CONSULTANCY REPORT

OF GLOBE TELECOM
MANUFACTURING INDUSTRY

Table of Contents
EXECUTIVE SUMMARY..................................................................................................................................... 4
STAKEHOLDER SUMMARY REPORT............................................................................................................. 5
1. INDUSTRY ANALYSIS................................................................................................................................. 5
1.1 Porters Five Forces Plus 1............................................................................................................................. 5
1.1.1 Competitive Rivalry High........................................................................................................................ 6
1.1.2 The bargaining Power of Buyer.............................................................................................................. 6
1.1.3 Power of complement providers.............................................................................................................. 6
1.2 PESTLED Analysis....................................................................................................................................... 6
1.3 Macroeconomic Forces.................................................................................................................................. 8
1.3.1 Growth rate of the Economy................................................................................................................... 8
1.3.2 Interest Rates........................................................................................................................................... 8
1.3.3 Currency Exchange Rates....................................................................................................................... 8
1.3.4 Inflation or Deflation Rates.................................................................................................................... 9
1.4 Industry Life Cycle of Mobile Phone Industry............................................................................................ 9
1.5 Product life Cycle.......................................................................................................................................... 9
1.6 National Competitive Advantage................................................................................................................. 10
2. CRITICAL EVALUATION OF THE PERFORMANCE AND STRATEGY OF GLOBE TELECOM
10
2.1 Porters Generic Strategy of Cost Leadership.............................................................................................. 11
2.2 Global Standardisation Strategy and Transnational Strategy...................................................................12
2.3 First Mover Advantage................................................................................................................................ 13
2.4 Capacity Utilisation...................................................................................................................................... 14
2.5 Core competencies........................................................................................................................................ 15
3. RECCOMENDATION FOR THE NEXT THREE YEARS...................................................................16
3.1 Merger with the Network Provider............................................................................................................. 16
3.2 Merger and Acquisition of the Outsourcing Companies............................................................................16
3.3 Corporate Level Strategy: Market Penetration and Product Development..............................................17
3.4 Market Development.................................................................................................................................... 17
3.5 Utilising the full capacity of the production plant in USA and Asia..........................................................18
3.6 Investing in Corporate Social Responsibility (CSR)...................................................................................18
4. REFERENCES......................................................................................................................................... 19
5. APPENDICES................................................................................................................................................ 19
Appendix 1: SWOT Analysis of Globe Telecom............................................................................................... 19
Appendix 2: Global Market Share................................................................................................................... 20

1
 Appendix 3: Research and Development Spending......................................................................................... 20
STAKEHOLDER SUMMARY REPORT........................................................................................................... 22
1. STAKEHOLDER MAPPING OF MARKS AND SPENCER.....................................................................22
1.1 Key Players.................................................................................................................................................. 22
1.1.1 Directors and managers........................................................................................................................ 22
1.1.2 Shareholders.......................................................................................................................................... 23
1.1.3 Suppliers................................................................................................................................................ 23
2. CRITICAL EVALUATION OF THE SUCCESS OF M&S EXECUTIVES IN BALANCING
STAKEHOLDER NEEDS OVER THE LAST FIVE YEARS............................................................................23
3. REFERENCES.............................................................................................................................................. 24

EXECUTIVE SUMMARY
Globe Telecom is operating in a very competitive environment and attractive market in
the mobile phone industry where the competitive forces are high. The external analysis of

2
the environment which is beyond the control of the company has provided Globe
Telecom opportunities and threats. The company exploit these opportunities to
successfully compete in the market.

For many years Globe Telecom has been able to deliver a consistent and profitable
growth to the shareholders, however, in recent years, the intensity of competition has
squeezed the market share, sales revenue and profit. Adopting global standardisation
strategy and business level strategy of cost leadership by selling the products into the
lowest price in the market gave the company a competitive advantage, by lowering the
cost and benefiting from the experience curve, learning curve and economies of scale.
Globe also adopted the first mover advantage by being one of the first company to
manufacture Tech 2 and 4, this give the company a competitive advantage to sell the new
Tech at a premium price. However, this strategy was not able to maintain the level of
profitability because of the intensity of competition in the market. Furthermore, the
competitors were also using the same strategy. Globe Telecom changed the strategy to
transnational strategy because of the pressure for cost reduction and local responsiveness.
Overall, Globe Telecom is the second leading company in terms of the total cumulative
shareholders return.

