Thursday 18 November 2010

Marks and Spencer - PEST and Information Systems case study

Marks and Spencer

Company Background and Mission Statement.

Marks and spencer was mainly founded by Michael Marks and Paul Myners in the year 1884 as a market stall in Leeds.. Later it became a partnership in 1894 when Spencer joined them in the business. They started as a clothing retailer and later they diversified their business into other categories such as food, finance, etc. Today it’s one of the biggest British retailers which has its presence in more than 30 countries with 379 stores worldwide selling its own line of clothing, food, and household items.

The company’s mission statement is Making aspirational quality accessible to all”. It is one of the shortest mission statement yet one of the powerful mission statement a company could ever have. It emphasises mainly on quality, making clear to everybody that quality is most important priority of the company.

Environmental Analysis

Let us now do an analysis of the environmental factors that affects the company in terms of

· Political factors Technological factors

· Economic factors

· Social factors

· Ecological factors


The political factors that can affect Marks and Spencer in political and legal side are: industrial, employment and consumer law, taxation, policies, government stability, competition policy, war in their trade country and foreign trade regulations. If any of these factors change then it would affect the company. In order to face these problems two types of guidances are required, policy guidance and competition guidance.


The economical factors that could affect the business of marks and spencer are inflation, unemployment, income, interest rate, economic growth, exchange rate and price of factors of production. These factors are to be considered and taken care of while they are operating for their business. However relative recession and proof industry can be adopted to face the above mention factors.


There are many social factors could affect M&S, some of the major things are: Level of education, lifestyle, mobility of population and income distribution,..

Marks and Spencer is a well positioned and a competitive player in its market segment. Goods progress has been made in setting up an online shopping facility. It should continue this path, but also to be care about their elderly customer base. It sells organics and healthy eating food to its customers. Eating out and take away is available. Besides being environmental conscious, it is also expanding its operations.


Technology have been rapidly changing, bringing in revolutionary ways of shooping and security. Marks and Spencer has to move along with the new technology in order to grow their business, make their business more secure, and compete with the competitors. The following factors should be considered to keep in pace with the upcoming technological changes: Technological transfer, technology development and rate of obsolescence.

Internet technology has advanced and spread further, more people use and trust online shopping. This store is making use of latest technology to offer good and cost efficient service.


Whenever there are any changes in legal environment or in law it affects an organization in many ways. For instance, if there is a tightening of health and safety legislation and regulations it will increase costs, premises failing to meet the higher standards may be closed down etc. Sometimes, an imposition of complete ban on a particular product can adversely affect the organization’s profitability.

Marks & Spencer knows that it is responsible not just for what it actually owns, but also for the total footprint of its business through the manufacture, use and disposal of its products. This has required it to work in partnership with its stakeholders to define new limits for business behavior.

SWOT Analysis


  1. Marks and spencer is one of the UK's leading retailers of clothing, foods, home ware and services.
  2. It has its own labels which are perfectly balanced.
  3. Has a wide range of products, and great services.
  4. Has a work delivery scheme.
  5. Marks and Spencer is one of the few retailers contributing to a new, tougher approach to chemical regulation. Produces its own fresh quality foods from its own farms.
  6. It is one of the biggest work experience programme of its kind in the UK to help people who face the biggest barriers to getting a job to gain invaluable work experience in its stores and head offices.
  7. It is the only retailer that got to engage with civil liberties groups on the complex issue of using microchips to track products in supply chains and address a potential loss of consumer privacy.

  1. It is also the only retailer working to develop an approach to fisheries management that involves fisheries, environmental NGOs and local communities.

  1. A world leader in managing labour standards in supply chains, working not only with auditors but also with their suppliers and their workers.
  2. Announced as a business in the community’s company of the year 2004.
  3. The company has been ranked number one by Greenpeace on non-GM foods, ranked as the top UK food retailer by Friends of the Earth on pesticide reduction, ranked number one by the Marine Conservation Society on fish sourcing and by Accountability/Insight Investment on labour standards.


  1. It is very dependent on the performance of their own labels.
  2. Sold their Financial Services business, M&S Money, to HSBC just because they wanted to enter into an agreement whereby the Group will continue to share in the success of the business.
  3. It has an on-line shopping.
  4. Expansion is not easy because of its existing store coverage.


