Portfolio Option 1. Prepare a learning portfolio of approximately 600 words based upon the case of ‘Marks and Spencer Plc’ for which the task are:

1.    Critically analyse why Marks and Spencer’s fortunes changed as quickly as they did in 1999. How would this change be explained by applying Thompson’s EVR model

Marks and Spencer has made a phenomenal turnaround in the last few years after it suffered a massive decline in business activity in 1999 (Beaver, 1999). This was an unprecedented turn of events for an entity with a rich history and was, in essence, a household name. This paper seeks to discuss why the company’s fortune declined in 1999 as well as present a SWOT analysis of the company and compare it with the Thompson’s E-V-R model.

During this period, many businesses were going through a technological transformation phase (Beaver, 1999). Global communication speeds were also on the increase and as such, these developments brought about an unprecedented increase in complexity about how business operations were managed. The failure by the organization’s management to revise and capitalize on its strengths concerning the wider environment contributed to the slump (Beaver, 1999). As such, a transforming and erratic operating environment can be beneficial to an organization if the right responses from management are realized. As per the Thomspon’s E-V-R model, Marks and Spencer opted to insulate its operations from environmental transformations citing the need to maintain its organizational culture. The outcome was less innovative capabilities as well as a dismal generation of progressive ideas. The strict hierarchy and control worked against the company at a time when it could have used these industry disruptions to position itself strongly in the UK as well as international markets.

2.    How might such a decline have been avoided in the first place?

The environment-values-resources congruence model offers a prime framework through which managers can examine what to strategically attain to create and subsequently sustain operational success and effectiveness (Woodruffe-Burton and Wakenshaw, 2011). An E-V-R on Marks and Spencer shows that its environment is a source of opportunities and as such, if it could have strived to conform to the operating environment changes, it would not have suffered the 1999 decline.  The resources functions of Marks and Spencer also demonstrate that the company is in a healthy financial position to conform to the business environment needs. However, success is dependent on the values, culture and leadership of the organization. Its strict hierarchical organizational structure worked against the innovative development of business process as it sought to have traditional control iover business operations. As such, if the company’s current decentralized organizational structure was in place prior to the 1999 decline, it would have transitioned in to the 21^st Century without any loss of business.

3.    What are the key factors which contributed to M&S’s recovery and do you feel that this recovery will be sustained in the future?

Marks and Spencer has however made a complete turnaround is now considered as one of the fastest growing business and industry leaders in the UK as well as in the global market. The 125-year old company’s brand is renowned for high quality, value foods, home products and fashionable clothing. The organization now employs a progressive business strategy and decentralized organizational structure in its operations (Babalac, 2013).

It has a positive reputation and more so, brand image. Over the past few years, the company has appraised its unique selling points for its products such as strategically positions it’s Simply Foods Stores in train stations. It now has one of the most progressive infrastructure as well as business organization environment (Lazerson and Lorenzoni, 1999). The company has also realized a widely rewarding global market penetration drive. More so, it has received many achievement awards in the UK and international retail industry and boasts a robust as well as sustainable supply chain.

The corporation’s clothing business has been performing dismally leading to shareholders piling pressure on the CEO. The company products are also more costly considered to its rivals (Campbell and Rahman, 2010). Surveys also indicate that customers at Marks and Spencer feel less satisfied concerning the shopping experiences. The company therefore worked to realign its marketing strategy to focus more on younger audiences. The company was also presented with an excellent opportunity to capitalize on the relatively new online sales market (Campbell and Rahman, 2010). More so, it has productively transitioned into the strategic banking sector.

Marks and Spencer still faces stiff competition from industry players such as Next, Zara and Debenhams in the clothing fashion industry. However, all its other divisions have been performing above expectations. It the Eurozone has been facing a period of slow economic recovery, leading to a situation where there are less disposable incomes in the UK (Lazerson and Lorenzoni, 1999).

Portfolio Option 1. Prepare a learning portfolio of approximately 600 words based upon the case of The Tata Nano, Low Cost, No Frills car for which the task are:

1.    Critically evaluate how does Blue Ocean strategy fundamentally differ from Red Ocean strategy? Is it important for businesses to consider Blue Ocean strategy, and if so, why?  Write a brief report relating to the related areas of academic literature addressing these questions and illustrate with examples of how similar firms have adopted their Blue Ocean strategy, discussing sustainability of this strategy.