Based on the Globe Telecom strategic capabilities and core competencies, the company
can choose from the strategic choices available however, considering the feasibility and
financial capability of the company the following are recommended as strategy for the
next three years: merger with the network provider or alternatively merger or acquisition
of the outsourcing company, market penetration and product development, utilising the
100% capacity of the production plant in the USA and Asia as well as considering
investing in Corporate Social Responsibility or (CSR).

3
STAKEHOLDER SUMMARY REPORT

1. INDUSTRY ANALYSIS
Globe Telecom is operating in USA, Asia and Europe in a very competitive environment.
It is one of the leading producers of mobile phone with 12 manufacturing plants in USA
and 8 in Asia. Its major competitors include AKD company, Pink Phones, Eagle and
Cherry.

1.1 PORTERS FIVE FORCES PLUS 1

The mobile phone industry is very attractive where the extent of competition is one key
determinant of profitability. Porters argued that an attractive industry structure is the one
that offers a good profit potential and the five forces determine the industry structure.

Risk of
Entry
Low

Bargaining Bargaining
Power of Power of
Suppliers Buyers
Medium High
Competitive
Rivalry
high

Power of
Threat of Complement
Substitute Providers
Products
Medium
Low

Figure 1: 5 + 1 Competitive Forces of Mobile Phone Industry

Source: Adapted from Hill and Schilling (2015)

4
1.1.1 Competitive Rivalry High
The high degree of competition can be associated with the mobile phone industry growth
rate, high fixed cost and high exit barriers (Johnson et al., 2014)

1.1.2 The bargaining Power of Buyer

The bargaining power of buyers are high because of the low switching cost, where buyers
can switch easily and it does not cost anything to go to competitors.

1.1.3 Power of complement providers

The complement provider plays a vital role in the global operation of Globe Telecom
(Hill and Schilling 2015). The network coverage or the signal of the mobile phone is an
important element in the strategy formulation of what products or technology the
company will offer in the three markets they operate.
Therefore, the industry structure can be influenced by deliberate strategies like for
example acquiring the competitors and increasing promotional budget to improve
customer loyalty. The five forces analysis needs to be reviewed quite regularly (Johnson
et. al., 2014).

Figure 2: The Network Coverage Forecast (Cesim, 2017)

1.2 PESTLED ANALYSIS

The PESTLED analysis are the micro environment factors which are beyond the control
of the organisation, to benefit from the PESTLED analysis framework, Globe Telecom
can use the opportunities and threats in the formulation of strategy. By exploiting the
opportunities and taking into consideration the potential threats of each factor in the
business.

5
PESTLED OPPORTUNITIES
OR THREATS
ANALYSIS

Political *US presidential election (Cesim Year 8) O/T

Economic *Europe abolished the tariffs on imported goods

(Cesim Year 9)
O
*Agreement to abolish tariffs between USA and
China (Cesim, Year 8)
*Interest rate, exchange rate, tariffs O
O/T

Social Developing demand from the customers. O

Technological **Rate of technological evolution. O/T

Network provider or the signal in different O/T
market for each Technology.

Legal Changes in the laws and regulations in the O/T

country.

Environmental *The Scandinavians leaders criticizing the

pollution level of US (Cesim, Year 8).
T

Demographics **Europe customer are appreciative of the

products feature
O
**Asian customers are sensitive to price
Population growth, rising middle class.
O

Figure 3: PESTLED Analysis of the Mobile Phone Industry

* Based on the Cesim market outlook year 1 to 10
** Based on Mobile Inc – Case Company Description

The political factors like the US presidential election that were able to reach an
agreement to abolish tariffs between USA and China is a big opportunity to explore the
market. political uncertainty in Asia (Cesim, 2017).

