Impact of Macro Environment and Internal Capabilities on Business Strategy

This report discusses the impact of macro environment and internal capabilities on business strategy, using Morrisons as a case study. It covers frameworks such as PESTEL analysis, Ansoff matrix, SWOT analysis, McKinsey's 7S model, and VRIO framework. The report also explains Porter's five forces model for evaluating forces within the organization.

Business Strategy

Table of Contents
INTRODUCTION ...............................................................................................................................3
TASK 1 ................................................................................................................................................3
P1 Use appropriate frameworks and impacts of macro environment in given organisation
strategies..........................................................................................................................................3
TASK 2.................................................................................................................................................6
P2) Examine the internal capabilities and internal environment within the organisation. .............6
TASK 3.................................................................................................................................................9
P3) Explain the porter's five forces model in order to evaluating forces within the organisation. .9
TASK 4...............................................................................................................................................10
P4) Use a range of theories, concepts and models as well as interpret and devise strategic
planning.........................................................................................................................................10
CONCLUSION .................................................................................................................................13
REFERENCE.....................................................................................................................................14

INTRODUCTION
In business sector, strategy and tactics play important role in development and growth of
enterprise. Business strategy is defined as process of set of actions or tactics that are used to
achieve competitive benefits. It is important for business to implement strategies so that goals are
achieved in effective manner. Morrisons, a large supermarket chain headquartered in U.K. Firm
deals in groceries, daily consumable items etc (Kahre and et.al., 2017). It providing wide range of
products and services offered for customers in order to achieving organisation goal and objective of
company. It has wide range of competitors such as Tesco, Sainsbury, Walmart etc. This report
comprises of impact of macro environment, internal and environment capabilities, frameworks,
Porter Five Force model and theories & models for strategic planning.
TASK 1
P1) Use appropriate frameworks and impacts of macro environment in given organisation
strategies
Macro environment is defined as factors which occur outside enterprise and affects overall
organisational structure externally. Strategy is defined as set of actions or tactics to achieve
competitive advantage. In relevance of Morrisons, they to determine those external factors
PESTEL Analysis is being used and is further explained below-
Political factors-
It is first element in which it includes environmental law, labour law, policies, rules and
regulations etc. It also impact upon company's strategy as due to change in labour law they have to
revise their strategy again which leads to time consuming. In reference of selected firm, to
implement strategies company has to properly follow government legislations related to foods and
supply retailers.
Positive impact-:Main positive effect of this factor is that Morrisons following proper
procedures & analysing these impacts leads to increase of goodwill.
Negative impact-: The greater impact on political issue because they highly impact on trade
policies so affect the business operation and functions (Swaffield and et.al., 2019).
Economic factor-
It is another component in which it comprises of tariff and non tariff, foreign trade policies,
foreign exchange rates etc. In context of Morrisons, this factor impact upon organisational strategy
as due to Brexit there has been a fluctuations in currency which is affecting business operations of
company.
Positive impact-: Positive impact refers organisation easily expand their business operation

due to economic condition of United Kingdom is good.
Negative impact-: It includes ample numbers of competitors are present at marketplace so
accordingly they serves the customers so it affect the profitability and productivity of company.
Social factor-
In this element of PESTEL analysis, it includes habits, attitude, perception, of customers,
society, etc. It is essential to be aware about these factors so that marketing and activities are carried
out accordingly. In viewpoint of Morrisons, they distribute their products relying on taste of
customers & market sales ratio. It includes organisation know about the taste and preferences of
customers and accordingly served for customers (Haseeb and et.al., 2019). In context of
organisation, it involves conducting market research in order to know about the market trends,
customer taste and preference due to aware about the taste of customers.
Positive impact-: They conducting proper research so accordingly providing services and
product so easily achieving satisfaction level of customer.
Negative impact-: In present context, it includes technology are changes very first so
accordingly changes in trend so affect organisation services and business.
Technological factors-
This factors plays important role in order to providing innovative products and services to
customers. There are ample factors which affect the business operation and their policy is Morrison
utilised advanced technology which result as easily manufacturing products and services so serves
to customers. It involves they providing innovate products so according fulfil the needs and wants
of customers which helps to developing their brand image in the market.
Positive impact-: It includes utilising various technology which result as retail businesses
helps to achieving organisation goal and gaining competitive advantages at marketplace.
Negative impact-: It involves organisation not using advanced technology so affect the
business profitability and productivity of company.
Legal factor-
It is process which refers to various various laws, legislation such as employment contract
act and wages act so organisation adhered to follow such rules and regulation on that basis smoothly
run the business operations (Majid and et.al., 2020). In relevance of Morrison, it includes
organisation followed such rules and condition which help to easily operate the business.
Positive impact-: Organisation followed the rules and regulation so easily conducting
business functions.
Negative impact-: It includes various process which refers to changing that process so
impact the business models.
Environmental factor-

