1. Background

Companies operating in the UK have been preparing themselves to face with the eminent changes creating unique challenges and opportunities since the referendum (Tarasanski, 2017). This blog will examine how Marks and Spencer(M&S), a popular British company in the UK utilizes change management in revising its marketing strategy to maintain competitiveness. 

Figure 2: Pound Performance since the EU Referendum

Since the decision to leave EU on 23 June 2016, the discussion on the withdrawal agreement has become an endless process (Wheeler et al., 2019).  Currently, there is no deal being made, causing the delay in the departure date resulting in the UK prime minister, Theresa May to resign on 6 June 2019.  The new deadline is scheduled for 31 October 2019, but the UK can leave before if the new prime minister can somehow get the deal approved by Parliament and preventing hard Brexit (BBC News, 2019).  

During such period, the pound has had a rough time when it comes to its price against the dollar and other currencies.  Immediately after the referendum, Figure 1 shows how the pound declined sharply in value, and further volatility is expected (Mustoe, 2019).  Holidays and imported goods have become more expensive, but UK exports have been cheaper. M&S has been affected by this since they have to buy raw materials from abroad causing its sales of products to fall sharply (Tarasanski, 2017).

2. Change management Framework

Currently, there are several change management frameworks that can be used to explain how companies can adapt and adjust its marketing strategies, and operations to increase its performance and profitability (Cameron & Green, 2015). The well-known change models include Lewin model (Lewin, 1951), McKinsey 7’s model (Baldwin et al., 2012), and Kotler 8’s step change model (Kotler, 1996) –all of which can be used to develop and modify marketing strategies to meet with the ongoing changes (see Figure 2, 3, and 4).

Figure 3: Lewin’s Change Model (Lewin, 1951)

Figure 4: McKinsey 7’s model (Baldwin et al., 2012)

Figure 5: Kotler 8’s step change model (Kotler, 1996)

From above, change management processes involve change in operations, and the adaptation can become a challenge for companies and taking time for the strategic implementation to be effective (Kotter & Schlesinger, 1979).  Nevertheless, the change model can be used as a guideline for a company to adjust and follow and be beneficial in the long-term (Cameron & Green, 2015).  Lewin change model is appropriate for M&S in adjusting to changes in strategies and operations (see Figure 2).

3. Choose

M&S is a British retailer with a unique heritage of brand values in the UK and International, with over 1,380 stores around the world.  M&S is engaged in delivering own brand food, clothing and home products in its stores and online globally (M&S Annual Report, 2019).  M&S operates as a family of accountable businesses, bound together not only by a common consumer brand but also by shared sites, employment values and customer data.  Currently, there are over 8000 employees working for M&S (M&S Annual Report, 2019), and both revenues and operating profit for March 2019 show a slight decrease from the previous year.

After the referendum, M&S is forced to shut down 14 stores and 100 more by 2022 (Wood & Butler, 2018).  Given that most of M&S’s revenues came from the UK market (M&S Annual Report, 2019), the sales of products drastically declined by 8.9% within three months after the announcement of Brexit referendum (Jarvis, 2016).  The company also experienced an increase in debt due to the decline in the sales (Jarvis, 2016).

4. Develop a solution to the problem and an action plan

Challenge

To be operative and overcoming the declining value of pound, M&S aims to close down underperformed stores in order to use the fund for investing through innovation with other stores that can still generate revenues and profits for the company (Thompson & McLarney, 2017).

Action Plan 

By adopting the Lewin change model, M&S’s first priority is to maintain its sales of products by lowering the price, and running various promotional campaigns for both online and in-store, and consequently capturing more customers (M&S Annual Report, 2019).  

5. Outcome

Despite the ongoing turbulent arising from Brexit uncertainties, M&S has taken some drastic measurement by closing down number of underperformed stores in order to use the fund for investing in innovation of other existing stores. This is done in conjunction with lowering prices, running several promotional campaigns, and heavily investing and upgrading its innovative tools, but there are other unforeseen factors to be considered.  For the time being, M&S can still be in operation as evident from Lewin Change model to maintain its sales and profits.

References

Baldwin, R., Cave, M., & Lodge, M. (2012). Understanding regulation: theory, strategy, and practice. Oxford University Press on Demand.

Cameron, E., & Green, M. (2015). Making sense of change management: A complete guide to the models, tools and techniques of organizational change. Kogan Page Publishers.

Jarvis, P. (2016). Marks and Spencer sales slumped before the Brexit vote. [online] The Independent. Available at: https://www.independent.co.uk/news/business/news/marks-and-spencer-sales-food-brexit-eu-referendum-marc-bolland-a7124336.html [Accessed 24 Jun. 2019].

Kotter, J. P. (1996). Leading change. Harvard business press.

Kotter, J. P., & Schlesinger, L. A. (1979). Choosing strategies for change (pp. 106-114). Harvard Business Review.

Lewin K. (1951). Field theory in social science. New York: Harper & Row.

M&S Annual Report (2019). [online] Corporate.marksandspencer.com. Available at: https://corporate.marksandspencer.com/documents/msar-2019/full-annual-report.pdf [Accessed 24 Jun. 2019].

Mustoe, H. (2019). How does Brexit affect the pound?[online] BBC News. Available at: https://www.bbc.com/news/business-46862790 [Accessed 24 Jun. 2019].

Tarasanski, P. (2017). Brexit: Changing Dynamics of Corporate Financial Risks, Return, and Performance: Case Companies: BP, Royal Bank of Scotland, Marks & Spencer, GlaxoSmithKline, EasyJet.

Thompson, J., & McLarney, C. (2017). What effects will the strategy changes undertaken by next Plc have on themselves and their competition in the UK Clothing Retail Market? Journal of Commerce and Management Thought, 8(2), 234.

Wheeler, B., Seddon, P. and Morris, R. (2019). Brexit: All you need to know. [online] BBC News. Available at: https://www.bbc.com/news/uk-politics-32810887 [Accessed 24 Jun. 2019].

Wood, Z. and Butler, S. (2018). Marks & Spencer to close 100-plus stores by 2022 in ‘radical’ plan. [online] the Guardian. Available at: https://www.theguardian.com/business/2018/may/22/marks-spencer-close-stores [Accessed 24 Jun. 2019].

BBC News (2019). New Brexit deadline set for 31 October. [online] BBC News. Available at: https://www.bbc.com/news/uk-politics-47889404 [Accessed 24 Jun. 2019].

Websites

https://www.ft.com/content/cf51e840-7147-11e7-93ff-99f383b09ff9

https://www.bbc.com/news/business-46862790

https://www.reuters.com/finance/stocks/overview/MKS.L