6
The economic factors or the different macroeconomic forces like currency exchange rate,
interest rates and taxation can influence the financial performance of the company
(Wetherly and Otter, 2014).
The social factors like the customers need and desires for a cheaper mobile phones or
with more number of features can be analysed separately and used to be a customer
responsive in the continent that will help boost sales growth (Johnson et al., 2013).
The technological factors like the network coverage will positively or negatively impact
the sales if not taken into consideration in selling mobile phones in the different
geographic locations (Cesim, 2017). Keeping up with the rate of technological evolutions
is a threat since Research and Development requires continuous investment and can make
a product obsolete, however, it can be an opportunity because investing in R&D will add
to the competency, gain competitive advantage and long term profitability and
sustainability (Wetherly and Otter, 2014).
The demographics like for example the Asian market are sensitive to price, while the
European customers are appreciative of the product feature (Cesim, 2017). Globe
Telecom can use this as an opportunity to make their products and price offering
responsive to the needs and wants of the customers in the different market they operate.
The market outlook of developing demand posed as an opportunity to exploit the market,
however the slow growth will negatively impact the performance of the company.

1.3 MACROECONOMIC FORCES

It is significant for the business to understand how its operations are affected by the
macroeconomic forces.

1.3.1 Growth rate of the Economy

The macroeconomic forces like the growth rate of the economy is an important force for
the business to grow and an indicator of business opportunity. A high economic growth
will suggest an improvement in the living standard (Hill, 2011).

1.3.2 Interest Rates

A high interest rates makes it more expensive for Globe Telecom to borrow money from
the bank to finance the activities, it also affects the consumers buying behaviour,

7
however a low interest rates makes it easier to finance the operation of the business like
for example, taking long term or short terms loans (Campbell, 2011)

1.3.3 Currency Exchange Rates

Since Globe Telecom is operating in three geographical locations and are using different
currencies like the US dollar, Euro and RMB, the changing currency exchange rate may
affect the viability in export and vulnerability to imports (Johnson et al., 2014).

1.3.4 Inflation or Deflation Rates

A high inflation rates will mean uncertainty and a rise in cost for the business, it can
negatively affect the company’s profit. It can also lead to a depreciation in exchange
rate. Therefore, a stable inflation rate is important for a firm exporting like Globe
Telecom (De Wit, 2017)

1.4 INDUSTRY LIFE CYCLE OF MOBILE PHONE INDUSTRY

It seems that the mobile phone industry has reached the growth stage in the industry life
cycle and currently on a shakeout stage were the market becomes saturated, declining
profit and increasing rivalry forces that leads to slower growth. The industry life cycle
stages do remind that the conditions changes overtime particularly in a fast moving
industry like mobile phones. (Johnson et. al., 2014) (See Figure below).

Mobile Phone
Industry

Figure 4: Mobile Phone Industry Life Cycle (Johnson et. al., 2014)

8
 1.5 PRODUCT LIFE CYCLE
Because of the rapid growth of technology, the product life cycle of mobile phone will
reach a certain point that it will mature. Like for example Tech 1 which is being produced
since year 1, started a boom in the market, however, a significant decreased in demand
happened in year 10. It can therefore be argued that Tech 1 has reached the maturity stage
and now in a decline stage. The decline can me manipulated by increasing budget in
promotion, innovation and lowering the price.

1.6 NATIONAL COMPETITIVE ADVANTAGE

Globe Telecom invested 8 production manufacturing plant in Asia because of the national
competitive advantage of factor condition like the low cost labour, land and raw
materials. (Hill, 2014). Porters argued that a country has a national that can be used as a
source of competitive advantage

2. CRITICAL EVALUATION OF THE PERFORMANCE AND

STRATEGY OF GLOBE TELECOM
Strategy is the long term direction of an organisation (Johnson, et al., 2014). Globe
Telecom mission is “To be the global leader in mobile phones technology and to build a
long term value to the shareholders”. The mission statement served as a guide in the
strategic, tactical and operational level of the decision making process of the company.
Globe Telecom invested two production plant in Asia from year 1 to 4. That’s a long
term strategy to minimised the cost in tariffs, logistics and to benefit from the national
competitive advantage of low labour cost (Hill, 2013).
They also issued 10,000 shares to finance the investment in new production plants and in
Research and Development, to avoid taking short term loans with high interest rates.
Paying dividends yearly is also one of the strategy of the company to meet the
expectations of the shareholders.

