After years of ever-increasing profits, the ailing British retailer Marks and Spencer (M&S) has fallen out of favour with British customers. Sales and profit strongly declined, followed by shakeups in the top management team. M&S faced extinction when confronted with Philip Green′s takeover plans. Top management have made efforts to turn M&S around. The analytical approach to assess these efforts is as follows:
Having evaluated turnaround models (Chapter 1), I will observe actions undertaken by M&S (Chapter 2), finally putting both sides together, determining if the actions fit the model (Chapter 3). Introducing competitive advantage as the measurement for success (Chapter 4), the conclusion (Chapter 5) will show that M&S is just one example for a problem that goes far deeper.
At a glance
- Three business students rated M&S turnaround actions for the author's analysis
- Appendix includes the action inventory and individual ratings
- Applies the sharpbender model to Marks and Spencer
Contents
Introduction: The Analytical Approach
Chapter 1: The Theory on Corporate Turnarounds
Chapter 2: M&S’s Actions
2.1 Definition of an appropriate timeframe
2.2 Process of evaluation of key actions
Chapter 3: Matching Theory and Practice
3.1 So which case example fits the M&S case?
3.2 So which stage of the model is M&S in?
3.3 So where is M&S standing now?
Chapter 4: Competitive Advantage As the Measure For Future Success
Chapter 5: Conclusion: So will they succeed?
Objectives and Themes
This work examines whether Marks and Spencer’s response to declining performance fits a corporate turnaround model and how sustained competitive advantage might be used to assess its prospects. It compares turnaround theories, selects and evaluates company actions, and considers the strategic challenges facing the retailer.
- Corporate decline and turnaround theory
- Marks and Spencer’s actions from November 1998 to November 2000
- Assessment of key actions by three business students
- Application of the sharpbender model
- Sustained competitive advantage and strategic drift
Excerpt from the Book
Chapter 1: The Theory on Corporate Turnarounds
There are several turnaround models which could be applied to the M&S case.
Slatter claims that he has ‘identified ten major generic strategies’ and that the ‘successful turnaround manager needs to undertake (…) eight actions immediately on entering a turnaround situation, irrespective of the nature of the situation.’
Slatter makes assumptions about the turnaround process, introducing the above ‘generic strategies’ and ‘eight actions’. The model is based on a sample of ‘case-histories’, which serve to assign company examples to his theory. This approach underpins arguments empirically. In addition, the sample also includes three retailers, which might help to assess the M&S case.
His method, however, is not appropriate to assess a turnaround process. He defines theoretical terms first and then ‘fits’ examples to match his theory. This seems fairly arbitrary. One would rather observe what companies did and then draw conclusions. To define ‘eight actions’ to be applied ‘irrespective of the nature of the situation’ is too simplistic and ignores that every turnaround effort must be tailored to the respective company and internal and external factors. His ‘case-histories’ include only 20 firms, which is not enough for a representative sample.
Bibeault widens Slatter’s approach, with his sample including interviews of ‘sixteen of the top turnaround artists’, ‘eighty-one CEO questionnaires’ and an ‘exhaustive search of the literature’. He identifies six turnaround ‘types’ and introduces a ‘turnaround cycle’ comprising five stages.
This approach features broader empirical evidence. It is likely that experienced turnaround agents find the right measures for turnaround. Bibeault analyses internal and external factors, therefore giving some explanation for corporate decline. His 5-stage cycle tries to incorporate experience.
But his whole approach relies too heavily on the CEO interviews. He takes for granted everything his interviewees say. The subjective statements, however, cannot serve to draw general conclusions. Bibeault lacks critical reflection. Again, the sample of only 100 persons is not representative.
Grinyer/Mayes/McKiernan feature their ‘sharpbender’ model, extending the sample to 1,200 companies. Sharpbenders are ‘companies which have been in decline relative to their competitors, which have then exhibited a marked, and often dramatic, improvement in performance; and which have sustained that high relative performance over a reasonable period of time (…)’. The model classifies four basic types of sharpbenders and introduces a 4-stage model of the turnaround process (Viz. Appendix, diagrams 1&2).
Chapter Summaries
Introduction: The Analytical Approach: The author introduces the Marks and Spencer case and outlines the comparison between turnaround theory and company actions.
Chapter 1: The Theory on Corporate Turnarounds: The chapter assesses models by Slatter, Bibeault and Grinyer, Mayes and McKiernan, selecting the sharpbender model for the case study.
Chapter 2: M&S’s Actions: The author defines the period under examination and explains how three business students rated the importance of company actions.
Chapter 3: Matching Theory and Practice: The selected actions are compared with the sharpbender model’s case types and stages, and the model’s limitations are considered.
Chapter 4: Competitive Advantage As the Measure For Future Success: The discussion turns to resource-based and competitive analysis as ways of considering the retailer’s longer-term prospects.
Chapter 5: Conclusion: So will they succeed?: The author considers strategic drift, changing markets and the challenge of establishing sustained competitive advantage.
Keywords
corporate turnaround, Marks and Spencer, corporate strategy, sharpbender model, strategic drift, sustained competitive advantage, retail industry, corporate decline, resource-based view, business restructuring, turnaround actions, case study
Frequently Asked Questions
What is this work about?
It examines corporate turnaround through the case of Marks and Spencer and considers the strategic conditions for future success.
What are its central themes?
Its themes include corporate decline, turnaround models, restructuring, strategic drift and sustained competitive advantage.
What is the main research question?
The work asks how well Marks and Spencer’s actions fit a turnaround model and how their longer-term prospects should be assessed.
What method does the author use?
The author compares turnaround models, compiles company actions from published sources and asks three business students to rate their importance before applying the selected model.
What does the main body cover?
It evaluates turnaround theories, identifies key actions at Marks and Spencer, matches them against the sharpbender model and discusses competitive advantage.
Which keywords characterize the work?
Key terms include corporate turnaround, Marks and Spencer, sharpbender model, strategic drift, restructuring and sustained competitive advantage.
What period does the case study examine?
The analysis of company actions covers November 1998 to November 2000.
How are key actions identified?
Three business students rate the actions on a scale from one to ten; the author treats an action as key if its mean rating is at least seven.
What supporting material accompanies the analysis?
The appendix includes diagrams of the sharpbender model, an inventory of company actions and a table of individual ratings and means.
- Quote paper
- Marcus Matthias Keupp (Author), 2001, Turnaround as a key strategic issue in times of crisis, Munich, GRIN Verlag, https://www.grin.com/document/7762