  1. Internet shopping.
  2. Retail partnership.
  3. By integrating a set of values into its business practices, Marks & Spencer has been able to build its reputation as a responsible retailer.
  4. Has a vision of standard against which all others are measured.
  5. By integrating a set of values into its business practices, Marks & Spencer has been able to build its reputation as a responsible retailer.
  6. Further exploiting the non-food sector.
  7. Marks & Spencer’s track record as a responsible retailer.
  8. Has a business in the community with the impact on society for and its commitment to deliver measurable positive impact to the society.
  9. The Company also trades in 30 countries worldwide.


  1. Overseas groups entering the market.
  2. Manufactures are still seeking to legally slow down the penetration of its own brand. (Seconded by Waitrose).
  3. It has cheap chains targeting the high end market.

Competitive advantages :

· An important reason for the high standing of Marks and Spencer's products and supposed value for money is that the company doesn't buy its products "off the shelf" from suppliers.

· Marks and Spencer has a simple philosophy that says if it sells, restock it quickly and avoid stock out: if it doesn’t sell, get it off the shelves quickly and replace it with something which will sell.

· It uses an automatic stock ordering system which is called Assisted Stock Replenishment; it is used for more routine stock control decisions. As soon as an item has been bought by the customer through the till point, it automatically generates an order for that item to be replaced in the product.

· It has an advantage of selling things on the internet and it can manage this because it has its own strong brand.

· It has a significant type of product quality; it sells goods which are of high quality than any other retail shops in the UK.

· On the sales floor, they control stock in tasks that are to ensure that all the clothing rails are fully stocked, that the stock tickets reflect the sales information on display and that everything is neat and arranged properly.

· M&S doesn't have a specific research and development budget, but encourages its suppliers to invest to the common benefit of both companies. Competitive advantage is gained for the supply chain as a whole, through sharing Marks and Spencer's knowledge of its customers with its suppliers' knowledge in production, distribution, logistics and information technology.

· It has a significant store of which it uses its trial products and this is the store in Marble Arch.

· It has the policy of not bringing out stock onto the floor during opening hours, but when it comes to fast moving items but of course at times it can be unavoidable, but they try to control and avoid it as much as possible.

· Marks and Spencer has often been held out as an example of how to manage effective relationships with suppliers, employees and customers. For many years the company was a favourite of the Stock An important reason for the high standing of Marks and Spencer's products and perceived value for money is that the company doesn't buy its products "off the shelf" from suppliers Market, with regular and increasing levels of profitability.

· With food, M & S has innovated to improve availability. As an example, the company decided in 1989 to explore ways of extending the strawberry growing season. M & S technologists, working with suppliers, applied the best scientific methods, and now UK growers can supply the company for seven months a year rather than two.

Information systems

Information means having data that have been shaped into a form that is meaningful and useful to users. This is collection of facts representing events occurring in a situation in the organisation before being arranged into a form that people can understand.

Information Systems is a set of interrelated components working together to collect, process, store and distribute information to support decision making , coordination, control, visualising and analysis in an organization.

Information systems at each management level of M & S

Management of organizations have been separated into four main levels as Strategic, Management, Knowledge and Operational levels .There are four types of

Information Systems which serves the four main levels of management Strategic-level systems, Management level systems, Knowledge level systems and Operational –level systems.

Strategic level : Starting with the strategic level,which uses Strategic-level systems. Strategic-level system is used by senior managers to deal and layout strategic issues and long-term trends in the business environment itself and in the external environment of the business. The senior management consists of officials in the topmost hierarchy in an organisation who are responsible for making long-range decisions. Their decisions are primarily to match factors of the external-business’s environment which affects their organizational capability .For example in developing countries, the strategic managers are considering what will be the employment levels of nursing staff in the next ten years?This strategic planning question is arising because nurses in the developing countries have been moving to United Kingdom for greener pastures and worse now the United States of America has also just enforced a Nursing Employment ACT of nurses from the developing country. Other factors to be considered by the managers can be what service should we be providing in next five years.A good example is the senior management of London School of Commerce when deciding which modules should be core modules to be taught for the next three years until the students finish their programme.

This level of management uses an information system called Executive Support System (ESS) to make decisions. Executive Support System creates a generalised

computing and technological communications environment which is not fixed but flexible in applications with different capabilities, which serves the senior managers well as they deal with non-routine situations requiring judgement, evaluation and insight as there is no agreed procedure of fixed decisions on challenges.This information systems is designed to incorporate data about factors outside the organization such as new tax laws or competitors.Using the last two examples of tax laws and competitors,the system can also help answer the questions asked by the senior management like ,for competitors,what are our competitors doing in this five years?Which units should we sell to compensate for tax in next six years?

