The European Dimension - Essay Example

The European Dimension Table of Content Serial Number & Chapter Heading Page Number 0 Introduction 02 2.0 Executive Summary 03 3.0 Overview 05 4.0 European Law 06 5.0 Analysis (Against) 10 6.0 Analysis (For) 12 7.0 Conclusion 12 8.0 Bibliography 13 1.0 Introduction Quality, value, service, innovation and trust, are the virtues associated with Marks & Spencer. In 1894, Michael formed a partnership with Tom Spencer, a former cashier from the wholesale company IJ Dewhirst. Today, Marks & Spencer have over 450 stores spread across the United Kingdom, and have 150 stores in 30 countries worldwide (Marks & Spencer, Marks & Spencer-The Company, www2.marksandspencer.com [Accessed 20 August 2006])1. Marks & Spencer are one of the UK’s leading retailers, with over 15 million people visiting their stores each week. They offer their customers a wide range of stylish, high quality, great value clothing, home products, and quality foods. They are able to maintain this quality through their well sourced list of trusted suppliers (1900 suppliers) from around the globe to ensure CSR standards. Marks & Spencer is a publicly owned company with around 290,000 shareholders, many of whom are customers, and present and past employees. The majority of products sold in the retail stores are own brands (2006, Corporate social responsibility report, www2.marksandspencer.com). This focus of this paper will be to: 1. Identify the objectives and purposes that drive Marks & Spencer 2. Investigate the key features of the local and national economy in which Marks & Spencer operates 3. Investigate the external factors which influence the organisation 4. Analyse the impact of European Union policies it 5. Should UK be allowed to enter the European Monetary Union? 6. Finally, a look at the likely impact on Marks & Spencer in the context of the proposed enlargement of the European Union 2.0 Executive Summary Marks & Spencer was named as the leading UK retailer responsible for fish sourcing by Greenpeace, and Marine Conservation Society. Similarly, RSPCA recognised them for their animal welfare policy and launch of a range of clothing made from Fairtrade certified cotton in clothing. Marks & Spencer has been included in the Dow Jones Sustainability and FTSE 4 Goods index. They converted all the roast, ground, and instant coffee to Fairtrade, and became the first major UK high street retailer to launch a range of clothing made from Fairtrade certified cotton (An extract from the Chairman’s speech on the occasion of CSR) (Marks & Spencer-The Company, www2.marksandspencer.com [Accessed 20 August 2006]).2 Marks & Spencer work to protect the environment and animal welfare, and have made huge contributions in the development of community services in countries where they have their presence. The company’s hard work has seen them included in the Dow Jones Sustainability and FTSE 4 Good Indexes and ranked equal 20th with a score of 95% in Business in the Community’s Corporate Responsibility Index (Marks & Spencer-The Company). They manage CSR under Product, People and Places. Some of their achievements in this direction are listed below: 1. Marks & Spencer was the 1st major UK retailer to start selling Fairtrade cotton clothing. 2. 68% of M&S managers are women and 14% of all our employees are from ethnic minority backgrounds. 3. 9% less carbon dioxide emissions compared to 2002/03 from energy used to power M&S stores and offices. 4. 90% of M&S stores have had HCFC gases replaced in refrigeration systems. 5. 97% of customers said that CSR was important in recent research. 6. 90% of our food that contained hydrogenated fats and oils have had them removed. 7. 102,000 days training for M&S people. 8. 6,000 people have benefited from our ‘Marks & Start’ work experience programme 9. All the tea and coffee drinks served in our Café Revive are Fairtrade. 10. Recognised for their fish sourcing behaviour, named global Seafood Champion by the Seafood Choices Alliance at the International Boston Seafood Show. 11. For selling sandwiches in cardboard packs made from well-managed forests, Marks & won the Best Retail Recycling Initiative, and the 2005 Institute of Grocery Distributors (IGD)/Tetra Pak Environmental Award. 12. Marks & Spencer removed potentially harmful hydrogenated fats and oils from their foods. By April 2006, they removed 90% of potentially harmful hydrogenated fats and oils from affected products. 13. In keeping with government guidelines, Marks & Spencer employed more disabled and homeless people. They seconded a manager to Sri Lanka to oversee the use of a £250,000 donation from the Company to help re-build 80 homes destroyed by the tsunami. Another initiative on humanitarian grounds was for Breast Cancer. The company raised a total of £1.5m through the sale of pins, wristbands, clothing and food products, and fundraising in their stores. 