Marks and Spencer 2013 Annual Report Download - page 49

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Governance Marks and Spencer Group plc Annual report and financial statements 2013 47
Overview Strategic review Financial review Governance Financial statements and other information
Description Mitigating activities
Selling channels: We have ambitious plans for our UK, International and Multi-channel businesses as part of our
commitment to becoming an international, multi-channel retailer
Multi-channel
A new multi-channel platform with flexibility to
support future growth is not delivered by the time our
contract with Amazon expires
To achieve our target to become a leading multi-channel
retailer and to make our brand more accessible, we are
investing in a new online platform that will provide both an
enhanced shopping experience and help to accelerate
growth.
– Robust programme governance in place with clear
identification of interdependencies with other Group initiatives
–Phased approach to implementation
–Agreed quality assurance plan for programme delivery
–Close working with Amazon to ensure the quality of the existing
online offer is maintained during new platform delivery
International
Our plan to grow our international business is limited
by performance in legacy markets, the start up
profitability of new markets or substandard
infrastructure
To increase our international presence and build a leadership
position in priority markets it is crucial that we maximise our
performance in both legacy and new markets, supported by
robust systems and supply chain capability.
–Frequent monitoring of performance, including individual
country reviews
–Particular focus on like for like performance and poor
performing stores
–Property Board approval of new store openings and monitoring
of returns on investment, plus creation of key roles to facilitate
delivery of property pipeline
–Representation of International in key Group initiatives
Day-to-day operation: We are a customer-centric business and strive to deliver an efficient and effective operation
GM stock management
Ineffective stock management control impacts either
gross margin delivery or product availability
Effective stock management is integral to ensuring that we
provide good availability to our customers, whilst minimising
the impact of markdowns on profitability.
–Stock, Sales & Intake tool used consistently across GM to plan
and manage stock levels
–Regular commercial reviews to monitor stock levels and
improve overall stock control
–Tight control of promotional activity
–UK stock ledger now live and the implementation of supporting
Business Insight reporting underway
–Established inventory control team to ensure stock data
integrity
IT change
Unforeseen impact of IT changes to new and existing
systems disrupts business operations
As we undertake a number of significant change
programmes, the rate and scale of IT change is increasing,
with potential to significantly impact our complex and
interdependent systems.
–Established Change Approval Board process
–Clear decision making process for system changes, including
the adoption of change freezes during critical trading periods
–Proactive management of cross programme dependencies
including ‘release management’ to group system changes
together
–Robust Disaster Recovery plans in place for critical business
applications
The Group Risk Profile reflects the most important risks facing the business at this point in time; these risks
receive specific attention by the Board to ensure that sufficient mitigating activity is in place to reduce net risk to
an acceptable level. The Group Risk Profile will evolve as these mitigating activities succeed in reducing the
residual risk over time, or new risks emerge. As such, we have removed a number of risks from our Group Risk
Profile since the prior year:
–Last year we included Business continuity on the Group Risk Profile in response to the heightened level of risk driven by the
UK’s summer 2012 events. With the risk now returning to a normal level it has been removed, recognising the strength of our
controls in this area
–Financial position, Corporate reputation, New store format, Key supplier failure and IT security have also been removed in
recognition of the actions taken to reduce the net risk position
The above risks remain important and they continue to be monitored as part of ‘business as usual’ activities; however, we
consider that they do not represent key risks to our business at this time and they have therefore been removed from the
Group Risk Profile.
The risks listed do not comprise all those associated with Marks & Spencer and are not set out in any order of priority. Additional
risks and uncertainties not presently known to management, or currently deemed to be less material, may also have an adverse
effect on the business.
Further information on the financial risks we face and how they are managed is provided on pages 101 to 106.