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M&M's Case Study

In: Business and Management

Submitted By QianzhiYuan
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Summary

The main purpose of this report is to identify the key business challenges for M&M’s, the confectionary brand of Mars Inc., and develop management solutions and specific recommendations on how effective leadership can meet these challenges in the company. The report proposes organisational change for the firm, which is fully driven by leadership and management strategies. It is identified that the key challenges for M&M’s are weak technological base, insufficient innovation in the sphere of product and package design, dependence on suppliers, conflict of interests in the management team, flat organisational structure, trade barriers, increased competition and insufficient CSR efforts. It is recommended that the organisational change should include the change of leadership style to more inspirational and transformational, achievement of more hierarchical organisational structure and implementation of the diversification marketing strategy. It is concluded that M&M’s should also cultivate innovativeness and creativity among its employees.

Table of Contents

1. Introduction and Background 5
2. Environment Monitoring 6
3. External and Internal Analysis 7
4. Complexity of Environment 17
5. Business Challenges and Rationale for Leadership 17
6. Leadership and Improvement Options 19
7. Conclusion and Recommendation 25
References 27

List of Figures

Figure 1: Cultural Web 12
Figure 2: Stakeholder Analysis 16
Figure 3: Hofstede’s Cultural Dimensions 17
Figure 4: McKinsey 7S Model 21
Figure 5: Burke Litwin Model of Change 23

1. Introduction and Background

The major purposes of effective leadership and management consist in timely monitoring of organisational environment, development of adequate responses to environmental challenges and further strategic planning and changes[1]. Relevant leadership strategies and implications can solve numerous business challenges and help organisations to overcome diverse external as well as internal pressures and crises[2]. This strategic report is aimed at the identification of the key business challenges of M&M’s through external and internal analysis and further development of solutions and specific recommendations on how effective leadership can meet these challenges in this organisation.

M&M’s is a popular confectionary brand, which belongs to Mars Incorporated. The brand’s name is an abbreviation for its creators such as Mars and Murrie. The main products of M&M’s are chocolate and peanut colourful candies with the letter ‘m’ on one side[3]. The product was firstly launched during the World War II, and the main customer of M&M’s was the US army. In 1980, the firm began its foreign market expansion[4]. Nowadays, Mars Inc., the parent company, is one of the biggest confectionery manufacturers in the world. M&M’s chocolate beans are sold in more than 70 countries around the world. The company employs more than 40,000 people all over the globe. It should be noted that M&M’s is a private firm, which started from a family business. In 2010, total revenue of the parent company, Mars, constituted $30 billion[5]. M&M’s uses flat organisation structure, which makes the company very responsive to the needs of its employees as well as customer. The main competitors of M&M’s are Hershey, Nestle, Cadbury and Kraft Foods[6]. M&M’s business strategy consists in maintaining high quality of the production alone with high volume and low prices.

2. Environment Monitoring

Research and development (R&D) department has always been of great importance for M&M’s. It has been mentioned in the background that multi-level efficiency is one the main principles of the firm. To achieve this efficiency, the company relies on its own market research and general industry publications and analyses[7]. The company’s success formula consists in in-depth customer engagement practices, through which tastes and preferences of customers are studied and analyses. For instance, in 2002, M&M’s monitored customer environment through the internet survey method, when the target population was proposed to select a new colour if candies. As a result, purple candies were added to M&M’s production[8].

Furthermore, it should be noted that in the early 2000s, the external environment began to rapidly change. In response, M&M’s needed to develop adequate measures and strategies in order to remain competitive the market. In this case, M&M’s decided to implement the ‘launch and learn’ approach, which can be considered another successful method of monitoring the environment[9]. As a result, ‘My M&M’s’ brand was introduced to the customers. The main idea of the new brand consisted in customisation. Customers could order chocolate beans, but instead of the letter ‘m’, they could request their names or even images. In-depth market research and monitoring were also made after the launch of the new sub-brand. The new product turned out to be successful and appreciated by customers. In addition, it should be noted that M&M’s uses the benchmarking method when new marketing strategies are tested in smaller focus groups[10].

