Running head: RETAIL CASE FAILURE 1Retail Case Failure: A Case of Marks and SpencerName:Institution:.
RETAIL CASE FAILURE 2Retail Case Failure: A Case of Marks and SpencerIntroductionInternational expansion has been leveraged as the graveyard by renowned retailers across the world. Marks and Spencer (M&S) is a legendary retailer in the United Kingdom specializing in the sale of food, clothing, and home products globally. Before experiencing international retail failure, M&S has been recognized for its exemplary practice, leadership, and organizational style. Peter Drucker defined the retailer using the phrase ‘managerial giant’ suggesting managerial excellence that was responsible for its success at the time (1974). Tse acknowledged that the company ranked top in regards to management and was admired across Europe (1985). Until 1998, renowned business gurus and academicians were motivated to make akin compliments. Nonetheless, few years later, the company began undergoing extraordinary problems. Its profits collapsed, sakes stagnated, and market share dropped. Its reputation abroad and at home was adversely affective and the unthinkable occurred. M&S sold its Kings Supermarkets in the United States and Brooks Brothers brand. It adopted franchise business structure to run its Hong Kong stores and closed the unprofitable European segment stores.M&S has a long history of international expansion. It makes use of diverse types of entry modes worldwide which combined of entry modes from organic growth, joint venture, and franchise agreements to partly or wholly-owned subsidiaries (Whitehead 1994, p.41). This kind of widely use of ownership models and countries give the priority of the company to perform well globally even when some individual markets may not that good.The company began its tentative internationalization activities by exporting its St. Michael brands products in the 1940s (Alon 2000, p.5). Then M&S formalized some of its export activities through franchise agreements in the 1970s. In the next two decades, a gradual
RETAIL CASE FAILURE 3expansion occurred both in number and geographic scope. By 1998, M&S had almost 500 stores in over 30 countries with the retail sales of almost £8bn. Meanwhile, the company owned BrooksBrothers and Kings Supermarkets in the United States (Burt et al 2002b, p.200). However, three years later, Marks and Spencer sold its Brooks Brothers brand and Kings Supermarkets (USA) businesses, turned the Hong Kong stores into franchises in a downgraded regional structure, closed the European stores which were unprofitable (Burt 2002a, p1). Under these circumstances, M&S faced a survival crisis on its overseas market and most of the company’s direct international activities were compelled to stop. As a consequence, the reputation of the company went downhill both at home and abroad.