JOINT VENTURE AND

ACQUISITON
ANALYSIS OF A JV: MARKS AND
SPENCER AND RELIANCE RETAIL

AYUSH GAUTAM(BFT/14/632) & PRERNA

KHATRI(BFT/14/174)
MARKS AND SPENCER

Marks and Spencer, also known as M&A is a major British multinational retailer
headquartered in the City of Westminster, London. It is listed on the London
Stock Exchange and is a constituent of the FTSE 100 Index.

It specialises in the selling of clothing, home products and luxury food products.
M&S was founded in 1884 by Michael Marks and Thomas Spencer in Leeds. The
company also began to sell branded goods like Kellogg's Corn Flakes in
November 2008.

The company was founded IN 1884, by a partnership between Michael Marks, a

Polish Jew from Sonim and Thomas Spencer, a cashier from the English market
town of Skipton in North Yorkshire. The revenue of the company is
10.300 billion(2015) with operating income of 762.5 million (2015) and profit
481.7 million (2015).

Today M&S is one of the UKs leading retailers, with 1,382 stores worldwide and
no. of employees 83,069(2015), are committed to delivering sustainable value
for stakeholders by making every moment special through the high quality, own
brand food, clothing, and home products, offered both in the stores and online.

Quality innovation and choice are the hallmarks of their food business, which
accounts for 58% of the turnover.

As one of the UKs leading retailers, they sell stylish, high quality, own brand
Womenswear, Lingerie, Menswear, Kidswear, Beauty and Home products, serving
customers through their 302 full-line stores and website, M&S.com. The Clothing
& Home business accounts for 42% of their turnover and are the UKs largest
clothing retailer by value and have market-leading positions in Womenswear,
Lingerie and Menswear.

They have 468 stores across Europe, Asia and the Middle East, operated through
three different business models owned, franchise and joint venture to bring
out the quality in Clothing & Home collections and Food ranges to international
customers. They are a growing international online business delivered through
localised owned and franchise websites and through partnerships with leading
marketplaces.

HISTORY
M&S traces its history back to 1884 when Michael Marks, a Russian-born Polish
refugee, set up a stall at Leeds Kirkgate Market. Thomas Spencer joined him in
1894 to create Marks & Spencer

Spencer was a former cashier from the wholesale company IJ Dewhirst, and his
partnership with Marks helped the business grow quickly. In 1901 a new
warehouse and a head office opened in Manchester.

The advert from November 1930 marked the opening of M&Ss flagship store at
Marble Arch, London. A year later the company opened a food department,
selling fresh produce and canned goods.

M&S made its reputation as a retailer of British quality goods. In the 1970s it
still sourced most of its products from the UK - unlike now when they are mostly
made internationally.

Sir Richard Greenbury ruled M&S through the 1990s, and in 1998 it became the
first British retailer to make pre-tax profits of over 1bn. It took a decade until it
achieved this again. But Greenburys reign ended with bitter boardroom
infighting.

The same year, after a prolonged sales slump, chief executive Peter Salsbury was
ousted after two years in charge. Chairman Luc Vandevelde took full control of
the troubled company as the two roles were merged

With M&S sales in freefall in 2004 entrepreneur, Sir Philip Green plotted a
takeover bid. M&S turned to Sir Stuart Rose, then chairman of the British Fashion
Council, to turn things around and repel Green.

In 2001, Vandevelde closed down 38 stores across France, Germany and Spain in
a cost-cutting drive. M&S renewed its international expansion drive recently with
the opening of its first store in Dubai in autumn 2006. As well as 600 stores in
the UK it now has 240 stores in 34 countries

M&S launched its Christmas advertising campaign in 2006 with a TV ad starring

Dame Shirley Bassey. Done in the spy-movie genre, the ad featured five models
including Twiggy and Elizabeth Jagger acting as undercover agents while Bassey
delivered her version of Pinks Get the Party Started. Ad campaigns starring
Myleene Klass, Twiggy, Jagger and Noemie Lenoir have been credited with
reviving clothes sales.

Despite losing market share at the start of the year, M&S remains the most
popular destination in the country for underwear. Even though its quality has
been criticised by Newsnights Jeremy Paxman, who was quoted as saying: 'Their
pants no longer provide adequate support'.

