Running head: CROSS-CULTURAL MANAGEMENT ISSUE
CROSS-CULTURAL MANAGEMENT ISSUE
UK Retailer Marks & Spencer
Table of Contents
3About Marks and Spencer
3Issues and Affected Stakeholders
4Aims and Outcomes
4Approach to Cross-Cultural Management
8Evaluation of CCM Criteria
10Possible solutions and Appropriate Actions
Cross-cultural management focusses on studying the behavior of individuals from different cultures working together in an organizational setting. It deals with traditional behavioral issues in a workplace such as motivation, leadership, communication, and decision making (Velo, 2011), thus concentrating more on the micro-level study of people within an organization rather than the macro-level study of agencies themselves. Managing cross-cultural issues in international businesses involves more than hygiene factor of the dual-factor motivation theory, and embracing cultural diversity may bring either success or failure of a company.
Unclear branding positioning is the major cross-cultural management issue analyzed in this research. Brand positioning refers to giving brand benefits focusing on all points of contact with a consumer, giving them a reason to buy that brand in preference of others (Holden, 2006). It involves identifying a location of similarity or difference to create a proper brand identity and a clean brand image. For a business to attain a distinctive area in a market, it had to choose a market niche and gave a differential advantage carefully. It is this area that Marks and Spencer failed in the Chinese market, which is forcing the company to withdraw and close down its stores.
Unclear branding positioning of the M&S clothing line brought about disappointing results for the whole merchandise, with a 5.8% drop in sales (Mellahi, Jackson, &Sparts, 2002). However, the company’s food products are growing stronger and recorded high sales regardless of the cross-cultural management issue. Should reasonable measures be taken on general merchandise and clothing, the company would still be stable in recording top transactions and would not have considered withdrawing from China market. Since the Chinese are proud of buying the M&S foods, necessary measures ought to be taken to improve the latter thus would not have to close its stores.
About Marks and Spencer
M&S is a leading retailer in the UK whose headquarters are in Westminster, London. The company specializes in production and sale of clothes, home products, and luxury foods. Launched by Michael Marks and Thomas Spencer in 1884, the company started selling branded products and currently has 979 store in U.K and many other international outlets (Wildman, Griffith, & Armon, 2016). The company has recently observed low sales in clothing while food sales are tremendously increasing.
Issues and Affected Stakeholders
Unclear branding positioning is the major problem affecting the company leading to the store’s closure. The giant retailer is speeding up its plans to close down non-performing clothing stores and slowing down the expansion of its food chain (Wildman, Griffith, & Armon, 2016). M&S is no longer attractive and competitive as it used to be regardless of brand, quality, and price. The company is focusing on reshaping its market and concentrating on most successful locations to restore its high street fortunes. Due to the continued losses in China, the company is withdrawing from the Chinese market, and this will lead to the closure of about ten stores. It is substantially affecting the business, shareholders, and the retail industry.
Aims and Outcomes
Much as the Chinese love British products, it is unlikely that one will go up the vast building to pick a single imported product available next door in a smaller retail shop or buy expensive fancy clothes while there is a cheaper local alternative. It is unclear positioning that is causing M&S to fail in this broad Chinese market thus giving an advantage to domestic companies. This analysis will, therefore, focus on ambiguous branding positioning as a cross-cultural management issue for the M&S Company, alongside other problems affecting the success of the business.
Approach to Cross-Cultural Management
While the Chinese consider M&S foods as premium, British, and high quality, they have a different opinion for fashion and merchandise as it does not gain traction. However, from a product perspective, M&S delivers exceptional fashion hit, for example, the legendary dusty coat of AW13 (Warner &Joynt, 2011). The retailer excellently positions its food offers through attractive communications and smart activations. With the focus on top quality, organic, and British produce, M&S is keeping it simple and sustainable to meet customer expectations.