9
 Cumulative Total Shareholders Return (p.a.) %
60

40

20

0
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
-20

-40

-60

-80 Eagle Globe Telecom AKD Company Cherry Pink Phones

Figure 5: Cumulative Total Shareholders Return (Source: Globe Telecom, 2017)

Based on the cumulative total shareholders return, Globe Telecom was in number one
position for six years and in number two positon for four years. This can be associated
on the cost leadership the company is pursuing. However, because of the intense
competition in the market they operate.

2.1 PORTERS GENERIC STRATEGY OF COST LEADERSHIP

In the first four years of operation Globe Telecom used the Global standardisation
strategy that is manufacturing the same product to cater all the demands in all market
area, and Porters generic strategy of cost leadership, that is selling mobile phones at the
lowest possible price in the market, by doing so, Globe produce the products at the lowest
cost, benefiting from the experience curve, learning curve and economies of scale.
Utilising 100% of the capacity of the production plant in year 2 and 3 and 80% in year 1
and 51% in year 4, the results in year 4 is quite alarming as the company were not able to
use the full capacity of the production plant, Investment in new plant was stopped in year
5, the strategy was reviewed.

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 Global Sales Revenue (k USD)
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
-
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Eagle Globe Telecom AKD Company Cherry Pink Phones

Figure 6: Global Sales Revenue (Source: Globe Telecom, 2017)

From year 1 to 4, Globe Telecom was leading in term of global sales revenue among the
five competing companies, the success can be attributed to the business level strategy or
Porters generic strategy of cost leadership, selling the mobile phones at the lowest
possible price in the market. Globe Telecom were able to aligned the business level
strategy to the functional level strategy. They were able to utilise the full capacity of the
production plant in USA and Asia. By using the 100% production capacity, Globe
Telecom benefits from the learning curve and experience curve, furthermore, attained
economies of scale through high sales volumes and market share (Hill, 2013). However,
Globe Telecom were not able to maintain that position because of the intensity of
competition in the market. Competitors started to compete using the cost leadership
strategy. Sales growth started to stagnant.

It could therefore be argued that achieving the economies of scale and learning effect will
lower the costs through functional level strategy of the company (Hill, 2014).

11
2.2 GLOBAL STANDARDISATION STRATEGY AND
TRANSNATIONAL STRATEGY
Globe Telecom produced a standardised mobile phone for the customer in USA, Asia and
Europe to minimise the cost and gain competitive advantage. However, the company
realised that the customers from the three markets have different needs, Asian market are
price sensitive while the Europe market are more of a new technology conscious. Globe
Telecom decided to adopt the transnational strategy by customising product offerings and
marketing mix to the different market segments (Hill, 2014). The decision was made to
cope with the pressure of local responsiveness from the different market.

Profit and Lost (k USD)

1,500,000

1,000,000

500,000

-
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
-500,000

-1,000,000

-1,500,000

-2,000,000
Eagle Globe Telecom AKD Company Cherry Pink Phones
-2,500,000

Figure 7: Profit and Lost chart of the Mobile Industry (Source: Globe Telecom,
2017)
Year 1, 2, 4, 7 and 10 produced a major profitable growth for the company while year 3,
5,6, 8 and 9 were the least profitable and overtaken by competitors. This suggest that the
Globe Telecom has failed to reach the low cost strategy as reflected in the first four years.
The stagnation in sales revenue has a great impact on the profitability of Globe Telecom.
The lack of emergent strategy of the company can be associated to the to the decreasing
profitability.

