Impact and Influence of Macro Environment on Organisation and its Business Strategies

This report discusses the impact and influence of macro environment on an organisation and its business strategies. It includes a PESTLE analysis of Morrison, a leading supermarket chain in the UK, and explores the political, economic, social, technological, legal, and environmental factors affecting the company. The report also discusses the Ansoff's growth vector matrix and stakeholder analysis of Morrison.

BUSINESS-
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Impact and influence of macro environment on organisation and its business strategies......1
TASK 2............................................................................................................................................7
Assessment of internal environment and capabilities............................................................7
TASK 3............................................................................................................................................9
Evaluation of a given market by applying Porter's Five Force Model..................................9
TASK 4..........................................................................................................................................10
Applying of theories, concepts, models to understand and interpret strategic directions
available to a company.........................................................................................................10
CONCLUSION..............................................................................................................................13
References......................................................................................................................................14
Books & Journal............................................................................................................................14

INTRODUCTION
Business strategy is set of competitive rules and norms that are adopted by organisations
for attracting customers, strengthening performance, getting competitive advantage and then
achievement of objectives and goals of the company. It basically outlines what should be done
by the company and way in which various task have to be planned and initiated are discussed in
planning of business strategy (Aubry, and et. al., 2012). The following report considered in this
report is Morrison. This is the fourth largest chain of supermarket of UK. The headquarters of
this company are located in Bradfort, England. This organisation was founded in the year 1899
by William Morrison. This report discusses about impact and influence of macro environment on
business and stakeholder analysis. The different models for Morrison discussed in report are
Porters model, VRIO framework, SWOT analysis and PESTLE analysis.
TASK 1
Impact and influence of macro environment on organisation and its business strategies
 Mission:- To provide customers and clients valuable products by best value for money
on weekly shopping.
 Vision:- To become food specialist for all people.
 Objectives:- This company has the objective to attain success in market by providing
good quality of products to people.
 PESTLE analysis: This tool is helpful in providing detailed information about
Morrison’s external factors that affect business. PESTLE analysis is helpful in
understanding different macro factors that impacts business. Below mentioned is the
external analysis of Morrison -
1

 Political:- There are various factors that affect business operations of the company.
Political elements of country affects business strategies and operations of the company.
Morrison faced supply chain disruption prevailing in UK (Burgess, and Radnor, 2013).
This company is planning to enter foreign markets and while doing this Morrison has to
deal with lots of complexities.
Positive impact – The import duty influences business operations of Morrison. This company
imports some of the inventory to different countries like Asia, UK and China.
Negative impact – There are some regulations that affects business operations of Morrison.
Morrison is facing problem while operating in In Asia, Morrison is facing problems due to
increase in export charges for products. Economic:- Companies have the opportunity to invest in emerging economies as this is
helpful in growth of the company (Cacciolatti, and Lee, 2016). Morrison faced problem
of recession and this contributed to decline in sales and profit of the company. Recession
2

situation had a serious impact on sales and profits of Morrison. In order to overcome
from such situation, Morrison has adopted new strategies. The organisation was not able
to manage prices of products. Many employees lost jobs.
Positive impact – Morrison is using diversification in selling products and its presence in
foreign market is helping to increase success of organisation.
Negative factors – Supermarket of UK are affected by labour costs. Morrison had to pay a lot
of money because of increase in UK minimum wage rate up to 4.4% (Morrison's SWOT and
PESTLE analysis, 2019.).
 Social:- Social factors affects business operations and their profits. Each and every
country follows different culture and lifestyle. Morrison ensures that it is selling products
which are not offending any country’s religion or culture. Morrison analysed
requirements of people and started business home furnishing in the country where they
are having presence.
Positive impact – Morrison is a well reputed company and it has various diversification of
products. This helps in increasing lot of customers worldwide. In this way, sales and profits of
Morrison can be increased.
Negative impact – The disadvantage on Morrison because of social factor is that if it keep on
changing products and services offered to customers then there is disturbance of process and
business operations of the company.
 Technological:- Morrison emphasises on giving various experiences to customers.
People have high demands from Morrison so they have to adopt new techniques and tools
for achieving organisational objectives and goals. Cognitive intelligence and artificial
intelligence have been adopted by Morrison.
Positive impact – This has impacted the business sales in a positive manner. Morrison is using
latest techniques for payments and selling of products. This helps in attracting customers. It
saves both cost and time.
Negative impact – Technological advancement requires a lot of investment and also research and
analysis is needed for installing latest techniques and trends.
3