3. External and Internal Analysis

In order to understand external environment of a company, the PESTEL framework is frequently implemented. It should be noted that PESTEL is an acronym, which stands for political, economic, social, technological, environmental and legal environmental factors[11].

Political • M&M’s sells its chocolate beans in more than 70 countries all over the world[12]. If the government of a country is unstable, it can negatively affect the firm and its sales. For instance, quotas on imports and other restrictions may be introduced. In these conditions, M&M’s will be able to bring only a specific amount of chocolate beans to the local market. The main examples of such countries are Serbia, Thailand, China, etc.[13]. • The main M&M’s markets of presence are the US and the UK, which are characterised by low political risks[14].

Economic • The global economic crisis has negatively affected customers’ buying capacity. However, it should be mentioned, that chocolate beans are a fast-moving consumer good. Thus, it can be sold quickly even during economically pressing times and at low prices unlike cars and electronics, which are durable and high-priced commodities[15]. • As a multinational company, M&M’s opens new factories in different countries. The company hires employees and helps to decrease unemployment in developing economies such as Brazil, Kazakhstan, Mexico, etc. In turn, M&M’s also suffers from unemployment and other macroeconomic conditions in these economies. • The market has reached maturity yet, neither in the US, nor in other countries[16].

Social • The company produces chocolate beans, which are demanded by wide categories of buyers, from kids to adults. • The company’s products are very popular with special events such as weddings and birthdays. • The public is worried about the quality standards used in the company[17].

Technological • Contemporary marketing strategies require from M&M’s using online sales and online customer involvement. Customer engagement marketing methods are also required where the internet serves as the playground[18].

Environmental factors • Chocolate beans production cannot be classified as highly damaging to the environment and employees’ health. • However, M&M’s depends on the production of cocoa beans and weather conditions in which they are cultivated. Such input material as cocoa beans are unlikely to run out[19].

Legal factors • M&M’s has to follow the regulations of the US Department of Agriculture (USDA), Environmental Protection Agency (EPA) and Food Drug Administration (FDA) on the chocolate candies production[20]. • M&M’s has to follow the legislation in all countries where it operates. • M&M’s has to protect its employees’ rights and freedoms.

The next step of environmental scanning is SWOT analysis. This analytical framework will help to identify the company’s internal, including strengths (S), weaknesses (W), opportunities (O) and threats (T)[21]. The SWOT analysis also helps to determine whether the company’s resources and capabilities are enough to compete with other organisations in the marker[22].

Strengths • Strong and well-known brand name; • Belonging to the family of the largest confectionary firm; • M&M’s operates in over 65 countries around the globe[23]; • Good reputation among customers and suppliers; • High operational efficiency; • High-quality products[24]; • M&M’s chocolate beans are the best selling candies in the market; • New brand ‘My M&M’s’, which offers customisation; • Strong leadership and teamwork; • Good resource allocation; • Ability to listen to employees’ and customers’ ideas[25].

Weaknesses • M&M’s promotional campaigns require considerable funding; • Employees are resistant to change; • Complex business environment, which causes interest conflicts; • Flat organisational structure has some disadvantages. For example, one employee may have a few bosses. Furthermore, this structure type may limit the company’s growth. • Mars Incorporated was criticised for contracting with low-cost African suppliers of cocoa beans, who used child labour[26]; • Lack of innovative ideas and no recent innovations in the product range.

Opportunities • Further market expansion; • Wider diversification of products in the foreign markets; • To meet customer demand; • Technology improvement and development[27]; • Innovation; • Creation of brand-new goods; • Elimination of disadvantages related to flat structure[28].

Threats • Lack of innovations can cause shifts in consumer tastes. To be more specific, customers can stop buying old and outmoded candies and start buying new candies with innovated product and package design. • The number of competitors may increase[29]; • Further growth of trade barriers; • Decrease in consumer demand; • M&M’s rivals’ innovated design can give competitive advantage.