12
It could therefore be argued that in order for Globe Telecom to successfully compete on
cost leadership, they should utilise the full capacity of the production plants to benefits
from the economies of scale, learning curve and experience curve. But this is not the case
in year 4 wherein the cost has increased.

2.3 FIRST MOVER ADVANTAGE

Globe Telecom adopted the first mover advantage by investing and manufacturing Tech
2 in year 2 and Tech in year 4. By being the first in the market, Globe Telecom were able
to sell the products in premium price, which increased the profitability of the company
(Johnson et. al., 2014). When the competitors realised that Tech 2 and Tech 4 gains
popularity and in demand in the market. They also manufacture the new technology.
Again the competition squeezed the profit margin of Globe telecom. However, the
intensity of competition has forced Globe Telecom to reduce the price and compete on
cost leadership.

2.4 CAPACITY UTILISATION

Capacity Utilisation %
120

100 100 100

100

80 78
80 76
68
60 60
60 51 51
55 55
45
38
40
28

17
20
10
0 0
0
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

USA capacity Asia capacity

Figure 8: Capacity Utilisation of Globe Telecom in %

13
The graph above suggested that Globe Telecom were not able to use the full capacity of
their 12 production plants in USA and 8 plants in Asia. It’s only in Year 2 and 3 that they
were able to use the 100% capacity. They used the outsourcing because it is cheaper to
outsource than to produce in house, however, they didn’t realised the impact of not using
the full capacity of their own production plant. By doing so, the experience curve,
learning curve were not achieved as well as the economies of scale. Therefore, the
superior efficiency was not realised in most of the year. This suggested that the free plant
capacity served as a building blocks of competitive advantage (Hill, 2014).

Figure 9: Experience curve

It comes to a point that Tech 1 has reached the industry product life cycle and Globe
Telecom has not invested much in Technology 3, this could be one of the reason why the
sales revenue has decreased. Another reason is the competitors begun to compete on cost
leadership, the other four company were pricing their products at lowest cost, this
squeezed the competition.

2.5 CORE COMPETENCIES

Globe Telecom has $8.04 million cash and cash equivalent at the end of year 10, the
highest among the five company operating in the market. This financial capability is one
of the core competencies of the company to use in the business operation, however,
Globe Telecom did not invest much in R&D in the previous year. This can be used in the
future operation to gain competitive advantage.

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 Financial
capability

Figure 10: Balance sheet in Year 10 (k USD)

3. RECCOMENDATION FOR THE NEXT THREE YEARS

For many years, Globe Telecom had been able to deliver consistent and profitable growth
to its shareholders, however, in recent years, various problem arose this includes the
declining global sales, profits, market share and cumulative total shareholders return.
Therefore, the need to develop a strategy that will give the company a sustainable growth
is vital. The strategic options available for Globe Telecom for the next three years
includes the following strategies:

3.1 MERGER WITH THE NETWORK PROVIDER

Globe Telecom has accumulated cash and cash equivalent at year 10 amounting to $8.04
billion, that they were not able to use effectively and efficiently. By investing part of it in
merger with the network provider, it will give them a competitive advantage to use their
financial resources and competencies like the R&D. they have the have the financial
capability to do so.

3.2 MERGER AND ACQUISITION OF THE OUTSOURCING

COMPANIES
It seems that Globe Telecom competitors like AKD Company, Pink Phones, Eagle and
Cherry are all doing well recently in the market, in pursuit of long term growth they may
be interested in Merger or acquisition. However, if not, another alternative is the
acquisition of the outsourcing companies, Globe Telecom have the financial capability to

15
acquire the outsourcing companies with the massive amount of cash and cash receivables
(refer to appendix A) of the company as compared to the other four competitors in the
market. Globe Telecom can acquire the capabilities, speed, scale and scope economies
(Johnson et al., 2014; Goldin and Reinert, 2012). By doing so they can use the production
plant, Research and Development and manpower. Exploiting the strategic capabilities
will help the company to gain competitive advantage and long term survival. If
acquisition of the outsourcing companies is not possible a merger could be an alternative
as a growth strategy. It can help Globe Telecom to increase the company’s capabilities