The organization is slowly losing its obsession to protect its market share. Instead of trying to retain its market position by being all things to people a task that is almost impossible, M&S is trying to redo its brand by moving upmarket. Its direction of travel is also evident since M&S is not opening any more clothing branches, in fact, it is closing stores. After alienating the loss-making market, mark and spencer’s profits jumped from Euro 25.1m to 118.3m (Mellahi, Jackson, & Sparts, 2002). The strategy does not look like a bad thing for the company. Besides, M&S is significantly defeating traditional supermarkets regarding sales and profits regardless of its high prices.
M&S and its shareholders are making huge steps to make the company sales growth. The company is prioritizing improving performance in womenswear as well as increasing the food business, boosting margins, and observing tight control of costs. These move that M&S is making towards brand positioning and supply chain will ultimately improve sales and profit margins if they work correctly. M&S for instance, by increasing the product designs to 25pc and delivering clothing to stores more frequently, it will succeed to boost availability in stores and introducing new fashion frequently (Mellahi, Jackson, & Sparts, 2002).
The company now wants to focus on profits and generating cash instead of sales. In fact, the chief executive promised to improve M&S profit margins in the clothing arm by 1pc, and the interim results already show growth in margins by 1.5pc (Warner & Joynt, 2011). The improvement in margin is a sign that M&S fashion business is picking up. The trend is a back up to the CEO’s claims that the company is improving its quality and style of fashion. It is also gradually recovering from the discounting tradition.
Marks and Spencer launched a marketing campaign using ‘spend It Well’ slogan to represent a radical departure for its brand. ‘Spend It Well’ is a slogan representing both food and clothing, and is the first series of advertisements for the brand (Nisbett et al., 2001). M&S intends to promote a prevalent attitude that connects customers regardless of their age and demographic. The company, therefore, is using the slogan to focus on emotive experiences, such as being a music festival or waiting tables at the restaurant for consumers whether young or aged.
There is entirely a revolution taking place as M&S is adopting the discipline of increasing ads. It notably spent 4.9m pounds last year on advertisement campaign. The company now uses the review section of glossies and national press to promote fashion of its women clothing ranges. In fact, when the company advertises its products, the sales rise. The company is taking up measures to revolve around products, merchandising, marketing, and pricing to bring a positive change that will bring about profit growth.
The new chief executive is changing the retailer’s strategy from owning expensive stores to growing the networks of franchise shops. Rowe wants to turn around M&S after acquiring a company struggling with women’s fashion. The executive aims at scaling back international expansion for the firm to dismantle the past legacy. Interestingly, Rowe already has scrapped down more than 500 head office jobs and reduced the senior management in an attempt to cut down operational costs. The chief executive also agrees that clothes prices are too high and has cut the rates for men and women fashion by up to 15% (Mellahi, Jackson, & Sparts, 2002).
Another move the company is making is selling its franchise in Hong Kong and Macau. It views this as a more profitable act and consumer-centric for international business. It has led to the closure of several stores in global markets particularly China. Through this, the company is focusing on growing established the franchise, joint ventures, and operating fewer stores. The shift and the considerable focus on the franchise model for global niches will significantly benefit M&S. It will also help in focusing on the better building of brand image and developing its food products. Although the company’s business is failing in China, the shift to focus on food is a worthy move.
M&S differentiates itself from competitor businesses through its brand name. The company gained massive recognition through its affordable quality and different product offerings. The positioning as a quality retailer is, unfortunately, losing its influence which is leading to the continuous sales decline (Nisbett et al., 2001). The company needs to seriously re-evaluate and restore its reputation and brand positioning for it to salvage its sales. The poor selection of store location, as well as reduced maintenance and structure of premises, is not doing M&S any justice.
The brand is currently more divided as ever since as people shop for food for pleasure, shopping for general merchandise is falling due to the functional stocking of basics and a series of unclear sub-brands (Burt et al., 2012). Even the fans of M&S are now keeping quiet because they see it as a place to find hidden gems and not something to shout about in any real or virtual aspirational platforms. Clothing and the general merchandise seems to be entirely a kettle of fish. Although many go in for socks, pants, and other small stuff, the rest of the more extensive confusing fashion line misses the mark.