3.0 Overview The United Kingdom, from the census gathered from 2001 showed the total population of the country at 58789194 of which, 28579869 were men, and 30209325 were women. At the same time London, based on data released on or before 13 February 2003 showed a population of 7172091. Of these 3468793 were males and 3703298 women. Minorities made up of 436993 Indians, 378933 Black Africans, and 343567 black Caribbean. Those who were permanently sick or disabled were 242408, while those who were inactive, stood at 229804 (2006, National Statistics, Census 2001, www.statistics.gov.uk/census2001/profiles/h.asp [Accessed 22 August 2006])3. The UK economy grew at its fastest rate for two years in the second quarter of this year, said the Office for National Statistics (ONS). UK GDP grew by 0.8% between April and June, compared to the previous quarter. Growth of 0.7% had been expected. This took the growth rate up to 2.6% and boosted the chance of Bank of England raising interest rates. Strong retail sales and housing market were the primary growth engines. The ONS figures exceeded Chancellor Gordon Browns forecast of the economic growth this year, and the latest figures have done his confidence in the labour party no harm. The football World Cup also fuelled shopping growth. Pubs and hotels saw their business output increase by 1.2% during this quarter. Weak output in manufacturing industries contrasted with the strong retail sector. (2006, UKs economic growth accelerates, BBC NEWS | Business | UK economy shows recovery signs, news.bbc.co.uk/go/rss/-/1/hi/business/4632832.stm [Accessed 22 August 2006])4. Marks & Spencer attracts and retains culturally and socially diverse workforce. Because of this, they have been successful in recruiting talented people. As an equal opportunity employer, the company has been able to create an atmosphere that instigates their talent and ability for the cause of the company. The workplace is an oasis, free from discrimination, harassment or victimisation, an important aspect of man-management. All are equal irrespective of their age, colour, disability, gender, race, sexual orientation, and so on. A survey of the workforce in 2001 showed that Marks & Spencer had 50% of its workforce as women. There were 8% workers who represented the ethnic minorities. This figure was soon to change as in 2005, the census showed that there were 77 % women employees and 68 % of the managers were women. There were 14% employees who were from the ethnic minority and 8% of them were managers. 24% of the workforce saw people over 50 years, and there were 24% of people who were in service for over 10 years. This speaks well of the workplace culture practiced by Marks & Spencer. This is in keeping with government policies to encourage equal employment opportunities to the less privileged section of society (Marks & Spencer, Marks & Spencer-The Company, www2.marksandspencer.com [Accessed 22 August 2006])5. 4.0 European Law The European Union is based on the rule of law. All activities between any Union member and other nations must be agreed upon by other member states. Everything that it does is derived from treaties voluntarily and democratically accepted by member states. Treaties nonetheless keep updating with developments in society. The Constitution of Europe replaced all existing Treaties with a single text, worked on by the Convention on the Future of Europe and an Intergovernmental Conference (IGC). The Constitution was adopted by the Heads of State and Government at Brussels European Council in 2004. The European Unions economic policy is based on close coordination of Member States economic policies, internal market, and on the definition of common objectives. Member States must conduct their economic policies to contribute to the achievement of the Unions objectives; respect the principle of an open market economy with free competition, and regard their economic policies as a matter of common concern among other Union States (Economic Policy, EUROPA - The EU at a glance - European treaties, A Constitution for Europe, europa.eu [Accessed 22 August 2006])6 The European Monetary policy designates the euro as the currency of the Union and the Unions symbols. The Constitution then describes the Unions powers with regard to monetary policy. The Union grants exclusive competence for those Member States that have adopted the euro. Those Member States that have not adopted the euro will keep their own powers over monetary policy (Monetary Policy, EUROPA - The EU at a glance - European treaties, A Constitution for Europe, europa.eu [Accessed 22 August 2006]). European Union law states that it is illegal for businesses, including professions, to conspire with each other to fix prices or share markets among themselves. If a company is dominant in any particular market, it should not in any way abuse its market power to dictate. It should also refrain from exploiting weaker companies from negotiating with its smaller customers and suppliers. Large firms are not permitted to impose conditions on its suppliers to do business with other companies. The Commission can fine companies for such practices. The Commission can and will allow companies to cooperate in developing technical standards that help sustain industry growth. This move is quite beneficial for smaller companies as it helps strengthen their ability to compete with the more established companies. There are exceptions to this law. Some co operations may require Commission approval, but most others are covered by the above rule. The ultimate benefit should go to the consumer and must in no way harm competition. Commission could impose a ban or levy penalties if an established company were to merge and takeover another to quell competition. This could have adverse effect on the market, leaving it stifled, and crush consumer decision making significantly. In practice, most mergers are cleared without further action being necessary In an open economy like that of the European Union, monopolies are a rarity. The effects of such a situation can be ill afforded. High prices and poor service are synonymous of this trend. Exceptions and subsidies are allowed for inherently uneconomical services such as postal deliveries in rural areas. The Commission does pay a lot of attention to essential service industries, like the gas and electricity sector, to ensure that the established players and new entrants play fair, and maintain competitive pricing to the consumer (2006, Europa- Activities of the European Union, Overviews of the European Union activities, Competition, europa.eu/pol/index_en.htm [Accessed 22 August 2006]).7 The Agreement on the European Economic Area (EEA Agreement) provides for greater cooperation in the social field between the European Community and Member States on the one hand, and countries of the European Free Trade Association participating in the European Economic Area (EFTA/EEA), on the other. Provision should be made to open up this programme to participation by the candidate countries of Central and Eastern Europe, in accordance with the conditions established in the Europe Agreements, in their additional protocols and in the decisions of the respective Association Councils of Cyprus, Malta, and Turkey, funded by additional appropriations in accordance with the procedures to be agreed with those countries (COUNCIL DECISION of 27 November 2000 establishing a Community action programme to combat discrimination (2001 to 2006) Labour: The prohibition of age discrimination is paramount to meeting the aim in the Employment Guidelines and encouraging diversity in the workforce. Differences in work ethics with the aged may be considered under certain circumstances and requires specific provisions in accordance with the situation of Member States (25, COUNCIL DIRECTIVE 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation) Prohibition of discrimination should be without prejudice to the maintenance, or adoption of measures intended to prevent or compensate for disadvantages suffered by a group of persons of a particular religion, belief, disability, age, or sexual orientation. Such measures may be permitted to groups of people of a particular religion or belief, disability, age or sexual orientation wherein the main objective is the promotion of the special needs of those people (26, COUNCIL DIRECTIVE 2000/78/EC, of 27 November 2000 establishing a general framework for equal treatment in employment and occupation) In order to guarantee compliance with the principle of equal treatment in relation to persons with disabilities, reasonable accommodation shall be provided. This means that employers should take appropriate measures to enable a person(s) with disability, to have access to, to participate in, to advance in employment, or to undergo training, unless such measures impose a disproportionate burden on that employer. This burden shall not be disproportionate when it is sufficiently remedied by measures existing within the framework of the disability policy of the Member State concerned (Article 5 Reasonable accommodation for disabled persons, COUNCIL DIRECTIVE 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation) (COUNCIL