It includes various process which refers to sustainability of business depends on this factors. In
relevance of organisation, it includes utilising recycle products, wastage of products so they helps to
developing brand image in the mind of customers.
Positive impact-: Organisation utilised this process so they developing their brad image in
the market.
Negative impact-: There is lot of pressure regarding the utilising eco-friendly products so
they are not using such kinds of products it impact on business profitability and productivity.
Ansoff matrix
It is strategy which are using by business model in order to gaining competitive advantages
as well as developing brand image in the mind of customers. In context of Morrison, it utilising this
tools and techniques which helps to achieving organisation goal and objectives (Bui, 2017).
Product development-: This is strategy which includes organisation developing new product
for market so they helps to attracting large numbers of customers.
Market development-: This know as growth strategy which refers to existing products are
offered for new customer segment so they helps to enhancing profitability and productivity of
company.
Market penetration-: It is process which refers to organisation capturing huge market share
for the the products for existing market.
Diversification-: It is essential process which refers to new product is developing for new
market in order to increasing customer segment as well as enhancing profitability and productivity
of company.
Thus, it involves PESTEL frame work which refers to including various factors such as
political, economical, technological, legal and environmental which affect the business operation
and function and their managers utilising various technology in order to increasing profit and
explore the new opportunities which are available at marketplace (Bhattacharyya, 2019).
TASK 2
P2) Examine the internal capabilities and internal environment within the organisation.
Strategic capabilities are refers to various strategies which organisation essential to analysed
the different frameworks and accordingly formulated new strategies which result as formulated new
strategies due to gaining competitive advantages. This is tools and techniques which organisation
implemented effectively and efficiently which helps to achieving organisation goal and objectives.
Resource-based view strategy
This is process which refers to organisation analysed various framework which includes

organisation managing the tools and techniques in order to attaining profitability and productivity of
company. It includes organisation utilising various resources such as tangible and intangible and it
helps to gaining competitive advantages at marketplace (Holmberg-Wright, and et.al., 2017).
Tangible resources refers to machinery, land, capital, equipment and intangible resources such as
intellectual property rights, trademarks and brand reputation and many others.
SWOT analysis
Strength Weaknesses
 It utilising high quality products which
offered to customers and it is helps to
increasing profitability and productivity
of company (Bhattacharyya, 2019).
 It utilising advanced technology so
products so easily gaining competitive
advantages.
 Morrison is greatest weaknesses they
charging high prices for quality products
and services.
 It includes they are not effective
management which affect the business
operations.
Opportunities Threats
 It includes there are various
opportunities to easily expand targeting
business operation and targeting large
numbers of customers.
 The biggest threat for the organisation in
order in order to ample numbers of
competitors are present at market place
so they are cuts throat competition in the
market.

 It utilised the various tools and
techniques which are helps to promote
the products and services in order to
attracting large numbers of customers.
 It includes technology changes very fast
so changing market trend it affect the
business functions.
McKinsey's 7S model
This is tool and techniques which includes organisation utilising this approach so there are
ample numbers of factors are present in this model which analysed by organisation and accordingly
developed the new strategies which result as enhancing profitability and productivity of company
(Holmberg-Wright, and et.al., 2017). In context of organisation, it used this tools so there are
various elements which are discussed below.
Strategy-: It includes various kinds of strategy which utilised by organisation in order to
gaining competitive advantages. It involves analysed the competitor strategy on that basis
developing strategy so easily sustain business for longer period of time.
Structure-: It is process which includes organisation division of various department and unit
as well as manager of Morrison assigned the work to their subordinates on that basis increasing
effectiveness of organisation in order to smoothly flow of information between the employees.
Systems-: It is process organisation utilising effective system in order to decision making
process so smoothly conducting business operations and functions.
Skills-: It is process which result as HR manager giving training to their employees which
result as enhancing the employees skill and knowledge which helps to improving performance of
company as well as achieving organisation goal and objective of company.
Style-: It is technique which utilising by organisation which top management followed the
leadership style adapting by Morrisons so effectively decision making and developing team spirit
among the existing employees (Bereznoy, 2017).
Staff-: This is process which result as employees is effective and efficient resources which
adding value in day by day operation and helps to attained goal and objective for company.
Shared value-: It involves organisation sharing norms and standards in order to measures
the employees behaviours in order to Morrison providing healthy working environment.
VRIO Framework
This is model and techniques which refers to organisation utilising various resources in
order to enhancing internal strength and capabilities so easily establishing their business model in
order to gaining profitability and productivity of company. In relevance of organisation, it involves
various factors which are analysed by organisation.