In 2007 British supermodel Lily Cole joined the retailer's celebrity lineup. Rose
incurred the wrath of major shareholders when he was promoted to executive
chairman while keeping the chief executive job. Investors were told only a few
hours before the official announcement
SWOT ANALYSIS
SWOT Analysis of Marks and Spencer with USP, Competition, STP (Segmentation,
Targeting, Positioning) - Marketing Analysis

Marks and Spencer

Parent Company Marks and Spencers

Category Retail

Sector Lifestyle and retail

Tagline/ Slogan Quality worth every penny

One of the UK's leading retailers with around 21+ million

USP customers each week.

STP

Segment Cost conscious group

Target Group Upper class and upper middle class

Positioning High Quality within reach

SWOT Analysis

1. It is one of the most powerful retail brand with a top of the mi

recall
2. M&Ss products are perceives as value for money due to
quality, convenience and wide range of products.
3. They have their own branded labels
4. It has over 1000+ stores present across 40 countries
Strengths 5. Over 80,000 employees form a part of the workforce globally
 1. Strong competition from other retail brands means limited
market share
2. Being a popular brand, they need to protect their brand from
Weaknesses misuse of fake imitation products

1. M&S can develop their website

2. They can introduce new market segments that offer more pro
3. There are future opportunities in expanding their brand into
Opportunities China & India.

1. Other retail stores are a threat due to their discounted prices

2. M&S being a global retailer means they are exposed to differe
political facts in countries they work in.
Threats 3. Govt policies for retail stores

Competition

1. Aldi
2. Asda
3. Central
4. Tesco
Competitors 5. Farmfoods

RELIANCE RETAIL

Reliance Retail Ltd. is a subsidiary company of Reliance Industries. Founded in

2006 and based in Mumbai, it is the largest retailer in India in terms of revenue.
The revenue of the company is INR 216.12 billion (2016) with operating income
of INR 5.08 billion

Reliance Retail is the retail initiative of the group and is central to our consumer
facing businesses. It has in a short time forged strong and enduring bonds with
millions of consumers by providing them with the unlimited choice, outstanding
value proposition, superior quality and unmatched experience across all its
stores.

Reliance Retail has adopted a multi-prong strategy and operates the chain of
neighbourhood stores, supermarkets, wholesale cash & carry stores, speciality
stores and online stores and has democratised access to a variety of products
and services across diverse segments for Indian consumers.

Serving the food and grocery category Reliance Retail operates Reliance Fresh,
Reliance Smart and Reliance Market stores. In the consumer electronics category
Reliance Retail operates Reliance Digital and Reliance Digital Express Mini stores
and in fashion & lifestyle category it operates Reliance Trends, Reliance Footprint,
Reliance Jewel stores in addition to a large number of partner brand stores across
the country.

Reliance Retail has the distinction of being the largest retailer in the country.
Reliance Retails commitment to bettering the lives has been embodied in its
pursuit to make a difference on social socioeconomic issues in India. The
initiative has brought millions of farmers and small producers to the forefront of
the retail revolution by partnering with them for growth.

Deep insight into Indias economic, cultural and consumption diversity drives
Reliance Retails vision in the retail universe. The operating model is based on
customer centricity while leveraging common centres of excellence in
technology, business processes and supply chain. More importantly, it has built a
strong and unwavering foundation through its extraordinary people. Our
nationwide network of retail stores offers a world-class shopping environment
and unmatched customer experience.

Reliance Retail has emerged as the partner of choice for International brands and
has established exclusive partnerships with many revered international brands
such as Diesel, Superdry, Hamleys, Ermenegildo Zegna, Marks and Spencer, Paul
& Shark, Thomas Pink, Kenneth Cole, Brooks Brothers, Steve Madden, Payless
Shoesource, Grand Vision and many more.

Reliance Retail reported a turnover of Rs. 21,075 crore for the financial year
2015-16. As on 31st December 2016, Reliance Retail operates 3,553 stores
across 686 cities with a retail area of over 13.25 million sqft.

Reliance Retail Ventures Limited, a fully owned subsidiary of Reliance Industries

is the holding company of Reliance Retail Limited which operates the retail
business.

HISTORY
The Reliance Group, founded by Dhirubhai H. Ambani, is India's largest private
sector enterprise, with businesses in the energy and materials value chain. The
flagship company, Reliance Industries Limited, is a Fortune Global 500 company
and is the largest private sector company in India.

Dhirubhai Ambani founded Reliance as a textile company and led its evolution as
a global leader in the materials and energy value chain businesses. It was in
1957 when he returned to India after a stint with A.Besse& Co., Aden he started
yarn trading business from a small 500 sq.ft. office in Masjid Bunder, Mumbai.he
set up his brand new mill in Naroda, Gujarat. In 1996 Reliance went on to
become the biggest textile brand Only Vimal. In 1977 the Reliance Textile
Industries came with an IPO which was oversubscribed seven times.