 Legal:- . Morrison is affected by labour laws and other regulations given by different
countries. Morrison performs all business operations by following legal rules and
regulations given by countries.
Positive impact - Morrison adopts all regulations and rules given by Food retailing Commission
(FRC) as it helps in being loyal to customers. A good image is formed by following all
regulations and rules.
Negative impact – Workers and employees of Morrison can take legal actions against company
if they feel discriminated at workplace. This will create down fall of image in front of
customers.
 Environmental factor:- It is not easy for Morrison to sustain in market for longer time
by harming environment. Morrison ensures that it is not causing any harm to
environment.
Positive impact - Morrison adopts new techniques and process which do not harm
environment. It provides help in maintaining positive relation with business environment factors
like customers, suppliers, manufacturers, etc.
Negative impact – The installation of eco friendly techniques and processes requires a lot of
investment by the company.
The different layers of business environment includes macro environment, industry,
competitors and the organisation. In context of Morrison, the analysis of macro environment
will help in knowing what are the different ways of expanding business and it also tells about
success of business expansion in different countries. It tells about different challenges and
opportunities that this company possess while expansion of market. Morrison develops strong
and effective strategies that help in achieving organisational goals and objectives. These
strategies must be more powerful than competitors.
Ans-off's growth vector matrix:-
It is a strategic management tool which company uses to plan their future development
and growth strategies. Ansoff matrix basically consists of four different strategies which is used
to support in overall functioning of a business. MORRISON has also used this model to analyse
four strategies and then according to that select the most appropriate strategy which can be
adopted by the company. Below four strategies from point of MORRISON are discussed below -
4

Market Penetration:- This is a strategy which is used by many companies in this they
focus on using existing products and they try to expand themselves in the existing market where
company is presently operating (Linn, Sanden, and Piekkari, 2018). Existing customer base is
used in this strategy. Quality or low price these are two key features on which company makes
efforts to gain attention of their existing customer base. As popularity of the product increases
because of either price or quality standards being offered there is increase in sale of the products.
In case of MORRISON also, this company is managed to adopt penetration strategy as they are
involving in high quality and at prices which re affordable by its target customers (Milovanovic,
2015). The design which this brand is offering in its products and affordability in terms of price
had made it achieve a distinct position in market.
Market Development: - This strategy of porter deals with selling existing products but
they want to expand into a new market or target new geographical areas. This strategy helps
company in doing global expansion. Entering into completely new markets is not always very
easy as it involves lot of research and investment by the company (Morton, Wilson, and Cooke,
2015). MORRISON has faced lot of difficulties whenever they have tried to expand themselves
5

to abroad. They have successfully expanded their global customer base by understanding and
identifying their needs and able to successfully cater them.
Product development: - Another strategy given by porter in this model is product
development where companies are willing to introduce new product but in the existing market.
Main focus of this strategy is on a complete new product development, but the customer base is
existing ion this case. With the passage of time MORRISON has been able to successfully
expand their operations and functions in different parts of world (Pasquinelli, 2014). There has
been a tremendous growth of company this has been possible because of profitable growth being
experienced by this company in recent years.
Diversification: - This is an effective strategy which companies generally use when they
are planning to do expansion of their business to other countries (Rasula, Vuksic, and
Stemberger, 2012). This strategy is used when a new market is targeted by company and at same
time they are ready with a new product idea. Diversification is also a very popular strategy which
can be used by companies when they are planning to expand, in context of MORRISON
company is involved into using this strategy whenever they are willing to explore new customer
segment and plus company have new products ideas with them.
Stakeholder Analysis
Stakeholders are those people who are affected by operations of the company. In order to have
good reputation and image in market, it is essential to have loyal stakeholders
(Cserháti, and Szabó, 2014) . The stakeholder analysis of Morrison is mentioned below –
Stakeholder Effect on Morrison
Customers
Customers of Morrison are loyal towards brand
as this company offers quality products to
people since years.
Suppliers
It is important for Morrison to build long term
relationship with suppliers for smooth
functioning of the company.
Government is an essential stakeholder which
has to be treated effectively by the organisation
6

Governments (Eason, 2014). Morrison has to adhere different
rules and laws to build good reputation among
customers.
shareholders
Shareholders are another important stakeholder
that a company can have. In context of
Morrison, shareholders provide investments for
doing different business operations and
functions.
Employees
These are another stakeholder of the
organisation and Morrison thinks that
sharing growth and profit with
employees is beneficial for the
company. Morissons provide bonus,
money and incentives to it’s employees
for motivating them to work hard and
achieve organisational goals and
objectives.
From the above stakeholder analysis, it is concluded that stakeholders are an essential factor for
company and loyal stakeholders are important for better functioning of the company(Hoque,
2013) . Morison is having big supermarket chain and it is essential to keep satisfied and loyal
stakeholders for company's growth.
How analysis determines strategic management decisions of Morrison
Morrison is a leading supermarket organisation and it is has to expand it's business
effectively in order to increase profits. Companies develop various strategies that help in
achieving goals and objectives in less time. As Morrison deals in selling of different products, it
has opportunity of increasing number of customers.
TASK 2
Assessment of internal environment and capabilities
SWOT analysis of Morrison:
7