Valuable-: It is process which refers to manager of Morrison utilising this resources which
refers to determined this resources in order to gaining competitive advantages as well as smoothly
running the business operations.
Rareness-: This is tool and techniques which refers to VRIO model utilising in order to
understanding of an organisation so resources are rare for the organisation (Warren, 2016). In
context of organisation, it involves various resources such as competent employees, brand image,
distribution network and many others.
Imitable-: It is important element which refers to valuable, rare in order to this kind of
resources are not available to other competitors.
Organisation-: It includes each and every organisation managing their resources and assets
effectively and efficiently so it helps to attaining goal and objectives of company. In context of
Morrison, it using this resources so developing their brand image in the mind of customers.
Hence, it involve various tools and techniques which are analysis in order to gaining
competitive advantages (Hacioglu, 2020). It is tools which organisation effectively implementing in
order to improving work performance of employees as well as achieving objective of company
TASK 3
P3) Explain the porter's five forces model in order to evaluating forces within the organisation.
It is process which refers to analysis this model effectively and effectively in order to
gaining competitive advantages which result as increasing organisation effectiveness (Gauthier,
2017). It involves various factors which directly impact on business profitability and productivity of
company. In present context, it is process which refers to present environment changes very firstly
so organisation analysis the five forces on that basis formulating new strategies and achieving
organisation goal and objectives of company.
Threat of new entrants-: In context of organisation, it involves high threat for new entrant because

ample numbers of competitors are present at market place as well as incurring heavy capitalin order
to establishing business or operating business functions. It is process which heavy cost incurred to
proper planning of resources.
Bargaining power of buyers-: Bargaining power of buyer plays important role in order to
power of buyer because they easily negotiate in price of products and services so they have high
bargaining power. In relevance of organisation, it involves ample numbers of buyer so many
substitute products are available so easily switch to other brands.
Bargaining power of suppliers-: It is element which plays crucial role in order ample
numbers of supermarkets are available such as M&S and many others. In context of organisation, it
includes there are ample numbers of competitors are present so they are attracting large numbers of
customers (Miklian and et.al., 2017). The bargaining power of supplier are high so targeting large
numbers of customers.
Threat of substitutes-: It involves it is process which refers to ample numbers of substitute
products are available refers to customers easily buying the same brand to other supermarket at
cheap price in retail market. Customer know the price of products and services and comparison to
other brand and those retailer charges high price so switch the brand and purchasing with other
supermarkets.
Competitive rivalry-: There are ample number of competitors are present at marketplace so
organisation facing cut throat competition at marketplace. In relevance of Morrison, it includes
wide variety products and services are available in the market so there are many competitors are
available in the market which affecting profitability and productivity of company.
Therefore, it includes organisation utilising this tool which help to analysis in order to
achieving organisation goal and objectives of company. It is process which essential for each and
every organisation analysed this tools and techniques and accordingly developing the new strategies
which result as enhancing profitability and productivity of company (Cassia, 2019).
TASK 4
P4) Use a range of theories, concepts and models as well as interpret and devise strategic planning.
Porter's generic strategies: This model is used for determining the method by which a
company can gain competitive advantage at marketplace. It consist majorly three different strategies
which is combined with the scope of activities fro which a company seeks to attain them and that
tends to generic strategies in order to achieve pre defined goal and competitive edge. The three main
strategies that it includes are cost leadership, differentiation and focus. In context of chosen firm

