Note: Please solve the case study in yours own words

Case Discussion Questions 1. What do you think about the source of Marks & Spencers competitive advantage? 2. Marks & Spencer has managed to maintain its competitive advantage in British retailing for more than fifty years. Why, do you think, have rival firm found Marks & Spencers competitive position so difficult to attack?

Marks \& Spencer Marks \& Spencer (M\&S) is a British retailing institution. Founded in 1884 by Michael Marks, a Polish Jew who had immigrated to England, the company has been a national chain since the early 1900s. By 1926 the company had a branch in every major town in the country and had become Britain's largest retailer, a position it still held in 1996. Primarily a supplier of clothing and foodstuffs, M\&S is one of the world's most profitable retailers. In 1992 M\&S's 280 United Kingdom stores had sales of $7.5 billion. M\&S accounted for 15.0 percent of all retail clothing sales in the United Kingdom, and 4.6 percent of all food sales. According to the Guinness Book of Records, in 1991 the company's flagship store at Marble Arch in London had a turnover of $3,700 per square foot, more than any other department store in the world. M\&S provides a selective range of clothing and food items aimed at rapid turnover. The firm sells all its products under its own St. Michael's label. M\&S offers high quality products at moderate rather than low prices. This combination of high quality and reasonable price encourages customers to associate M\&S with value for money, and the firm's ability to deliver this combination consistently over the years has built up enormous goodwill from customers in Britain. In fact, so strong is M\&S's reputation among British consumers that the company does no advertising in that market. To achieve the combination of moderate prices and high quality, M\&S works very closely with its suppliers, many of whom have been selling a major portion of their output to M\&S for generations. The focus on quality is reinforced by M\&S's practice of having its technical people work closely with suppliers on product design. Suppliers are more than willing to respond to the firm's demands, for they know that M\&S is loyal to its supplier and as it grows so do they. The sale volume generated by M\&S's strategy of providing only a selective range of clothing and food enables M\&S's suppliers to realize substantial economies of scale from large production runs. These cost savings are then passed on to M\&S in the form of lower prices. In turn, M\&S passes on part of the savings to the consumer. Crucial to M\&S's effectiveness is a clear focus on the customer. The tone is set by top management. Each senior manager makes a habit of wearing M\&S clothes and eating M\&S food. Thus managers develop an understanding of what it is that customers want and like about M\&S products; by staying close to the customer, they can improve the quality and design of the products they offer. The focus on the customer is reinforced at the store level by store managers who monitor sales volume and quickly Identify lines that are selling and those that are not. Then store managers can transmit this information to supplier, which have the capacity to modify their production quickly, increasing the output of lines that are selling well and reducing the output of lines that are not moving. Another central feature of M\&S is its pioneering approach to human relations. Long before it became fashionable to do so, M\&S had developed a commitment to well-being of its employees. M\&S has always viewed itself as a family business with a board responsibility for the welfare of its employees. M\&S offers employees medical and pension plans with benefits that are well above the average within the industry. Likewise, the company pays its employees at a rate that is well above the average within the industry, and it makes a practice of promoting employees from. within, rather than hiring from outside. Furthermore, there a series of in-store amenities for employees, including subsidized cafeterias, medical services, recreation rooms, and hairdressing salons. The reward for M\&S is the trust and loyalty of its employees and ultimately, high employee productivity. Also vital is the company's commitment to simplifying its operating structure and strategic control systems. M\&S has very flat hierarchy; there is little in the way of intervening management layers between store managers and top management. The firm utilizes just two profit margins, one for foodstuff and one for clothing. This practice reduces bureaucracy and frees its store managers from worrying about pricing issues. Instead, they are encouraged to focus on maximizing sales volume. A store's performance is assessed by its sales volume. Control is achieved partly through formal budgetary producers and partly through an informal probing process, in which top management drops in unannounced at stores and quizzes managers there about the store, In a typical year, just about every store in Britain will receive at least one unannounced visit from top management. This keeps store managers on their toes and constantly alert to the need to provide the kind of volume-for-money products that customers have come to associate with M\&S