Strength Weakness
 Morrison is a well reputed organisation
and this company is providing quality
products and services to people since
years.
 This company has a vast area of
network of suppliers.
 Morrison has adopted integrated
approach in their supply chain and
manufacturing.
 There are less supermarket of Morrison
as compared to other supermarket
chains.
 They do not have effective strategies
for market their products effectively.
 There is standard portfolio of Morison’s
products.
 Morrison is facing some controversies
and issues that are associated with
quality of products.
Opportunities Threats
 Morrison has opportunity of expanding
it’s business in foreign markets.
 This organisation can use new trends of
market such as e-commerce, such
promoting and marketing of products.
 Morrison has threat of various entry
barriers faced in entering foreign
markets.
 Morrison has to follow all rules and
regulations while doing business in
foreign markets.
 Morrison has short of diversification
strategies.
VRIO analysis: This framework is adopted by organisations for evaluating weakness and
strength of the company. This analysis is basically on four aspects like value, rarity, inimitable
and organization (Kohtamäki, and et. al., 2012). There are four resources of Morrison such as
human resource, global presence, cost strategy, differentiation strategy.
 Valuable: Companies have valuable resources that are used for attaining organisational
objectives and goals. Global presence of this company provides opportunity for reaching
potential customers and making customers aware about products of Morrison. Cost
8

strategy is strength of Morrison that is used for occupying distinct position in market.
Morrison uses another strategy i.e. differentiation strategy in which company offers
different features and different customer like kids zone, café, restaurants etc. It enables
Morrison to get differentiation advantage.
 Rare: Global presence is not a rare concept (Knott, 2015). Differentiation strategy of
Morrison is unique feature of this organisation. Also, Cost strategy is adopted by
Morrison for offering products to customers at affordable prices. Human resource of
Morrison is strong department that provides effective training and development
programs to it’s employees. This is also a rare characteristic of this organisation.
 Imitable: Global presence and human resource are two strong factors of Morrison.
Differentiation strategy and cost strategy are two different features which other
supermarket organisations cannot copy.
 Organization: All resources have to be organized by the company to ensure smooth
functioning. Human resource, global presence and cost strategy resources which are
present in different organisations. Morrison must focus on differentiation strategy.
This is the characteristic which has helped company in gaining a competitive advantage
in market.
Resource Valuable Rare inimitable organized
Human resource yes yes
Global presence yes
Differentiation
Strategy
yes yes yes yes
Cost strategy yes yes yes
Resource based view
The resource based view is the way by which a company can use it's resources.
Generally, resources are of two types such as tangible and intangible. The tangible resources of
Morrison are factories, physical assets of the company, etc. On the other hand, intangible ones
9

are reputation and image of the company in market (Kim, S. C., Lee, J. S. and Shin, 2015).
Capabilities are a subset of resources that helps firm to take full advantage of other resources.
These include marketing skills and relationships. There are basically following types of
resources listed below - Financial – Morrison is having these resource in the form of money and retained
earnings. Physical – This include plant and equipment and geographic location. Morrison is
operating in different countries and main headquarters are situated in UK. Human – These consists of skills and abilities of individual. Employees working in
Morrison are skilled and talented and they have capability to attain organisational goals
in given time.
 Organisational – These includes reporting structures and relationships. Morrison is
ensuring that it is maintaining healthy relationship with customers.
Critically evaluating the strengths and weaknesses of the organization's internal
capabilities, structure and skill set
Morrison evaluates strength and weakness by doing SWOT analysis of the company. It is
concluded by SWOT of Morrison that it is having internal capabilities to expand business
effectively. It has well organised structure and managers collaboratively work for attaining
organisational goals and objectives.
TASK 3
Evaluation of a given market by applying Porter's Five Force Model
Porter’s model is used by organisations for analysing forces present in the business
environment that influences business operations and functions. This is useful model that helps in
assisting companies for making good market analysis.
Bargaining power of buyer: Customers are the biggest asset of the organisation.
Morrison has to attract customers in order to increase sales and profit of the company. Customers
of Morrison require quality products to be offered to them (Lee, and Smith, 2018). The
management of Morrison believes that customers are satisfied when they are provided quality
products. The marketing managers focuses on marketing approach. This is helpful in identifying
10

