A firms relationship with its business environment - Marks and Spencer
in recent times the competition has increased. The Chairman of Marks and Spencer was quoted as saying “When our customers and the high street began to change, we failed to change with them”. Due to the increase in competitors and the decline in Marks and Spencer it could be said that they are in threat of joining the Imperfect competition structure, where there are many firms who own a smaller share of the market.
SHIFTS IN SUPPLY IN MARKS AND SPENCER
There are many factors that can be considered influential on the shifts of the supply curve within a firm.
Land – If the costs of the mortgage on a factory, a fixed cost, decrease due to fluctuations on interest rates then the supply will increase due to more money the company saves, shifting supply to the right. I.e. if costs rise the supply may decrease causing a leftward shift.
Labour -If the labour costs are low and productivity high then more can be produced hence, supply shifts right. If the output decreases, and wages rise supply shifts left.
Fixed Capital- If the firms resources cost less or machinery is more technologically advanced increasing performance then this will shift supply right. If the machinery increases in price or weakens in quality supply will shift left.
Others maybe, the variable costs of the firm, such as price of raw materials, and indirect and direct taxes.
In Marks and Spencer a specific supply shifter is the decision to buy clothes on the open market. Purchasing from the UK has proved too expensive. Labour costs in the UK are that much higher than in the Far East.
WHY MARKS AND SPENCER MADE A LOSS LAST YEAR
Marks and Spencer, proved by last year’s financial statement, had made a total loss in their profits from the previous year. This was due to a lack of knowledge towards the needs and wants of the customer. Marks and Spencer recognised that they failed to keep up with the changes developed by customers and other high street stores.
The company Chairman and Directors have been working on an intensive programme of change by restructuring the firm, working to recapture fashion for younger women and considering relationships with manufacturers on quality issues. They are also expanding their departments in home furnishings, stationery and cosmetic products.
The main aim of the firm is to regain the trust of all stakeholders.