The Cultural Web analysis helps to see a more comprehensive and bigger picture of the company’s culture[30]. The framework consists of 6 separate dimensions, which are stories, symbols, power structures, organisational structures, control systems and rituals and routines[31].

Figure 1: Cultural Web[32]

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Stories
Mars Incorporated, the owner of M&M’s, is one of the greatest examples of the so-called ‘American dream’ realisation. Founded in 1911, Mars became a multi-national company with more than 50,000 employees very quickly. Workers of the firm are viewed as the most valuable asset. This idea is one of the main company’s focuses. Employees work in a highly motivating and inspiring environment[33]. They are given bonuses for coming to work on time, which stimulates their performance and productiveness[34].

Symbols
Small panned chocolate candies covered with coloured edible shell, which does not allow chocolate to melt in one’s hands, prove to be the major symbol of the company. Furthermore, the letter ‘m’, which stands for M&M’s name is a highly recognisable symbol. In addition, excellent quality and great taste have made M&M’s the world’s best selling candies[35].

Power Structure
Mars Incorporated, the parent company of M&M’s, was established as a family business. It was founded by Frank Mars in 1911 in Tacoma. Today, John Mars, a grandson of Frank Mars, is the chairman of the company. Paul Michaels is the company’s CEO at the moment. All the serious decisions in the company are made by the members of the Mars family[36]. Middle managers are given less power in the organisation. They are responsible for ‘insider’ management, and do not participate in taking strategic decisions.

Organisational Structure
The company has a flat organisational structure. This means that the number of intermediates between top managers and employees is reduced to a minimum. Hence, the role of middle managers is nearly eliminated[37]. Employees are actively involved the corporate decision-making process and can easily access the senior management. This type of organisational structure allows improving communication between management and workers. The company is teamwork oriented, which is another benefit of the flat structure type[38].

Control Systems
It has been mentioned that one of the major corporate values and principles in Mars and M&M’s is efficiency. The company’s aim is to generate the maximum revenue using minimum input materials and resources. Another important value is quality, which needs to be given considerable attention and accurately controlled. The company relies on an internal control system, which guarantees achievement of such objectives, as efficiency and compliance with the relevant laws and regulations. Other departments of the organisation are manufacturing, marketing, sales, human resource, research and development, supply, communications and finance[39].

Rituals and Routines
Unchanged design of chocolate beans since 1941 may be viewed as one of the key rituals of M&M’s. The firm regularly organises informal events for its employees, which improve communication between organisational members and facilitate learning in the workplace. The slogan of the company illustrates the main distinctive feature of M&M’s chocolate beans: “Melt in your mouth, not in your hands”[40], which builds strong associations with M&M’s candies. This slogan stimulates customers to test the firm’s promise. Hence, eating chocolate beans that do not melt in hands has become another important ritual.

Another important analytical framework, which helps to understand the overall degree of rivalry in the industry where the company operates, is Porter’s Five Forces[41]. According to this model, each industry is influenced by five forces, namely supplier power, buyer power, threats of new entrants, threats of substitutes and degree of rivalry.

Supplier power
There are plenty of suppliers all over the world that sell cocoa beans. M&M’s buys considerable amount of cocoa beans and is dependent on prices set by the suppliers. Even insignificant growth of prices can result in increase in the prices for the final production by M&M’s. On the other hand, M&M’s can easily switch suppliers since it does not have long-term obligations. Thus, supplier power is low[42].

Buyer power
M&M’s is presented in more than 70 countries. This means that the firm’s customers are many and they are highly fragmented. No single customer can significantly impact M&M’s and their pricing policy. It can be concluded that the buyer power is low[43].

Threats of new entrants
New entrants in the confectionery market are possible. However, new market players need to meet huge capital requirements in order to enter the market and start accumulating large market share. For this reason, it may be assumed that the threats of new entrants are medium[44].