3.3 CORPORATE LEVEL STRATEGY: MARKET PENETRATION

AND PRODUCT DEVELOPMENT
The Ansoff matrix of product and market development can be used as a corporate level
strategy framework for generating organisational growth (Johnson et al., 2014). The
strategic choices available for Globe Telecom is to increase the market penetration for its
existing market and existing product (Tielmann, 2010). It can be argued that the abolition
of tariffs in Europe in year 9 provides a huge opportunity for the company to export more
mobile phones in the continent. Zero tax on imported goods in Europe will help Globe
Telecom to increase their profitability and therefore exploit that opportunity. Similarly,
the future of Tech 3 and Teach 4 (refer to Figure 11) suggested that the demand will
continue to grow and the increasing network coverage will further influence its popularity
(refer to figure 2). Globe Telecom should continue investing in Research and
Development that will help the company to explore product development.

16
 Global Demand By Tech
70,000

60,000

50,000

40,000

30,000

20,000

10,000

0
R0 R1 R2 R3 R4 R5 R6 R7 R8 R9 R10

Tech 1 Tech 2 Tech 3 Tech 4 Total

Figure 11: The Global Demand by Tech (Source: Cesim, 2017)

3.4 MARKET DEVELOPMENT

The success of mobile phone industry in USA, Asia and Europe suggested that the
industry is growing. Market development is very attractive because it is potentially
cheaper and quicker to execute (Singla, 2012). Globe Telecom can offer the existing
product to new market or new geographical locations like in the Africa, Australia, South
America, and other countries in North America. This strategy is not only possible but
highly feasible considering the capabilities of the company like the resources and
competencies.

3.5 UTILISING THE FULL CAPACITY OF THE PRODUCTION

PLANT IN USA AND ASIA
Globe Telecom should utilise the 100% capacity of all its manufacturing plant, Figure 8
suggested that the company were not able to use the full capacity as a result a free
capacity that incurred cost, but they used the outsourcing. By using the 100% capacity
they will benefit from the learning curve, experience curve and economies of scale and
therefore, minimise the cost and they can sell the products to the lowest price and they
can go back to the Porters generic strategy of cost leadership, which has been used in

17
 year 1 to 4 and proved to be an effective strategy to gain competitive advantage and
sustained profitability.

3.6 INVESTING IN CORPORATE SOCIAL RESPONSIBILITY

(CSR)
Another alternative is investing in CSR, in today’s generation were information is one
click away, streamlining the source of the raw materials, improving the working
environment, and being an ethical company who looks the welfare of its employees can
be long term strategy that will the company a brand image admired by the customers
(Cammpbell, 2011).

Globe Telecom should have an emergent strategy, it can therefore be argued that they
have a planned strategy but considering the intensity of competition in the market, the
plan strategy is not always realised at the end.

4. REFERENCES
Campbell, D., 2011. Business Strategy: An Introduction. 3rd Ed. London: Palgrave Macmillan.

Cesim, 2017. The Cesim Global Challenge. Available at: www.cesim.com.

Goldin, I., and Reinert, K., 2012. Globalisation for Development: meeting New Challenges.
Oxford: Oxford University Press.

Hill, C., et al., 2014. Strategic Management: Theory and Cases: An Integrated Approach. 11th
Ed. London: Cengage Learning.

Johnson G., et al., 2010. Exploring Corporate Strategy. 8th Ed. London: FT Prentice Hall.

Singla, R., 2012. Business Studies. New Delhi: VK Enterprise. Online. Available at: https://
books.google.co,uk. [Accessed 20 March 2017]

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Tielmann, V., 2010. Market Entry Strategies: International Marketing Management. Berlin:
GRIN Verlag.

Wetherly, P., and Otter D., 2014). The Business Environment: Themes and Issues in a
Globalizing World. London: Oxford University Press.