Businesses are primarily created with a particular industry in mind. Markets define industries and as such, most new market entrants attempt to enter into an already existing market. However, there are some businesses that seek to create new markets (Rao, 2013). A good example of a business entity that created and was successful in creating a new market is the low-cost airline industry giant, Easy Jet. This company looked to create a market for a service that had for years been side-lined by the major commercial airline companies. On the same note, the India-based company Tata introduced a car referred to as the Nano which attempted to take on the same road as Easy Jet did. This paper will critically address the blue ocean and read ocean strategies and determine whether the introduction of the Nano into the automobile market was one of either strategy.

The book titled Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant authored by W, Chan Kim and Renee Mauborgne first introduced the phrase (2015). This term is employed to describe means through which organizations attempt to create unique commodities that create new markets and thus expose it to high profitability ratios. The blue ocean strategy revolves around creating and operating in a marketplace that is virtually devoid of competitors.

The fast pace of transformation and innovation in the past decade led scholars to look to novel business strategies, more potent than the typical porter’s five forces first postulated by the renowned scholar Michael Porter (Johnson, Whittington, Angwin, Regner, Scholes and Pyle, 2013). The blue ocean strategy is considered as one of the best efforts towards this end.

According to Kim and Mauborgne, four basic actions enable organizations to form a blue ocean strategy (2015). The actions are founded on four questions.

• Firstly, which factors taken for granted in the industry ought to be eliminated? (Raise)
• Secondly, which factors ought to be minimized far below current industry standards? (Eliminate)
• Thirdly, which factors ought to be maximized far above the industry standards? (Reduce)
• Lastly, which factors ought to be introduced which the existing industry fails to offer? (Create)

As such, the blue ocean strategy encourages organizations to place more emphasis on alternatives rather than competitors; less on customers and more to prospective new clients and non-customers.

The conventional business strategy model referred to as Porter’s five forces is what is referred to as the red ocean strategy in this context (Kim and Mauborgne, 2014). This descriptive phrase likens organizations operating in a similar industry to sharks in an ocean where they fight for prey leaving the waters blood red thus the term red ocean (Kim and Mauborgne, 2014). The specific factors employed through the five forces seek to examine whether an organization can remain profitable relative to other organizations also operating in the same industry.

The Indian multinational corporation Tata that has a diversified portfolio made an attempt to employ the blue ocean strategy with the creation and subsequent production of the cheapest car in the world (Prahalad, 2012). The car targets a market that has largely been ignored by other auto manufacturers. Priced at only 1,275 Sterling pounds, the Tata Nano is a car that was perceived as reaching out to the millions of Indian consumers who could not afford to purchase cars from regular automakers. Fitted with a small rear engine, the car provides 50 miles for every gallon of petrol (Prahalad, 2012). It lacks common car features such as air conditioning and power steering. Unfortunately, the car fails the minimum standards for carbon emissions. As much as the Tata Nano was an attempt towards employing the blue ocean strategy, the manufacturers failed to take comprehensively into account the right industry factors to eliminate. The company thus failed in applying the blue ocean strategy.

Portfolios Option 4. Prepare a learning portfolio of approximately 600 words based upon the case of ‘IKEA’ for which tasks are:

1. Apply a cultural web model to IKEA and critically analyse how success of the organisation can be explains by different manifestations of culture in the model.

The cultural web recognizes six interconnected elements that project the model of a given business environment. As a business strategy, the cultural web enables central planners to perceive the broader picture concerning the particular organizational culture (Campbell, Edgar and Stonehouse, 2011). These six elements are rituals and routines, stories, symbols, control systems, organizational structures and power structures. This paper seeks to apply the cultural web to IKEA, it success relative to the cultural web and present an analysis of the relationship between the success of IKEA’s competitive strategy and its organizational culture.

IKEA is a Swedish multinational company that was established in 1943, and its core business involves supplying self-assembly furniture. By 2011, the company had expanded into the international presence with more than 330 stores in close to 40 countries (Edvardsson and Enquist, 2011). The IKEA brand is internationally associated with premium quality goods at prices that are comparatively lower than those offered by industry rivals. As such, superior quality merchandise and relatively lower prices have over the years served to challenge the competition. The company founded by Ingvar Kamprad commissions furniture packs from more than 2,300 suppliers from about 70 countries worldwide (Edvardsson and Enquist, 2011). The company owns equity stakes in its major vendors and more so, operates a rigorous stock control program that serves to cut costs through the entire supply chain.

2.    Critically analyse the relationship between organisational culture at IKEA and success of its competitive strategy.