DIRECTIVE 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation, Official Journal of the European Communities, Employment, Social Affairs and Equal Opportunities - Labour Law and Work Organisation, ec.europa.eu/employment_social/labour_law/index_en.htm [Accessed 22 August 2006])8 5.0 Analysis (Against) 1. Marks & Spencer had sold its nine Spanish outlets to Spains largest retail chain El Corte Ingles. This move almost completed Marks & Spencer’s plan, to cut costs by winding up its mainland European operations. The company now had just four stores in Europe (Portugal, the Netherlands and Luxembourg), down from 36. All 800 employees of Marks & Spencer would retain their jobs. 2. Earlier the same year, Marks & Spencer had sold their Belgian stores and in the process sacked their entire workforce. The reason quoted was the management’s inability to find a local buyer. This infuriated the workforce and to protest against this ill-treatment, staged mass protests. 3. The same was the case with Marks & Spencer’s French operations. Protests erupted in France as well, until retailer Galeries Lafayette came forward to buy it. The company faced legal action from former employees for breaching European Union legislation that obliges employers to consult their staff over major strategic decisions. Termination of operations was a major strategic decision. Marks & Spencer also did not reveal the transfer/purchase price set with the Spanish retailer. All the three cases involving Marks & Spencer were against EU Labour laws. Personal reasons not withstanding, Marks & Spencer were guilty of breach of contract with the EU. This made their entry into the European Union mainstream difficult. Marks & Spencer will find the rules set out for operations and mergers difficult to apprehend. They are a leading retail company based in the United Kingdom and the idea to expand their business interests in Europe will obviously clash with the single market theory prevalent there. Mergers and competition will improve M&S image and market share. M&S will also be affected by the ruling on suppliers and negotiations. Thus, M&S will not find the going to their liking in the event of a re-launch in the European Union. In order to cover the damage for its withdrawal from Europe, Marks & Spencer set aside £224m. Analysts predicted that the firm could show profits first time in two years. Shares rose nearly 2% on the London Stock Exchange. (2001, Marks & Spencer Sells Spanish stores, BBC News Online, news.bbc.co.uk/1/low/business/1634305.stm [Accessed 22 August 2006])9 6.0 Analysis (For) Marks & Spencer is an equal opportunity organisation that strives to encourage the weaker sect of society to partake in its growth. The company has been recognised for its endeavour to support women and ethnic minorities in its growth. The rule applicable to labour in the European Union is a welcome sight. They are also known to be good educators. Training is their forte. These features can only enhance their reputation in the EU. Also the fact that, despite the single market theory, Marks & Spencer will be able to establish their brand and credibility is a cause for celebration. 7.0 Conclusion Despite their earlier closures, Marks & Spencer have a lot to gain by entering the European Union again. To sustain their growth and profits, Marks & Spencer would need to develop their image in Europe. Perhaps mergers and takeovers may be a worry in the short-term. With their environmental friendly products that costs much less to conventional products, Marks & Spencer will be able to benefit from the single market theory. Their entry would therefore enhance their image and help in getting a strong foothold in the European market. 8.0 Bibliography 1. Marks & Spencer, Marks & Spencer-The Company, www2.marksandspencer.com/thecompany 2. UKs economic growth accelerates, BBC NEWS | Business | UK economy shows recovery signs, news.bbc.co.uk/go/rss/-/1/hi/business/4632832.stm 3. National Statistics, Census 2001, www.statistics.gov.uk/census2001/profiles/h.asp 4. Marks & Spencer Sells Spanish Stores, BBC News Online, news.bbc.co.uk/1/low/business/1634305.stm 5. EUROPA - The EU at a glance - European treaties, A Constitution for Europe, europa.eu/abc/treaties/index_en.htm 6. EUROPA- Activities of the European Union, Overviews of the European Union activities, Competition, europa.eu/pol/index_en.htm 7. COUNCIL DIRECTIVE 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation, Official Journal of the European Communities, ANTI-DISCRIMINATION IN EMPLOYMENT AND OCCUPATION, Employment, Social Affairs and Equal Opportunities - Labour Law and Work Organisation, ec.europa.eu/employment_social/labour_law/index_en.htm Read More