Threats of substitutes
There are plenty of other large multinational companies and highly recognisable brands in the confectionary market (e.g. Kraft Foods, Nestle, Hershey Co and Cadbury). If M&M’s will demonstrate weak innovativeness and creativeness in product range, customers can easily switch to alternative manufacturers and their goods. Threats of substitutes may be evaluated as high[45].

Rivalry
The degree of rivalry in the US and the UK confectionary markets is rather high. Wise management and pricing policies, as well as product quality and brand authority can be of great assistance in further market expansion and holding positions for M&M’s. The degree of rivalry is high[46].

The findings obtained from the Stakeholders Analysis may be illustrated the following way[47]. This technique is implemented to identify the key people in the organisational environment in order to win support and disposition from them.

Figure 2: Stakeholder Analysis[48]

[pic]

Taking into account that customers of M&M’s have low power, they should only be kept informed. Similarly, low power of suppliers allows M&M’s to monitor them with the minimum effort. Alternatively, M&M’s id highly dependent on the Mars family and Board. Employees as well as the public should be let satisfied since their productiveness and efforts determine success of the firm[49].

Hofstede’s Cultural Dimensions is an important framework that analyses five important characteristics cultural environment in which international companies have to operate[50]. The major cultural dimensions for several countries of M&M’s presence are revealed by the following histogram.

Figure 3: Hofstede’s Cultural Dimensions[51]

[pic]

It may be observed that the larges diversity and disparity between M&M’s countries of presence is observed in the dimensions of long-term orientation, power distance and individualism[52]. Masculinity characteristics, which emphasise materialism and competitiveness, are similar in the US, the UK, China, Poland and India, whereas Japan is different from these countries. It may be critically remarked that M&M’s is not a distinctive masculine brand, which makes it less suitable and appropriate for Japan. In the dimension of uncertainty avoidance, there is similarity between the US, China, the UK and India[53].

Finally, it should be mentioned that the Core Competences analysis was developed and theoretically grounded by Prahalad and Hamel in 1990[54]. The main assumption of the framework is that the core competencies of organisations lead to competitive advantages[55]. M&M’s core competencies are: • Highly recognisable design of chocolate beans; • High quality of candies; • Operational efficiency; • High volumes of production[56].

4. Complexity of Environment

Complexity of the environment proves to be one of the main challenges for M&M’s. It has been stated that M&M’s is a family business company. There are some critical challenges family business may face. The first and the most serious dilemma is related to mixing of family and business interests, which may lead to the conflicts of interests[57]. Different family owners may have opposite interests, and this can make the problem even more serious. It is important to note that such interest conflicts usually occur at the emotional level. Another aspect of complexity is a large size of M&M’s as a large multinational and family owned company. As a rule, large family companies have high degree of diversification and vertical integration[58]. It helps to increase the company’s revenue because the greater part of the family’s wealth is tied up in the business. There is another dilemma faced by M&M’s, namely how to maintain stable growth and make operations even more profitable. The point is that family companies have their unique cultures, which are created by the company’s founders[59]. Related stories, rituals and other aspects of corporate cultures prove to be an inalienable heritage of organisations. On the other hand, these cultural characteristics may be associated with inflexibility of organisational members and their unwillingness to change[60].

5. Business Challenges and Rationale for Leadership

One of the main business challenges for M&M’s today is a high degree of competition between the biggest confectionery manufacturers[61]. In order to remain competitive in the market, M&M’s needs to make innovations in technology and their product range, which will, in turn, attract customers and make them more loyal with respect to the firm’s production. However, it should be noted that the firm has already achieved some positive results in this area. For instance, ‘My M&M’s’ was launched and provided wider opportunities for customisation and more targeted appeal to the target population. In no time this sub-brand has become very popular among different customer categories[62]. On the other hand, there is one serious problem with the new sub-brand in terms of marketing strategy. The company cannot produce large amount of customised candies because of the technology and other limitations. The solution to this problem may be found in the increase of the production capacity, which helps to increase order amounts. Nevertheless, in this case, prices for candies can become higher, which will reduce demand. Taking into account that there is a high degree of competition among the multinational confectionery manufacturers, M&M’s needs to take responsible and serious steps in its product development. Otherwise it can be pushed out of the market by more innovative and attractive products manufactured by other companies[63].