According to Nisbett et al. (2001), the supply chain has problems relating to timing and strategic entrance, location, and lack of integration. Marks and Spencer offer products that do not attract customers due to inappropriate designs and poor presentation in the Chinese market. Besides, the prices are too high and uncompetitive compared to the local offering. Many Chinese customers complain about packaging and labeling since the company does not include interpretations in a language they understand (Cartwright, Mccormick, & Warnaby 2016). On the contrary, M&S branches in the UK are well designed and presented correctly, and the market representation is so unique as opposed to the Chinese market. It is such unclear positioning that is making the company fail in China.
The promotion side also has many weaknesses since there is no store and brand awareness about M&S among people. It is even shocking that many Chinese heard of M&S after starting to give discounts to close the stores (Cartwright, Mccormick, & Warnaby, 2016). It is this rumor that made them know the company exists, an indication that the company is not taking an interest in marketing. M&S uses a tiny advertisement budget which lacks to achieve a proper target audience. The business has zero social and cultural understanding, the main reason that facilitated stupid rumors about M&S in China.
Getting the products right in the fashion industry is crucial. In recent years M&S experienced business downturns and lousy brand image due to being old fashioned. Although the company is recovering, it is repeating the same mistake in the Chinese market. According to (Cartwright, Mccormick, & Warnaby, 2016), poor sizing, old fashion, poor positioning, and competitive offers are factors making the fashion products to fail. These are making Chinese shoppers show low interest because the clothes are too big and simple. The overall brand positioning is a mess.
Evaluation of CCM Criteria
In my opinion, the company is doing very little to stress more about its strengths. The retailer prices its products way beyond the market expectations, therefore, needs to adjust the amounts and market efficiently. The company lacks an accessible and broad marketing platform are necessary to succeed in external markets. It, therefore, has not done enough to solve its cross-cultural issues hence the failure.
Again, M&S traditionally shies away from above-the-line advertising and relies on in-store marketing and point-of-sale (Nisbett et al., 2001). The organization mainly does not seem convinced on investing in costly national TV campaigns. The company’s advertising manager says that they will continue with in-store marketing because they have many loyal customers (Peterson & Castro, 2006). This kind of thinking is wrong. The company needs to invest in promotional strategies to succeed in the competitive Chinese market. In this case, the company is failing in its cross-cultural management and therefore the problem is not appropriately addressed.
Chinese shoppers spend much time on social media which creates a rapid and cheap delivery of goods leading to a booming e-commerce sector. M&S, on the other hand, is building its online presence which is attracting pure comfort to expats because the retreat from high street will mean lower sales in food and wine in China (Nisbett et al., 2001). In short, the company continues to make losses due to little brand awareness and the fact that it is going online shows the determination to improve. M&S is enlarging its scale of online shopping because Chinese consumers opt for more choices and great convenience is a great move.
Rowe, the Chief Executive, has a strategy to reduce price ranges and cutting down on clearance sales and promotions while still improving the services (Warner & Joynt, 2011). Since he also has programs to close some stores and restructuring others to reflect more online sales, the company is making moves to correct its mistakes. Although the plans are radicle, it shows to be a right strategy for the overall good of the society. The company may not be recording considerable differences in profits and loss accountability, but the thing is, M&S is trying a lot to rectify the cross-cultural issues.
The company embarked on closing underperforming departments and accelerating the expansion of the food chain. It also has five-year transformation plans to pin primary cost-cutting drives to reduce running costs by 10% from Euro 3.4bn (Peterson &Castro, 2006). The company is making adequate progress to remedy urgent issues. The underlying clothing sales were initially flat, but since the company started making changes, a better outcome is now visible; an indication that M&S is successfully tackling its issues.
