of UK-based suppliers whose size
allowed them to invest in people and machinery as required.

It actively encouraged the move toward supplier consolidation.

In total, 260 suppliers served the general merchandise
departments and 400-450 for the food group.

This supplier network was in many ways an extension of Marks

& Spencer’s own buying department organization – so much that
many senior people in the supply base were ex-Marks & Spencer
employees and functions and responsibilities between the
organization were closely linked.
MARKS & SPENCER BUYING

Merchandise Flow
Sir Richard Greenbury noted:

 1950’s and 1960’s – we were a production-led business, where the product

was pushed and manufacturing was king

 1970’s – it was a product business, where the retailer was the king

 1980’s – it became a pull business that customer led

 1990’s – the customer is no longer king but a dictator

 MARKS & SPENCER STORE OPERATIONS
The tradition of the old Marks & Spencer had been to have a dual authority
structure
 Store Manager
 Staff Manager

In the 1980’s, Lord Rayner, the previous chairman initiated a cultural and
structural change in the management of each store
 Store Manager
 Commercial Manager
 Personnel Manager
 Financial Manager
MARKS & SPENCER ESTATE AND STORE DEVELOPMENT

During the previous decade, Marks & Spencer had followed a

three-pronged strategy for store development that Greenbury sought
to consolidate.

In 23 major regional locations, Marks & Spencer sought to create

superstores that had the square footage and the full range of goods so
as to define the Marks & Spencer image.

“We have to treat the town center as our mall.” said Roger Aldridge,
the director of estates and store development
MARKS & SPENCER ESTATE AND STORE DEVELOPMENT
MARKS & SPENCER FINANCIAL SERVICES
Up until 1985, all transactions in the stores were either
through cash or check. No financial service products existed.

The introduction of the Chargecard in 1985 was Marks &

Spencer’s entry to financial services. By employing their own
Chargecard instead of accepting bank credit cards, they were able
to avoid the 2-4% transaction costs of major cards.

By 1994, financial activities were generating profit of

£41.7m. The Marks & Spencer cardholder base comprised of 2.7m
accounts and 3.5m card holders, accounting for 20% of retail sales
in the United Kingdom.
MARKS & SPENCER FINANCIAL SERVICES
MARKS & SPENCER FINANCIAL SERVICES

After the Chargecard, it allowed Marks and Spencer to consider

other financial services:
 Personal loans
 Personal Equity Plans (PEP)
 Unit Trusts
 Insurance

“It is not so much the Marks and Spencer label as it is the

Marks and Spencer culture. The public trusts Marks and Spencer
people and co-owns the culture.” explained Colvill
MARKS & SPENCER THE CHALLENGE OF
INTERNATIONAL OPERATIONS AND EXPANSION

Europe Far East (Asia) North America

 Paris  Hong Kong  Canada

 Madrid  China

 Barcelona  Japan
MARKS & SPENCER THE CHALLENGE OF INTERNATIONAL OPERATIONS AND EXPANSION

Franchising

Managers in the franchise group believed that the typical

Marks & Spencer attention to detail in managing their supplier
partnerships was being extended into developing franchise
partnerships.
By 1994, franchise operations existed in 22 countries – a total
of 76 shops.
“Our pace of expansion is driven by three factors – Marks &
Spencer human resources, the choice of the right country and
partner, and effective supply chain systems.” said Nigel Colne,
executive director responsible .for international franchising
Thank you for listening!