The internationalization of Marks & Spencer

This case study describes the internationalization of Marks & Spencer (M&S), a

giant British retailer. In recent years, the company has suffered a series of

misfortunes, both at home (Britain) and abroad. Company sales have dropped,

stock prices and market capitalization were substantially reduced, and overseas

profits have declined. In January 1999, following a terrible earning

announcement, the company announced that it had formed a marketing

department, forcing the company to become more proactive and market

driven. To head the department, M&S promoted James Benfield, a 17 year

veteran of the retailing giant who worked as a former head of menswear, home

furnishings, and direct mail.

For years, M&S’ marketing philosophy was simple: produce high quality products

under a recognized brand name at affordable (but not cheap) prices, and

advertise through word-of-mouth. However, in recent years, this marketing

philosophy has come under attack as the company started loosing its

competitive stance. The move to develop a marketing department was a

departure from a long tradition of production/manufacturing emphasis. The

problem facing James Benfield: how can M&S emerge from the slump and

reposition itself as a fierce global competitor in the international marketplace?

Marks and Spencer of Britain (often referred to as Marks & Sparks by locals) is a

general retailer that sells clothes, gifts, home furnishings, and foods under the St.

Michael trademark in the UK, Europe, the Americas and Far East. The company

also operates financial services segment, which accounted for about 3% of the

company’s 1998 profits (Dow Jones Industrial 1999).

Marks & Spencer (M&S) started as a stall in 1884 by Michael Marks in the Leads

market using a L5 loan from a wholesaler. The company stressed value and low

prices as a hallmark for development. By 1901, the company acquired 35 outlets

as well as a new partner, Tom Spencer. By 1949 all the company’s stores carried

mostly private label (St. Michael) products produced by British suppliers (De Nardi-

Cole 1998).

For many years the company’s mission has been to offer consumers quality, value,

and service. The company relied on five operating principles to achieve its

mission:

(1) Developing

...