Building a business in Europe A Marks and Spencer case study
Page 1: Introduction
Over recent years, the changing political, social and economic environment has created a different type of competitive situation for European companies. The pace of change has created many new challenges for nearly every business organisation. The net result has been an increasing interest in Europe and the marketing opportunities it represents. Europe has become one of the most important trading areas of the world, accounting for over 40% of world trade.
Organisations cannot ignore the potential opportunities offered through such developments in Europe. They must monitor their competitors' actions constantly and be aware of changes in demographics and buying patterns. Europe now has great strategic importance. The challenge is to develop an understanding of the key axes of development and the changing competitive patterns and include this data into the organisation’s corporate strategies.
Unlike many other organisations, growth for Marks & Spencer has been largely organic rather than through acquisition. This means that, rather than increase market share quickly by buying other businesses, Marks & Spencer has developed internally, capitalising on core competences to provide a ‘fit’ with its activities and the positioning of the organisation. For a company committed to high standards, this has become a critical element of its business strategy.
Strategists at Marks and Spencer have been aware of the potential of the European Market for some time. Many thousands of European visitors have associated shopping at Marks & Spencer as one of the main ingredients of visiting the UK. In 1975, Marks & Spencer first entered continental Europe in Paris, where it now has 10 of its 20 French stores. Today, it has stores and activities in many other countries within the European Union.
This case study focuses on one of Marks & Spencer’s current business objectives - to accelerate the growth of its international business. It examines how Marks & Spencer has increased the momentum of its European expansion and focuses on the opening of the first store in Germany.
Turning points in Europe
By the mid-1970s, as the European Community developed and some trading barriers started to disappear, a new framework was created for relationships between businesses in member countries. Marks & Spencer was able to learn about European markets through its suppliers in foods, clothing and raw materials. Increased international competition forced Marks & Spencer strategists to look to the future - in terms of trade, the world was getting smaller and many markets were becoming global. National trading policies would no longer suffice. At the same time, many overseas trading opportunities emerged for Marks & Spencer, with clear scope to develop the business further.
In any industry, superior performance depends upon an organisation's ability to deploy its resources to develop competences. Successful strategies rely upon an organisation’s strategic capability to undertake demanding activities at a high level. Marks & Spencer had a fast-developing technological base and a well developed organisational infrastructure which dealt cost-efficiently with large-scale logistical activities. European markets were within reach, providing the company with opportunities for market development and to gain economies of scale e.g. from increased buying power.
Marks & Spencer has many unique qualities which enable it to outperform competitors. For example, Marks & Spencer is a brand house with a single brand name - St. Michael. This helps to create perceptions which appeal to a particular market niche and also helps to develop a global business. The cornerstones of Marks & Spencer are quality, value and service. Experience has shown that these qualities are universally transportable to other markets where they can be adapted for local needs and requirements.