1. Introduction Marks and Spencer is a company which has the United Kingdom as its primary market. It has many sectors to its business from clothing to banking to food. This report will primarily focus on two sectors, food and clothing but will also incorporate the overall progress of the company over the past ten years.
This report aims to: * Study the performance and profitability and the differing contribution from Marks and Spencer’s two major sectors, food and clothes particularly analyzing the Financials using the ratios of Return on Equity and Return on Sales. Comparisons with competing firms in these sectors will also be made. * Demonstrate that Porters generic strategy may help explain the gulf in both performance and profitability between Marks and Spencer’s Food and Clothes sectors. * Determine that the resource based view may aid Marks and Spencer in understanding the market and its competition better, and thus place the company in a stronger position.
2 Financial analysis
2.1 Return on Sales
Source: Thomson one
Source: Thomson one
Analyzing the financials of a company is a key part of understanding the performance and profitability of a company. As indicated in the introduction this report will firstly look at the Return on Sales of Marks and Spencer. The chart below shows the Change in the return on Sales for Marks and Spencer from 2004-2013. Return on Sales demonstrates the percentage of profit being made on each unit of sales. The Return of sales has fluctuated throughout the time period shown. However, as the trendline indicates, there has been an average downward tendency throughout Marks and Spencer which possibly demonstrates a growing inefficiency as assets are not fully utilized.
2.1i Reasons for downward trend in Return of Sales: * The average reduction in Return of sales could be attributed to the growing