Reliance enjoys global leadership in its businesses, being the largest polyester
yarn and fibre producer in the world and among the top five to ten producers in
the world in major petrochemical products.

Starting as a small textile company, Reliance has in its journey crossed several
milestones to become a Fortune 500 company in less than 3 decades.

Reliance Industries Limited operates worldclass manufacturing facilities across

the country at Allahabad, Barabanki, Dahej, Dhenkanal, Hazira, Hoshiarpur,
Jamnagar, Kurkumbh, Nagothane, Nagpur, Naroda, Patalganga, Silvassa and
Vadodara.

SWOT ANALYSIS
SWOT Analysis of Reliance Retail with USP, Competition, STP (Segmentation,
Targeting, Positioning) - Marketing Analysis

Reliance Retail

Parent Company Reliance group

Category Retail

Sector Retail and lifestyle

Tagline/ Slogan Aapki khushi hamari khushi

USP Trusted quality and strong backing of parent company

 STP

Segment Quality and price cautious group

Target Group Upper middle class and middle class

Positioning Quality and trust

SWOT Analysis

1.It is Indian retail chain with 900+ stores in 80 cities in India

2.Hyper market with 95000 markets with tailoring, shoe and wat
repair, laundry

3.It owns various private label brands

4.It has strong distribution network- 1600 channels in villages

Strengths 5. Strong backing of the parent company

1.Product variety is available but more SKUs are not present due
inefficient back end infrastructure

Weaknesses 2. Poor inventory control at certain locations is a concern

1.Sourcing directly from farmers; no middlemen could earn more

profit as number of farmers will increase five times in next 5 yea

2.Leveraging on brand name and entering into Reliance saloon

3.Large potential to reduce operation cost in cities using strong

Opportunities supply chain
 1. Strong competition globally from Carrefour, Metro A.G., Tesco

2.Operationg cost are too high

3.Wallmart is biggest competitor when it comes to sourcing/

Threats backward integration

Competition

1.Subhiksha

2.RPG group

3.Future Group

Competitors 4.Star India Bazaar

WHAT IS JOINT VENTURE??

A joint venture (JV) is a business arrangement in which two or more parties agree
to pool their resources for the purpose of accomplishing a specific task. This task
can be a new project or any other business activity. In a joint venture (JV), each
of the participants is responsible for profits, losses and costs associated with it.
However, the venture is its own entity, separate and apart from the participants'
other business interests.

ADVANTAGES OF JV

Provide companies with the opportunity to gain new capacity and

expertise

Allow companies to enter related businesses or new geographic markets

or gain new technological knowledge

access to greater resources, including specialised staff and technology

sharing of risks with a venture partner

 Joint ventures can be flexible. For example, a joint venture can have a
limited life span and only cover part of what you do, thus limiting both
your commitment and the business' exposure.

In the era of divestiture and consolidation, JVs offer a creative way for
companies to exit from non-core businesses.

Companies can gradually separate a business from the rest of the

organisation, and eventually, sell it to the other parent company. Roughly
80% of all joint ventures end in a sale by one partner to the other.

DISADVANTAGES OF JV

It takes time and effort to build the right relationship and partnering with another
business can be challenging. Problems are likely to arise if:

The objectives of the venture are not 100 per cent clear and
communicated to everyone involved.

There is an imbalance in levels of expertise, investment or assets brought

into the venture by the different partners.

Different cultures and management styles result in poor integration and

co-operation.

The partners don't provide enough leadership and support in the early
stages.

Success in a joint venture depends on thorough research and analysis of

the objectives.

THE JOINT VENTURE : MARKS AND SPENCER AND

RELIANCE RETAIL
Britain's largest retailer Marks and Spencer (M&S) opened at least 50 stores
across India in the five years after signing a path-breaking agreement with the
Mukesh Ambani-led Reliance Retail Ltd (RRL) in April 2008.

The two companies set up a new joint venture, Marks and Spencer Reliance
India, with an initial investment of 29 million pounds (Rs.2.3 billion), setting the
scene for major foreign investments in the lucrative Indian retail sector.

M&S holds 51 per cent stake in the JV, while the remaining is held by RRL. The
new firm is named as Marks and Spencer Reliance India Pvt Ltd.