Possible solutions and Appropriate Actions
Focusing on a single occasional item is not enough for addressing the various brand problems surrounding Mark and Spencer’s fashion. The company has both a brand portfolio and masterpiece issue because with many sub-brands to navigate (Alden, Steenkamp, & Batra, 2003). For example, having the autograph, indigo, and Classic among other sub-brands, its fashion experience looks confusing and disjointed. M&S can focus on reducing some sub-brands instead of trying its master brand more likable. It could, for instance, have the entire fashion line just known as M&S instead of hiding in these many sub-brands.
M&S has to become clearer about what it stands for, for it to increase the strength of the master brand. The company is in a better position for its quality which has always been part of its heritage. As proven by food, M&S can quickly get it right by delivering quality products at a premium. Therefore, for further quality message differentiation, M&S can adopt the British message quality. Although the company brands are dipped into Britishness through ranges such as ‘Best of British,’ doing this through sub-brands instead of the master brand message is not competent enough to change the overall perception of the brand (Alden, Steenkamp, & Batra, 2003). Furthermore, the company can look at other successful British premium brands and then establish the various elements of Britishness it can own and weave into its messaging.
Other retailers are pursuing aggressive marketing strategies and repositioning their brands to compete with M&S. Others like Asda are setting themselves to match the M&S quality and at better prices. On the advertising side, M&S ought to address the brand issues head-on instead of focusing on a single product or a seasonal story (Burt et al., 2002). The company can for example overtly acknowledge contradictions in its brand in a cheeky way, just like Skoda did recently. Doing this would be like tapping into real consumer truth rather than adding more products in an ambiguous manner that doesn’t even get into the core of the matter.
In addition to brand strategy, portfolio, and messaging, the CEO should focus on ensuring the in-store experience and product offers live up to enviable heritage and reputation of the brand. Currently, the brand experience defines the name, and neither the customers nor the fans would attest that M&S shop experience embodies British quality. The business can notably increase productivity through a focus on IT, by optimizing the number of people who work on projects and improving the speed of delivering solutions (Burt et al., 2002). The management can build a self-service agility and teamwork between the business and IT to restructure its services and productivity.
The company needs to revise its pricing strategy to match the local terms using a fare basis and customer purchasing power. Clients and public relation management is an essential factor for long-term success. Premium price justifies the reason for inclusion and M&S can use this as a competitive tool against other retailers. Not to mention, the store structure should correspond to Chinese trends for people to find it safe and comfortable. If the company incorporates the above recommendations is its marketing, it will achieve its goals and objectives in China.
The Chinese market is a promising one and is generating a massive turnover for established brands. Because the consumer market is shifting to less developed countries, M&S should not lose its place in these significant emerging markets. I would say that M&s underestimated the uniqueness of the Chinese market by not choosing the proper market strategy for entry. It is this that has brought about barriers in language, social class, culture among others.
The China model of M&S proves the importance of global marketing. A strong brand with excellent heritage and quality products is failing in the market, the same market overtaking US luxury goods consumption. The essential factor is an appreciation of the market localization and uniqueness, proper cross-cultural management, which ultimately make a difference in market entry and strategy that M&S has been struggling with for long.
For Marks and Spencer to win back its market niche and get profits, it needs to reduce the number of sub-brands in both men and women wear. A loyalty scheme would also encourage consumers and give M&S information about how and when customers shop, the preferences, and personal information. The company also needs to redefine and recognize their target audience, as well as go back to basics that made the successful before the tragic drop in sales.
Although globalized, fashion requires localization when entering a new market. Many western companies such as M&S forget to localize their styles and advertising. The use of celebrity images from UK and Europe fails to resonate with Chinese consumers. It is crucial that the company uses the right product selection and style for its advertising image. It has to be customized to suit the Chinese market. The company also requires solving merchandizing issues through brand customization because different customers have different behaviors and fashion preferences.
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Running head: CROSS-CULTURAL MANAGEMENT ISSUE