This Activity is designed to be used in the classroom or as a homework task to support the teaching and learning of Business Economics.
Business Economics - Activity
Business Growth - Motives, Objectives and Conflicts: Philip Green and Marks and Spencer
During the summer of 2004, the retailer Marks and Spencer (M&S) received a bid for a takeover of the company by the entrepreneur Philip Green. Mr Green had expressed an interest in taking control of the clothing, food and housewares retailer for some time and made several bids for the firm, eventually settling on a price of 400p per share which valued the company at £9.1 billion.
The takeover bid was characterised by the 'battle' for the hearts and minds of M&S shareholders between Philip Green and the newly appointed Chief Executive, Stuart Rose. The process of the bid highlighted some of the key features of business growth and business economics. The aim of this Activity is to investigate and analyse some of these features.
There is a range of information on the takeover in the business sections of the main press sites. You will need to use some of these to help build up the story and analyse the issues.
Image: A Marks and Spencer store
- Ten days that shook the High Street - Observer article (http://observer.guardian.co.uk/business/story/0,6903,1232145,00.html)
- Turning principles into profits - Guardian article (http://www.guardian.co.uk/business/story/0,3604,1259507,00.html)
- Analysts are divided - Guardian article (http://www.guardian.co.uk/business/story/0,3604,1259833,00.html)
- D-Day on Baker Street - Observer article (http://observer.guardian.co.uk/business/story/0,6903,1258290,00.html)
- Green drops bid for M&S after small investors back Rose's revival campaign - Guardian article (http://www.guardian.co.uk/business/story/0,3604,1261667,00.html)
- Profile: M&S boss Stuart Rose - from the BBC (http://news.bbc.co.uk/1/hi/business/3766215.stm)
- M&S suitor is retail king - BBC article (http://news.bbc.co.uk/1/hi/business/3755195.stm)
The Activity will provide a series of relevant topic areas to explore linked to the theory. Ensure you go through or have access to the PowerPoint Presentation as you are following through your analysis.
Task 1:
The Philip Green takeover bid was contested by Stuart Rose. The basis of the argument between them was who would be better placed to develop the business. What might the motivation of the following stakeholders in the M&S story be?
- Stuart Rose
- M&S shareholders
- Institutional shareholders
- Private shareholders
- Philip Green
The original bid by Philip Green centred on a cash and shares offer. This was rejected by the board of M&S and was followed up by two further offers of cash only deals. The last of these was finally rejected following a meeting of M&S shareholders.
Task 2:
Look at the summary of the takeover attempt in the following two links:
- Q&A: M&S takeover battle - from the BBC (http://news.bbc.co.uk/1/hi/business/3872779.stm)
- Ten days that shook the High Street - Guardian article (http://observer.guardian.co.uk/business/story/0,6903,1232145,00.html)
What evidence is there in the story that the bid by Philip Green was never going to be enough to win over the shareholders?
Stuart Rose's series of interviews on the morning of 12th July set out his policies for reviving the fortunes of the retailer. The substance of those policies was vital in fending off the interest shown by his rival Philip Green.
Task 3:
Look at the following summary of his strategy:
- Q&A: Rose's M&S revival plan - from the BBC (http://news.bbc.co.uk/1/hi/business/3886161.stm)
- Is Marks & Spencer's decline terminal? - an outline of the problems faced by M&S from the BBC (http://news.bbc.co.uk/1/hi/business/3624961.stm)
In the light of the performance of M&S in previous years, critically assess the likely success of the strategy proposed by Stuart Rose.
Philip Green withdrew his offer following the support shown to Stuart Rose's plans by shareholders. He quickly made his intentions clear by announcing that he would step up the pressure on M&S and Mr Rose by intensifying the competition faced by M&S from his other retailing stores.
Task 4:
Read the following news story:
In the light of what you have read, evaluate the economic implications of the response by Philip Green for shareholders in M&S and customers in this market.