The new stores were likely to be called as 'seamless malls' - massive shops
within shops and standalone boutiques selling mainly clothes and homeware - in
Mumbai, Delhi, Bangalore and other major cities.

The proposal awaited for approval from the Foreign Investment Promotion Board
(FIPB) of India for some time. Though the initial investment touched 29 million
pounds (in cash or in kind), both firms agreed to go for further funding as and
when required.

Commenting on the deal, Reliance Industries chairman Mukesh Ambani said:

"Marks and Spencer is a very well respected brand globally. At Reliance, we have
always strongly believed in the power of the Indian consumer market."

In the first five-year phase, the JV planned to open at least 50 stores across India
with M&S' existing franchise partner Planet Retail, through which the British
company currently sells clothes.

M&S chief executive Sir Stuart Rose said: "India is a very exciting opportunity for
M&S and a market where there is the potential for us to become a major retail
brand. Reliance Retail is the ideal partner for us to accelerate our expansion and
create the opportunity to open much bigger stores."

The M&S move into India was the first step in a major global expansion plan
announced in 2007, mainly pinned around India and China. The announcement
was a part of M&S' plans to grow its international business to 15-20 percent of
group revenues within next five years.

The new company has Mark Ashman as its CEO and Jatin Luthra as CFO.

They planned to open 100 stores in India by 2016 instead of 86 as their Indian
same-store-sales grew 13 percent in the fiscal year ended March 2014.

Same-stores-sales is a key performance metric for retailers and measures sales

growth at stores open for more than a year. Comparative figures from a year
earlier were not available.

M&S identified India as a priority market and Chief Executive Marc Bolland said
the company planned to offer more stylish and fashionable clothes to Indians
after years of struggling with brand positioning in the country.

M&S faced tough competition in India from the world's biggest fashion retailer
Inditex SA (ITX.MC) and its Zara brand.

"Together with our partner Reliance Retail, we are continuing to invest into
accelerating our growth in India as we build a leadership position in the market,"
said Venu Nair, Managing Director of Marks & Spencer Reliance India.

The company, which is present in India through a joint venture with Reliance
Retail, expected robust contribution from online sales.

"Our all stores are company owned and all the staff are on our rolls. Currently,
we have little over 1,300 employees and we are looking to hire 200-300 people
next fiscal as per our plans to open new stores," Marks & Spencer Reliance India
Head of Retail Mohit Bhayana said.

The sales, "In 2014-15, we achieved a growth of 23.1 per cent. We hope to
maintain around 20 per cent growth in the next three years." Bhayana said

Talking about the online stores, the company has started selling its products
through ecommerce sites like Myntra and Flipkart.

"These two sites account for huge portion of online clothing sales in India and we
are present in their platform. So far we have received very good response and
we hope to increase our sales in coming days," Bhayana said.
Out of the total online sales, 25 per cent is going to North Eastern locations, he
added.

The company has 54 stores located in 24 cities, including Delhi, Amritsar,

Mumbai, Pune, Kolkata, Bengaluru, Chennai, Kochi, Baroda, Kanpur, Hyderabad
and Chandigarh.

OTHER JVs of RELIANCE INCLUDE

QuickSilver
Bharat petroleum
International Lifestyle Brands
Reliance Industries and BP announced the incorporation of India Gas
Solutions, a 50:50 joint venture company, to globally source and market
natural gas in India. It also developed infrastructure for transportation and
marketing of the gas.
Quiksilver planned to form 51:49 JV in India, which helps the former to
consolidate Indian sales in its global revenue. The NYSE-listed Quiksilver,
through a European subsidiary, has sought permission from the Indian
Government to float a 51:49 JV with Reliance, with which it had a
distribution agreement till now.
Reliance formed JV with Iconix Brand Inc, grabbing the ownership rights of
20 international lifestyle brands. The company has partnered with brands
including big boys like Diesel, Hamleys, Ermenegildo Zegna, Kenneth Cole
and Timberland.

REFERENCES
http://timesofindia.indiatimes.com/business/india-business/Marks-Spencer-will-
continue-to-expand-in-India/articleshow/55312512.cms

http://economictimes.indiatimes.com/industry/jobs/marks-spencer-to-hire-up-to-
300-people-in-india-next-fiscal/articleshow/51227731.cms

http://corporate.marksandspencer.com/media/press-
releases/archive/2008/18042008_marksandspencergroupplcandrelianceretailann
ouncejointventureinindia

https://www.ft.com/content/8c37ac3a-2946-11e4-8b81-00144feabdc0