Environmental safety and sustainable production have always been important questions to be discussed. It is a serious challenge to keep the environment safe and not to pollute it since it can damage business as well. Mars Incorporated realises the scale and importance of this problem. The company tends to reduce harmful emissions into the atmosphere in their plants and factories. Bigger plans to achieve sustainable production in M&M’s will have been realised by 2040[64]. Moreover, the company expresses willingness to achieve these objectives even if the business would grow, which means more pollution and greater releases of harmful emissions into the atmosphere[65]. The company may face different trade barriers, and this probability is rather high since M&M’s is a multinational company. The point is that there is no universal framework and standardised global rules. Every country is ruled by its own laws and regulators. This situation creates certain business challenges, which M&M’s needs to overcome[66].

Further market expansion is an important and useful strategy for M&M’s. The company produces considerable amount of chocolate beans every day. It is obvious that the firm needs supplies to produce the candies. Cocoa beans are the main input product of M&M’s candies. Failures in supply chain may lead to considerable problems in production, which makes cooperation with suppliers a significant tasks and a strategic priority[67]. The company ventured $10 million in a 10 years project, which will map all the genome of cocoa. This project’s aim is to create a cocoa tree, which will be resistant to diseases. Mars’ global director of plant science reported that “it is the appropriate choice for a stable, high-quality cocoa supply in the future. We think that this is what we are supposed to do as a responsible world citizen”[68].

It may be summarised that the pursued internal and external analyses have identified considerable number of business challenges experienced by M&M’s. These challenges and problematic issues are weak technological base, which does not allow for achieving full-scale customisation, insufficient innovation in product and package design, underestimation of the relationship with the suppliers of cocoa beans, conflicts based on the diversity of interests in the Mars family and flat organisational structure that limits further growth and makes interaction between the top management and employees more time consuming and less effective[69]. Furthermore, considerable trade barriers are experienced by the firm in overseas markets, and highly competitive business environment in the confectionary industry stimulates M&M’s to better organisational performance. Finally, it has been revealed that diverse marketing campaigns of M&M’s in different countries and cultural environments are excessively resource consuming[70]. It is hypothesised by the present report that the mentioned challenges and problematic issues may be solved by the relevant leadership and management strategies and implications.

6. Leadership and Improvement Options

The role of leadership and management in M&M’s as well as reasonable measures aimed at the solution of the previously mentioned problems may be addressed by means of McKinsey’s 7S Model. The framework assumes that strategic vision of organisations should be identified in the dimensions of strategy, structure, systems, staff, style and skills[71].

Figure 4: McKinsey 7S Model[72]

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In order to address the previously mentioned business challenges and problematic issues, strategic business vision of M&M’s should be modified to a certain degree. For instance, the choice in the favour of the flat organisational structure was made because of M&M’s ownership form and the importance of communication at different organisational layers as one of the major corporate values[73]. Nevertheless, it has been revealed that flat organisational structure serves as an obstacle to further growth of the company. Furthermore, interest-based conflicts in the Mars family add to the existing contradictions associated with the flat organisational structure. For this reason, it is essential to make the whole organisation more hierarchical and strengthen the role of middle management[74]. On the one hand, this innovation may contradict to the present corporate values of M&M’s. On the other hand, this change can make the whole company less dependent on conflicts on the top management team. However, it should be understood that this measure can be initiates only by the top management. Otherwise, the Mars family and the Board will be resistant to these innovations[75].