This billion dollar corporations exhibits a unique cultural web (Hultman, Johnsen, Johnsen and Hertz, 2012). Firstly, it operates on an informal organizational structure. All employees proactively endeavour to serve customers regardless of official position. As such, it is important to note that the company’s power structure does not recognize official titles. As such, there is no preferential treatment for senior managers as all are accorded similar treatment in line with the adopted organizational structure (Hultman, Johnsen, Johnsen and Hertz, 2012). It enables the senior as well as ordinary employees to work in unison towards innovatively meeting customer expectations.

Secondly, IKEA stories that revolve around its founder Kamprad have worked to progressively and continuously propel the organization ahead. The employees at IKEA view Kamprad as a visionary leader who is not only prudent but hardworking, humble and a good example to all employees (Hultman, Johnsen, Johnsen and Hertz, 2012). The company’s Swedish roots also vouch for teamwork, simplicity and a gentle aura that serves to create a high degree of customer loyalty. Thirdly, rituals and routines at IKEA revolve around exemplary customer service (Hultman, Johnsen, Johnsen and Hertz, 2012). Its employees work in an innovative and relaxed environment where making mistakes is perceived as a learning opportunity. In fact, stores that realize the best cost cutting outcomes are rewarded.

Fourthly, symbols famous with the company include the staff dress code. The yellow and blue of IKEA employees represent the colours of the Swedish flag. These symbols show that the company endeavours to project the high attributes of the Swedish culture (Hultman, Johnsen, Johnsen and Hertz, 2012). Fifthly its control system is pegged on quality. The company prides itself in ensuring products are of the highest quality. Lastly, its organizational structure is anti-bureaucratic (Hultman, Johnsen, Johnsen and Hertz, 2012). With three hierarchical levels, store manager as well as employees work towards customer satisfaction and more so, cost-cutting endeavours.

IKEA’s competitive strategy is founded on the organizational mission that seeks to offer high-quality merchandise at affordable prices. The informal organizational structure, on the other hand, ensures that senior managers as well as employees keep in touch with the customer needs (Nattrass, Altomare and Hawken, 2013). This has worked well for the company over the years enabling it to expand internationally with great success. For instance, the different stores in various countries project cultures that differ (Verbeke, 2013). The informal organizational structure allows managers to understand the cultural inclinations of customers in various countries thus allowing the company to incorporate customer needs in an innovative manner.

Appendices

Appendix A

Image of the graphical Representation of the cultural web. Available from http://firstmonday.org/ojs/index.php/fm/article/viewFile/5626/4467/43000

IKEA has been a successful company throughout its lifetime and by extension, it projected to continue to earn sustainable profitability for the long-term. This is due to the organization’s endeavour towards maintaining the same organizational culture its founder envisaged during its establishment. The company’s cultural web has served to allow the company to enter international markets with diverse cultural values and yet successfully conform to these cultural variations. As such, it has been able to appeal to a mass audience and employ its economies of scale towards the production of culturally sensitive goods for its vast diverse customer base.

Appendix B

Image of the graphical representation of Thompson’s E-V-R Model. Available from http://www.staffs.ac.uk/sgc1/faculty/blb10089-3/images/clip_image002_028.gif

Marks and Spencer suffered in the late 90’s and early 21^st Century from the failure to ensure a strategic drift towards the technological disruptions that were occurring in its operating environment. However, in recent years, the company has worked to conform to the environmental changes witnessed and as such, realigns it values and directs its resources accordingly through a predetermined strategic drift. The outcome has been the company once again attaining favourable operating outcomes as suggested by its improved sustainability. The Thompson E-V-R model underscores the fact that the firm is well position to maintain and sustained its current profitability growth trend in the near future.

Appendix C

Image 2: Graphical representation of the Blue Ocean Strategy. Available from http://www.theinnovativemanager.com/wp-content/uploads/2013/12/blue-ocean-strategy-thumbnail.png

The Blue Ocean Strategy has served to enable some organizations realise sustainable profitability by creating new products for a previously untapped market. As the image above shows, for an organization to successfully create novel products for an untapped consumer base, it strategy canvas or blueprint has to incorporate four actions. Unfortunately, the Blue Ocean strategy as undertaken by the conglomerate Tata towards the development of the Tata Nano for the low end market failed in a myriad of ways. The company failed to incorporate issues of carbon emission, ease of driving, incorporation of standard features and more so the fact that people tend to consider cars as a status symbol. The company thus failed to fully comprehend what to raise, reduce, eliminate and create towards a successful Blue Ocean Strategy.

References

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Campbell, D. and Rahman, M.R.A. (2010). A longitudinal examination of intellectual capital reporting in Marks & Spencer annual reports, 1978–2008.The British Accounting Review, 42(1), pp.56-70.

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