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Unit 14: A Review of Retailing: Environment and Operations

Lastly because all managers were promoted internally, such an approach led over time to a Notes
closed inward looking system which fairly ignored external change. Appointing managers
solely on the basis of this system implies the danger that new innovative ideas from outside,
essential for creating strategies leading to sustained competitive advantage are not fostered.
Culture is the product of a long time period, people get used to it because it offers direction. So,
change strategies might lead to resistance because new ways of doing things have to be adopted.
Furthermore, knowing now about the impact Greenbury, Salesbury and their predecessors
have made on M&S culture it gets clear how difficult it is for the new CEO Luc Vandevelde to
achieve a turnaround.

Strategic Capabilities

In this part, we will examine the resources and competences of M&S using the following model:

Easy to imitate Difficult to imitate
Resources Threshold resources Unique resources
Competences Threshold competences Core competences

Illustration 6: Resources and Competences of an Organization

A. Threshold Resources: Threshold resources are requirements needed for existing in the
market. M&S, as a retailer, has nearly 300 stores, in which there are experienced staffs
serving different customers. The company has long-time suppliers, which are essential to
assurance the high quality of products. Furthermore, as a listed company, the organization
has enough financial sources to fund its operation.

B. Unique resources: Unique resources are crucial to underpin the competitive advantage.
M&S, which has long history in the market, has unique brand awareness. Most of the
people in the U.K. know the company. The brand of St Michael is deemed as the symbol of
trust and quality. Facing the decrease in performance, the company reacted by employing
an experienced CEO, Luc Vandevelde, who has an outstanding performance in the industry.
He emphasizes on building a flatter company structure to improve the decision-making
environment and to improve customer relationships.

C. Threshold competences: Threshold competences are competences, which are essential to
stay in the industry. M&S provide retail services along with financial services, domestically
and globally. Facing the intensive competition, the company has to adjust its purchasing
systems and starting global sourcing to reduce the cost of sales. M&S charges rents for each
individual store, in order to make store managers more accountable for their branches’
performance. In addition, they group the stores on the basis of demographic characteristics
and lifestyle pattern instead of allocating merchandise depending on floor space.
D. Core competences: Core competences are activities or processes that critically underpin an
organization’s competitive advantage. There is no clear core competence held by M&S,
but the new CEO thrives to it up in order to recover the market share. He emphasized on
building a flatter company structure to improve the decision-making environment. Another
point is that he wanted to create a customer oriented organization.
In general, the analysis outlined shows that M&S has enough threshold resources and
competences, and even some unique resources. But unfortunately, the company has not any
proved core competence at the moment. In the past, the company did have some unexampled
competitive advantages, which resulted in M&S’ dominant status in the industry. In recent
years, there have been huge changes in both the macro and the micro environments. But the

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