Marks and Spencer Merger with Sainsbury Essay

1350 Words6 Pages
Title of Modules: Strategic change in organizations, Creativity & Innovation, Strategic HRM

Strategic Change
Unit 3 1. Background to organisational strategic change.
Marks and Spencer plc is a UK-based company. Many people regard the business as a national institution. It is lovingly called "M&S" and "Marks and Sparks". M&S is known as a best retailer. There are over 370 Marks & Spencer stores throughout the UK that sell clothing, food and household goods. The core of its retailing business is clothing, particularly women's. Over 80% of Marks & Spencer's stores are sited in traditional high street locations. More than 10 million customers a week buy products from one of its stores. An increasing number of
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M&S clothing could also be sold through Sainsbury's stores, providing a powerful boost to the supermarket's non-food business. Last night one City analyst said there was a "lot of logic surrounding the deal" and suggested a move could come soon.
He said: "M&S have a fantastic property portfolio, there would be huge synergies between the two companies. M&S is strong in non-food, Sainsbury is strong in food and Sainsbury is desperately trying to get into non-food so a deal is a possibility. It would also help to find a successor to Sir Stuart Rose."
Despite Rose persuading the City that the company's profits are going to take a hit while the recession lasts, he has enraged some shareholders by breaching the City's best-practice standards with his twin roles of chairman and chief executive.
City investors and local authority pension funds that hold shares in M&S have demanded that the company appoint an independent chairman or a new chief executive by next summer, and it is now widely expected that Rose will step down long before the mid-2011 deadline set last year. A potential tie-up between the two has been rumbling ever since Rose let slip at a retail conference in 2007 that his shareholders would consider him "an idiot" if he did not think about mounting a takeover, before adding: "Watch this space."
But since then, the fortunes of the two have changed. While M&S is struggling against a
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