Executives are very busy people with little time to read stories, this information systems filter, compress and trick critical data from two other information systems known as Management Information System and Decision Support Systems.This is to give managers information which is brief,clear and straight forward for quicker strategic decisions.Lastly, Executive support Systems are designed to have easy-to-use graphic interfaces which makes it easy for executives to access the workstations containing menus, interactive graphics, and communications capabilities that access historical and competitive data from internal corporate systems and external databases like Dow Jones News or The Gallup Poll.

Management level : Secondly, Management Level which uses Management level Systems. Management level basically constitutes monitoring ,controlling and administrative activities.This Management -level system is designed to serve the monitoring,controlling, and administrative activities of middle managers.The main thing addressed by the system is , “Are activities working Well?”This system of information produces reports of a particular period and not instant reports on operations.This levels system is also called “what if” system.This is because it focuses on less-structured decisions.One of the questions this system can answer can be like,What would be the impact if we were to double sales in the summer period ?The system provides answers which are of new data from inside and outside the organization which are not easily drawn from existing operational-level systems.The system uses an information systems called Management Information Systems(MIS) and Decision Support System(DSS).This Management information systems serve the management level of an organization by providing managers with reports or on-line access to the organization’s current performance and historical records to help in planning and controlling.The Management Information System relies on another information system called Transaction Processing system,and the informayion pbtained fro the latter is compressed into a long report.

The Decision Support System is the other system used by management level.This is an information systems that combines data and sophisticated analysis tools to support non-routine unique decision making.It brings information from external sources such as competitors prices.Tesco and Sainsbury uses this system to check prices against each other.This decision support support system contains more analytical power than any of the other information systems as it contains a variety of models.It is designed to be used directly by the user in the way the user wants it. The system is built on a powerful desktop personal computer. The assumptions can be changed, new data can be loaded and very new questions can be asked as the system provides menus.

Knowledge level : The next level is called knowledge level.The knowledge level is concerned with integrating the company’s existing and new knowledge into the operations of the business and help the firms control paperwork through the data workers and knowledge workers. At this level it is the knowledge work systems(KWS) and Office Systems which are used. The knowledge work systems serves the knowledge workers while the office systems serves the data workers.The knowledge workers consists of professionals like lawyers, doctors and engineers to mention a few.The knowledge work system contains features like engineering design workstations which helps in creation and integration of knowledge in the organization. Data workers is formed of employees without formal university degrees. For example, filing clerks, bookkeepers and typing staff who create, edit, store and disseminate information.

Office Systems are applications of information technology which are created to make the data workers be efficient in production by supporting the coordinating and communicating activities of the typical office. Office systems uses features such as electronic mail systems, word processing and scheduling systems to increase the efficiency in production.It is the only system that serves as a clearinghouse for information and knowledge flows.It processes documents using document imaging ,digital filing, word processing and desktop publishing.This system has a component of computer science called Artificial Intelligence which answers questions just like a real life genius can do.

Operational level : Last but not the least level is Operational-level Systems.This is the level of management which deals directly with the people.This is where primary activities of the company start ,with transactions like selling, receipts, flow of units in the production rooms and payroll as examples of activities.The main aim of the system is to tackle routine querries and carefully follow the flow of transactions in the organization.Systems under this category include the bank recording system which records bank deposits from auto-teller machine in the various financial institutions and employee clocking in and out machines in the Marks and Spencer shops.The information system associated with this organisational level is the Transaction Processing System(TPS).This information system performs and records the daily routine transactions necessary to the operation of the business. For instance, employee record system, hotel reservations system, payroll system and sales order entry. Transaction Processing system contains a master file which contains data elements as names, addresses and identification numbers.When Marks and Spencer is pay checks to its staff it uses this master file.This system is central to all the organisation’s operations that just a few hours of failure to run can lead to the declining of the firm. Imagne!! At peak hours 250 baskets a second are processed in Britain’s Marks and Spencer.What would happen to Marks and Spencer if the Sales order entry system fails to run for just 1hour?

Managers uses this information systems to monitor status of internal operations and external operations with their environment.

Accounts department also uses the transaction Processing system to supply data into general ledger system which keeps incomes and expenses of the firm and uses the information system to produce the financial statement like Balance Sheet.