Serious changes and improvements should be made in the dimension of strategy. As it may be understood, strategy is also formulated by the management and should be viewed here as a managerial measure to improve organisational performance. In accordance with Ansoff Matrix, there are four main strategies such as market penetration, market development, product development and diversification. At the present moment, M&M’s follows the market development strategy, which means that new markets are won by the existing products[76]. Alternatively, M&M’s should change its strategy into diversification. The latter implies that new products should be introduced in new markets. This strategic priority is associated with the two main practical outcomes. Firstly, relatively new (but already existing) products of M&M’s should be launched in the new markets. For instance, the ‘My M&M’s’ has not been launched in the majority of the foreign markets. It may be explained by the fact that the importing strategy does not allow for launching ‘My M&M’s’ in the foreign markets since manufacturing facilities are necessary to print customised letters and images on candies. The second implication is that M&M’s should develop revolutionary new products, which are, however consistent with the firm’s culture, tradition and style[77].

Indeed, it has been revealed in the course of internal and external analyses that M&M’s lacks necessary innovativeness and creativity in terms of product and package design. On the one hand, the firm is said to remain its tradition in design since 1941, which adds to the reputation and popularity of the brand[78]. On the other hand, customers need to be offered new attractive products in order to increase the firm’s market share and maintain its competitive ability in the market. In this respect, one of the key implications for leaders and managers in M&M’s is to develop skills of their personnel. To be more specific, creativity and innovativeness of employees in Mars Inc. should be further cultivated[79]. The company has already undertaken a row of actions aimed at the creation of favourable and creative atmosphere in the workplace. However, these innovations are not enough to facilitate creative thinking and decision-making of the firm’s personnel. It can be critically remarked that there is a risk that new hierarchical organisational structure in M&M’s will have a negative effect on creativity and innovativeness of employees[80]. However, in this case, much depends on leadership styles and approaches to management, which will be implemented by leaders.

Another essential framework, which may be used for the proposal of the relevant organisation change in M&M’s, is Burke and Litwin’s model of change[81]. In accordance with the model, management practices in the organisation context are determined by the set of factors including leadership, organisational culture, mission and strategy, structures, systems, etc.

Figure 5: Burke Litwin Model of Change[82]

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It is essential to note that the discussed framework present organisational management strategies as dependent on the external environment, which is also consistent with the focus of this report that is based on environmental monitoring[83]. One of the most significant organisational changes that should be proposed to M&M’s is a culture-related change. It can be observed that the company has cultivated the ‘analyser’ culture until the present moment. It can be explained that this type of organisational culture implies focus on cost-effectiveness, building of strong competitive advantage and confident presence in the target markets. However, this approach to the culture should be changed into the ‘prospector’ type. The latter implies greater emphasis on innovation and creativity, which are necessary for M&M’s for new product and design development. It is estimated and forecasted that the new type of organisational culture in the firm can lead to middle-term positive changes in employees’ innovativeness, competence and creativity[84].

Another important aspect of organisational change in M&M’s should refer to leadership styles implemented by the management of the organisation. This direction of change is also consistent with the framework presented by Burke and Litwin[85]. It must be admitted that neither the Board, nor the chairman may be blamed for utilising autocratic and bureaucratic leadership styles. In this case, the company would have never achieved growth and popularity, which it enjoys now. Leadership styles implemented by the management team may be characterised as democratic and participative[86]. However, it would be more beneficial to cultivate more inspirational and transformational leadership styles for top and middle managers in the company. Again, this could have stimulated creativity and innovativeness among the personnel and could have solved the problem with new product and package design[87].

As it may be observed from the framework suggested by Burke and Litwin[88], appropriate management practices and good individual performance are linked in organisations through effective motivational techniques. These techniques are also essential to M&M’s to further rationalise and improve individual performance of workers. It is argued that high individual motivation of employees and creativeness and innovativeness in the workplace are directly interconnected. More motivated employees will allow Mars to maximise its competitive advantages in the conditions of a highly competitive business environment. Furthermore, motivation will be transferred throughout different organisational levels and will replace conflicts and pressures between employees and managers[89].