Morrison, entities use this model for effective planning which is as follows:
Differentiation: In this strategies company offered innovative and unique product which is
differer from competitors the aim of carry out this to gain competitive advantage and for improving
sales and revenue generation of company. In context of selected firm, Morrisons, it is a food
retailer company and basically known for its differentiations strategy as they offers innovative.
Fresh and house made foods on the basis of survey prices higher than average. The products that
they derived are branded beef, chicken, lamb so on (Habib, 2020).
Cost & price leadership: This growth strategies relies to offer product at lower prices within
same industry to consumers. It is vertical integrated into high value added proprietary components
& services. In relevance to Morrison firm as it is a food retailer company and they offers product to
their consumers at affordable prices in all rage for consumers.
Focus: This strategy is mainly emphasis on provision of on two major aspects that is
differentiation focus & cost focus. In context of chosen firm, Morrison, they mainly focus to offer
differentiated &cost products such as M-kitchen range and M savers basic branded products at
affordable prices for all types of consumers.
Bowman's strategic clock: This is also a strategic model that explores the options in order
to gain strategic positioning such as hoe a product need to be positioned in order to prove
competition to other companies at marketplace. This model consist various aspects which are as
follows:
low price & low value added: This is considered as it is not effective and will nor offers
competitive position for a business unit. In this the product is not produced on the basis of
differentiations and on the basis of consumers values instead made on the basis of low price. This is
s barraging basement strategy. In which entities of company seeks to produces product as cheap
they can produces with the aim that no one will compete them. In context of Morrison, they mainly
avoid this strategy.
low price: This is a strategy based on cost minimisation which is needed to become
successful often linked with economies of scale. In this the profit margins of each products are
lower with the high volume of output and still develops high overall profit. On the basis of this the
competition in market is intense and often involving prices wars (Gauthier, 2017). In context of
Morrison they sometime adhere this strategy in order to provide competitive edge in market.
Hybrid: The name itself suggest that a hybrid position includes few elements of relative
lower prices but also some product based on differentiation. In which the main purpose is to
persuade consumers that there is good added value by the combinations of affordable cost prices as
well as acceptable differentiated products. In relevance to selected firm, they mainly use this
strategies in order to offer some innovative and fresh products to their potentilla consumers like M-

kitchen range Home made foods products are prepared on the basis of this strategy.
Differentiations: The primary purpose of this strategy is to product and offer differentiated
products to consumers by adding hight level of consumer values. In this branding play major roles
as does product quality. As good quality product creates strong brand image and awareness along
with loyalty. This leads to attain relatively good prices and added value that a that this strategic
requires. In this case, Morrisons company use this strategy very well and mostly prefer this in order
to offer branded product like branded beef, chicken etc.
Focused differentiation: This relies to position a product at high price levels where
purchases prefer this products because of the values that received high range. This is mainly adhere
by the luxury brands ( Ashton, 2017). In context of Morrisons, this is also a branded firm and
targets all kinds of consumers for enhancement of sales and revenue.
Risky high margins: This is a high risk positioning strategy, in which the chances of failure
are high. In this company sets high prices without offering anything that perceives extra values.
This is not preferable strategy in relevance to selected company.
Monopoly Pricing- Morrisons is one such organisation having monopoly in the market,
offering its one and only unique products. Here the seller company is not much concerned about the
value addition to the perceiving customer as the only option they have is ,weather to buy the
product or not. Monopolistic firms can set prices as per their wish and hence in most countries are
regulated from setting prices.
Loss of market share- This is a position where selected company set up a standard price for
every product they want with a value low perceived (Miklian and et.al., 2017). Such a value makes
it uneasy to win customers with better options having high value from similar price of other
competitor companies. Loss of share is a recipe of disaster position in a market competition.
Therefore, it involves various strategies such as porter's generic model which including
others various tools and techniques utilising by organisation in order to gaining competitive
advantages as well as enhancing productivity. This model effectively adapting in organisation in
order to organisation survive in the market for longer period of time.

CONCLUSION
From above discussed report it has been analysed that there are various models such as
PESTLE analysis, Ansoff's matrix that are very useful for firm in order to carry out a detail analysis
of external environment. It provide assistance to entities in order to make effective marketing
strategies for providing competitive edge to other rivalries. Further, there are numerous models that
are used to carry out internal analysis for long term sustainability based on resources such resource
based model. Porters five forces model is used for assessing major five factors that are prevailing in
external environments based on analysis. It includes organisation used various strategies model and
manager formulated new strategies in order to gaining competitive advantages as well as enhancing
profitability and productivity of company.

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