Internal environment of MARKS AND SPENCER

INTERNAL ENVIRONMENT

1. >>>>>> RESOURCES

2 . >>>CAPABILITIES AND CORE COMPETENCIES

3. >>>>>>>>> FINANCIAL RATIOS

FINANCIAL RESOURCES:

In 2007 M&S total revenue was £8.6bn.It turend out to be a good year for marks and spencer .Their market share increased in all areas.M&S is supported by strong management and they have already completed 70% of store modernization by the end of 2007.Their total capital investment amount to £792.4m and apart from that their net cash generated in the year ending 2007 was £231.1m.M&S net debt on 1^st april 2006 was £1729.3m which has reduced to £1453.9 m on 31^st march.

ORGANISATIONAL RESOURCES:

Firstly the good thing about marks and spencer is that their organisational structure tend to be very flatter which means cutting some layers of management and giving employees at the remaining level with more responsibility and teamwork.M&S have successfully differenciated and created a competitive advantage over their competitors through key services which include empowering suppliers and manufacturers with design reponsibility ,managing supplier relationships,their brand management ,excellent customer services and providing excellent working conditions .

TECHNOLOGICAL RESOURCES:

By looking at their annual report of 2007 M&S has increased its spending on supply chain and technology from 39 million to 114 million pounds in 2007.The project includes changes in their financial system as well as a major projects to replace tills.M&S is also working on upgrading their ordering system and to use a single integrated order platform across all channels of stores telephones and online .Furthermore M&S has won the innovation in energy efficiency awards 2005 in the development of its `cohesive` remote integrated energy management system.

PHYSICAL RESOURCES:

Ownership is a key strength for M&S ,The total stores amount to 240 from which 21 is owned and 219 stores are franchised. The total property owned by M&S in percentage is 70% and 30% is leased.According to M&S financial report they had stated that overtime they will increase the leasehold but will aquire it where appropriate and will retain the key assets

M&S CORE COMPETENCIES:

IMPROVED CAPITAL STRUCTURE AND SUPPLY CHAIN:

To have a more efficient capital structure M&S gave 2 billion pounds to its shareholders so it can retain the financial strength and flexibility to fund future growth.Primary margin on clothing is rising at a faster rate for M&S ,their main priority remains as eliminating duplication and increase tranparency by establishing good relationships with their supply partners. M&S have achieved a great improvement in quality ,value ,product apeal and availability.

100% OWN BRAND.:

M&S only sell products and brands exclusive to them and hence guarantee customer the quality,value and service they have come to expect.M&S focuses on building strong relationships with core customers and hence delivering them with significant improvements in product appeal availability and value.Almost 10 million customers a week visit M&S stores hence still one of the best known,best trusted retail brand in the world.

Capability/ Resource	Valuable	Rare	Costly to imitate?	Non-substitutable	Competitive Consequence
Brand and Reputation	Yes	Yes	Yes	No	Sustainable competitive Advantage
Relationship with Supplier	Yes	Yes	Yes	Yes	Sustainable competitive advantage
Managerial Skills	Yes	No	Yes	Yes	Competitive Parity
Financial Resources	Yes	No	Yes	Yes	Competitive Parity
Consumer Relationship	Yes	No	Yes	No	Temporary Competitive Advantage
Capacity to Innovate	Yes	Yes	Yes	Yes	Temporary Competitive Advantage
Human Resources	Yes	Yes	Yes	Yes	Sustainable Competitive Advantage

FINANCIAL RATIOS:

CASH FLOW 2007

Working capital £114.1m

Interest and tax £282.6m

Dividends and shares issues £215.7m

Other movements £3.4m

Net cash generated £231.1m

GROUP PROFIT BEFORE TAX

UK £156.5m

International £21.8m

M&Smoney £25.6m

Total 2006/2007 £965.2m

RETURN ON NEW STORES

2006/2007 Store openings Retail parks Simple food

Investment £26m £82m

Sales-Year1 £80m £128m

Incremental EBITDA-Year1 £14m £12m

ToTal Return On Investment 54% 15%

M&S 2007 100-POINT PLAN.

The 100-point plan means that by 2012 M&S will become carbon neutral, send no waste to landfill, extend sustainable sourcing, set new standards in ethical trading, and "help customers and employees live a healthier lifestyle," according to the company.

"Every business and individual needs to do their bit to tackle the enormous challenges of climate change and waste," explains M&S CEO Stuart Rose. "While M&S will continue to sell great quality, stylish and innovative products, our customers, employees and shareholders now expect us to take bold steps and do business differently and responsibly. We believe a responsible business can be a profitable business. We are calling this "Plan A" because there is no 'plan B'.

Rose continued: "M&S will change beyond recognition the way it operates over the next five years. We will become carbon neutral, only using offsetting as a last resort; we will ensure that none of our clothing or packaging needs to be thrown away; much of our polyester clothing will be made from recycled plastic bottles instead of oil and every year we will sell over 20 million garments made from Fairtrade cotton.The company has received praise from a number of quarters. For example, Jonathon Porritt, Founder Director of Forum for the Future, noted that "This plan sets a new benchmark in the way businesses should be tackling critical sustainability challenges like waste, fairtrade and climate change. It raises the bar for everyone else - not just retailers, but businesses in every sector. We all know that even at the end of these 5 years there will still be a huge amount for M&S to do but we warmly welcome the scale of the ambition of this plan in particular the commitment to include customers and suppliers."