Furthermore, considerable leadership and management efforts are necessary to maintain the quality of supply materials and establishment long-term and reliable relationships with the company’s suppliers. It has been revealed in the course of investigation that M&M’s dependence on suppliers is frequently underestimated. For this reason, the management of M&M’s should regularly monitor quality of the suppliers and controls conditions in which cocoa beans are cultivates. It should be noted that the company has already done much to guarantee stable supply of cocoa beans in future. Furthermore, it is planned to cultivate decease-resistant cocoa trees in order to increase the quality of production. In this case considerable investment is necessary for M&M’s research and development projects in this sphere[90].

Finally, it should be noted that M&M’s should be more actively involved in the CSR activities. As a matter of fact, the company has many reasons to become more responsible in terms of sustainable production. However, one of the most positive outcomes of CSR activities will be growth of reputation and positive image of the company and better relationships with the local governments. In turn, better understanding with the officials may help M&M’s avoid limitations, trade barriers and tough legislation, which limit the firm’s operations in the domestic and foreign markets[91]. Nevertheless, it does not admitted by the present report that M&M’s should be motivated only by commercial stimuli in its CSR activities, which would be unethical[92].

7. Conclusion and Recommendation

Internal and external analysis of M&M’s have identified considerable number of business challenges experienced by the company, namely weak technological base, which does not allow for achieving full-scale customisation, insufficient innovation in product and package design, underestimation of the relationship with the suppliers of cocoa beans, conflicts based on the diversity of interests in the Mars family and flat organisational structure that limits further growth and makes interaction between the top management and employees more time consuming and less effective[93]. In addition, it can be concluded that considerable trade barriers are experienced by the firm in overseas markets. It has been revealed that M&M’s operates in a highly competitive business environment in the confectionary market, which stimulates the firm to better cost-effectiveness. Finally, it has been revealed that diverse marketing campaigns of M&M’s in different countries and cultural environments are excessively resource consuming[94].

It is recommended that M&M’s should carry out an organisational change that would touch upon leadership and management strategies in the company. In turn, these strategies will be able to guide the organisation in the challenging business environment. It is recommended that the flat organisational structure in M&M’s should be changed into more hierarchical, which will strengthen the role of the middle management[95]. This change is necessary because the present non-hierarchical structure serves as an obstacle to further organisational growth. However, it may be critically remarked that this innovation may contradict to the previous corporate values of M&M’s, which consist in barrier-free communication between the management and employees. On the other hand, this change can make the whole company less dependent on conflicts on the top management team. However, it should be understood that this measure can be initiates only by the top management[96].

It can be recommended that M&M’s should change its business strategy from market development into diversification. The latter implies that new products should be introduced in new markets. It means that M&M’ should implement creative approaches to developing new production present wide variety of products in the foreign markets. It should be noted that the recommended diversification strategy is consistent with the firm’s intention to develop strong competitive advantage in all markets of presence[97]. On the other hand, it may be critically remarked that diverse marketing campaigns and strategies implemented in different markets is rather costly. It is important to emphasise that this diversity of strategies is explained and rationalised by considerable cultural diversity in M&M’s markets of presence[98].

It can be also recommended that M&M’s should be more actively involved in diverse CSR activities and initiatives. If these activities are initiated by the management, the company will be able to establish better relationships with the governments and avoid additional restrictions, limitations and trade barriers. Another significant recommendation refers to leadership styles used in the company[99]. The present democratic leadership style used by the management should be made more inspirational and transformational. Again, this will have a positive effect on employee’s creativity, motivation and ability to perform better. In addition, the company should manage its relations and operations with suppliers very carefully since it determines quality and prices for M&M’s production[100].

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Watson, G., Kevin Gallagher & Michael Armstrong, Managing For Results, CIPD Books, London, 2005, p. 128.

Winer, R. Marketing management, Prentice Hall, California, 2000, p. 334.