5. APPENDICES

APPENDIX 1: SWOT ANALYSIS OF GLOBE TELECOM

STRENGTHS WEAKNESSES
 Appealing and customer driven  Short product life cycle
design
 Financial capability, huge amount
of cash and cash receivables
OPPORTUNITIES THREATS
 Europe abolish the tariffs (Round  Complicated and inflexible labour
9) laws in Europe
 Growth in the global market
 Large investment in R&D
 Low Cost of Outsource in the
market
 Product differentiation

APPENDIX 2: GLOBAL MARKET SHARE

19
 Global Market Share
45
40
35
30
25
20
15
10
5
0
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Eagle Globe Telecom AKD Company Cherry Pink Phones

APPENDIX 3: RESEARCH AND DEVELOPMENT SPENDING

Research and Development Spending (k USD)

1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
-
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Eagle Globe Telecom AKD Company Cherry Pink Phones

20
STAKEHOLDER SUMMARY REPORT

1. STAKEHOLDER MAPPING OF MARKS AND SPENCER

Marks and Spencer also known as M&S is one of the leading traditional retailer in the
UK that sells stylish, high quality, great value clothing, and high end food products
responsibly sourced from around 3000 suppliers globally (M&S, 2017). In order to
manage the business, it is imperative that M&S identified the different stakeholders that
has extent power/influence and potential interest in the company (Hill, 2014).

Figure 1: Stakeholders Mapping of M&S Based on Mendelow Matrix

Source: Stakeholders Matrix (Mendelow, 1991)

1.1 KEY PLAYERS

1.1.1 Directors and managers have high power, due to their legitimate authority
in the decision making process and their influence as leaders or managers. They have

21
 high interest because of their position in the organisation bearing the responsibility for
M&S current and future performance (M&S, 2017).
1.1.2 Shareholders particularly the major shareholders who owns a big stake in the
company have high power because of their legitimate authority to vote in the Annual
General Meeting (AGM) as well as their power to sell their current share in the company
that can have a negative impact on the company’s image. Shareholders with big
shareholdings have high interest because the return on their investment will depend on
the profit generated by the company.
1.1.3 Suppliers may vary in their power/influence and interest in M&S depending on
the status, size and circumstances. Major and core long-term suppliers have high
power/influence because M&S products are specially made for the company, it’s not
easy to change suppliers.

It could therefore be argued that mapping the different stakeholders on the right position
could help the company to develop the different strategies for the stakeholders’
communication, conflict/issues and relationship management.

2. CRITICAL EVALUATION OF THE SUCCESS OF M&S

EXECUTIVES IN BALANCING STAKEHOLDER NEEDS OVER
THE LAST FIVE YEARS

M&S key players were the priority of the ongoing stakeholders’ management that
includes proactive consultation and involvement in the strategic decision making process.
Communicating with the stakeholders properly and frequently and assessing their needs
and constraints. By sending information through M&S internal and external
communication to various stakeholders. This gives the company listening and taking
actions (M&s, 2017).

The executives’ priority is to reassure and manage the expectations of the shareholders.
Like for example the issue about the shareholders questioning on “how and when the

22
 clothing underperformance be rectified?” The issue was resolve by the executives in the
general annual meeting by highlighting the company’s long term strategy (M&S, 2017).

The M&S Code of Ethics and Behaviour define and sets out the major policies and
procedures in engaging or dealing with customers, employees, customer, shareholders,
suppliers, government, regulators as well the media (M&S, 2017). Therefore, any issues
will be dealt in accordance with the Code of Ethics.

M&S executives has been successful in managing the different stakeholders by

incorporating Corporate Social Responsibility (M&S called it Plan A and now Plan 2020)
into the heart of their business strategy (M&S, 2017). Its success depends on the support
and engagement of the different stakeholders.

It could therefore be argued that communication and strengthening the trust are
significant factor in managing the different stakeholders that have interest and power in
the company.

3. REFERENCES
M&S, 2017. Listening and Taking Action: Delivering Plan A. [Online] Available at:
www.corporate.marksandspencer.com. [Accessed 18 March 2017].

Hill, C., et al., 2014. Strategic Management: Theory and Cases: An Integrated Approach.
11th Ed. London: Cengage Learning.

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