-----------------------
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[32] MindTools, ‘The Cultural Web: Aligning your organization's culture with strategy’, , 2012, (Accessed 21 February 2012).
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[62] Russell Winer, Marketing management, Prentice Hall, California, 2000, p. 334.
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[67] Andrew Smith, Fast Food and Junk Food: An Encyclopedia of What We Love to Eat, ABC-CLIO, New York, 2011, p. 355.
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[97] Stewart Clegg, Martin Kornberger & Tyrone Pitsis, Managing & Organizations, Sage Publications Ltd, London, 2008, p. 273
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...ZARA: Fashion Follower, Industry Leader Business of Fashion Case Study Competition Amanda Craig, Charlese Jones and Martha Nieto Philadelphia University April 2, 2004 ZARA: Fashion Follower, Industry Leader Table of Contents Introduction………………………………………………………………….1 Financial Analysis and Comparison…………………………………………………….…………....1 Strategic Advantages………………………………………………………………...2-3 Strategic Drawbacks…………………………………………………………….….. 3-4 Possibilities for Failure…………………………………………………………………....…..4 Recommendations/Conclusion………………………………………………5 Calculations and Financial Statements……………………………………….……………….Appendix A Articles: The Recent Status of ZARA.……………………………………….…………………...Appendix B Works Cited Works Referenced The global apparel market is a consumer-driven industry. Also, globalization and new technologies have allowed consumers to have more access to fashion. As a result, consumers are changing, competition is fierce, and companies are evolving to meet these demands. Zara, a Spanish-based chain owned by Inditex, is a retailer who has taken a new approach in the industry. With their unique strategy, Zara has the competitive advantage to be sustainable. In order to maintain that advantage and growth they must confront certain challenges that face traditional retailers in the apparel industry. Financial Analysis and Comparison To prove Zara has the prospect of sustainable growth in the international apparel market, it is important to understand and compare the financial differences...

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...www.ebusiness-watch.org * info@ebusiness-watch.org CASE STUDY: HENNES & MAURITZ1 Abstract H&M is a very successful and expansive Swedish fashion group. H&M’s strategy has been developing along: • expansion, through the set up of a proprietary distribution network of centrally controlled stores • price-competitiveness and profitability, through very efficient management of production and logistics • very short lead times which ensure quick response to market trends and reduction of stocks H&M was a pioneer in pursuing a strategy of vertical integration with the distribution network. This strategy has allowed the company to directly collect and fully exploit information about sales and consumers in order to improve and accelerate response to the market Case characteristics • Sector focus Clothing • Business focus Large company • Geographical focus Worldwide Case objectives • Supply chain integration ÆÆÆÆ • Integration of internal processes ÆÆÆ • Integration of extended enterprise ÆÆÆÆ Æ = some relevance for case; ÆÆÆÆ = high relevance Background and objectives H&M is well known for being a successful and expansive company, both in terms of market and of financial performance. The company’s strategy is carried out along the lines of continuous expansion and search for most promising markets, cost-efficient production of goods, and reduction of lead times. H&M is also an example of competitive advantages brought by integrated e-business...

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...H&M Case Study Since 2000 Swedish retailer’s H&M growth rate is high. Its motto is to offer fashion and quality at the best price. Nowadays H&M’s growth target is to increase the number of stores by 10 – 15 percent per year, while increasing sales in comparable units. The growth will proceed with an emphasis on and continued high profitability. While entering the U.S. market in 2000, they face several problems. The primary problem of H&M is that it tries to expand around the world too fast without spending enough time to research and analyze the market it enters. In the United States they have chosen incorrect marketing mix strategy; consequently the company has low sales and low profits. Their lack of marketing mix strategy results in the following secondary problems: H&M has not taken into account the competition of inexpensive chains such as Express, Old Navy and Wet Seal. The U.S. customers are not aware of the higher quality of H&M products. So Swedish retailer is not able to compete with U.S. rivals effectively. Another problem H&M encounters in the U.S. market is its inefficient distribution network. Company has chosen too big outlets at poor locations in the suburbs, where they have a lot of direct competitors and few customers, who look for fashion and quality products. The company has suppliers in Europe and Asia, but not in America. It probably increases the turnaround period because of the long distance between suppliers and retailers...

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