demands and needs of customers. Customers of Morrison posess high bargaining power as there
are many competitors in supermarket industry.
Bargaining power of supplier: There are many suppliers of different products offered by
Morrison. This company follows a low pricing strategy which means that they have to maintain
good relationship with their suppliers. Good relationship with suppliers is very important as it
reduces bargaining power of suppliers. When there is high bargaining power then, Morrison can
cause threat for company for minimising profit and sales. This is helpful in maintaining healthy
relationship with their suppliers as it ensures benefit of organisation as well as supplier.
Threats of new entrant:- Morrison is a well established organisation and it wants to
expand business in foreign markets. As Morrison is dealing with supermarket chain so it has
many competitors in market. So it has to make effective strategies for remaining in market and
earning profits.
Threat of substitute:- Morrison has to ensure that it is not substituted by any other
service. This can be done by using tools and techniques for innovating products and services
(Lee, 2014). Some of competitor of Morrison are IKEA, Wal-mart, etc. that are involved in
supermarket service.
Rivalry within market:- Morrison works for attaining competitive edge in market.
Morrison adopts effective strategies at initial stages of positioning. Morrison has to make strong
strategies for competing with other competitors in market.
Above mentioned were some of the aspects on which porter's five force model that
affects business operations of Morrison.
TASK 4
Applying of theories, concepts, models to understand and interpret strategic directions available
to a company
According to Porter, there are four types of strategies followed by different companies in
their business-strategy. Some of these are cost leadership, differentiation, focus and this is
divided into differentiation focus and cost focus. This model is explained below -
Generic model of porter: Morrison is an organisation that runs supermarket chain and
offers different products at the same place. The generic model of Porter has basic three major
11

components that gives right direction to the organisation in dealing with current situation of
market. The three components of this model are helpful for company to know how to target
customers effectively. A strategic plan is developed by company for getting competitive
advantage in market.
Cost Leadership: Porter's generic strategies are ways of developing ompetitive
advantage. There are basically two types of ways of attaining cost leadership strategy – by
increasing profits and minimising costs while charging industry average prices. Another way is
by increasing market share by charging lower price and rates. As per this strategy, an
organisation is aiming to achieve leadership position in market by creating competitive
advantage. Morrison is emphasising on becoming the cost leader in reference of prices offered
for products. This is helpful in providing strong competition to other supermarkets.
Differentiation Strategy : - This includes making products and services different from
other competitors. In order to make success of this differentiation strategy, Morrison need to
conduct effective and strong research. They must deliver high quality services and products.
There must be effective sales and marketing so that market understand benefits offered by
differentiated product. Morrison must make new innovation in it's strategy and offering of
products to gain profit. According to this strategy, companies adopt some new innovation in
their product or service to attract more number of customers. In context of Morrison, It focuses
on providing distinguished feature to their customers. Morrison has given additional services like
restaurants, playing area for kids, café. Due to this, Morrison is able to build competitive
advantage in market.
Focus:- Companies that use Focus strategies concentrate on particular niche markets.
This includes understanding of market dynamics. In this way, unique and the unique needs of
customers within it, develop uniquely low-cost or well-specified products for the market.
Because they serve customers in their market uniquely well, they tend to build strong brand
loyalty amongst their customers. This makes their particular market segment less attractive to
competitors. There are basically two kinds of focus strategy adopted by Morrison, one is
differentiation focus and next is cost focus (Ritter, and Andersen, 2014). Morrison uses
differentiation strategy for focusing on narrow segment of market. When a small segment of
market is emphasised, it helps in achieving needs and demands of market in an appropriate
manner.
12

Cost focus is adopted by Morrison for focussing on price of products and services. It
focuses on decreasing cost of products. This company focuses on minimizing cost in order to
maintain profit margin and sales. In this way, Morison is able to increase the sales and profit of
the company.
Strategic management Plan
This management plan is defined as an overview of objectives, tactics and strategies of
the organisation. These strategies are helpful for achieving mission as well as vision of the
company. A strategic management plan is defined as document which is used for
communicating within the organisation. These includes organization's goals, focus energy,
configure resources, set priorities and ensure that employees and stakeholders are working
effectively together for attaining common goals. In context of Morrison, strategic management
plan is developed by top level management which is mentioned below - Mission: Mission of Morrison is to become a cost leader in supermarket chain by
offering quality products at very affordable prices to their target customers. Vision: “ To Create better customer experience by providing high quality products” Objectives: This company wants to provide better products to it’s customers at
affordable price. The main objective is to achieve customer satisfaction. Extensive marketing: A special marketing team is created in Morrison for forming
strategies and attracting customers for innovating products and services offered to
customers. Market research: Morrison conducts strong and effective market research for identifying
needs and demands of customers (Rowlinson, Hassard, and Decker, 2014). This helps in
reaching potential customers and selling products to them. This research is helpful in
planning of company's overall strategies associated to new business plan.
 Tactics: To achieve set objectives, Morrison adopts tactics of providing increased value
to their customers. Also they ensure to use latest technology in business operations and
functions.
13

CONCLUSION
From the above discussion, it is analysed that there is need of effective strategies present in
organisations for attaining success in long term. Each and every company require development
and growth for surviving in market. Different tools for analysing market are SWOT analysis,
PESTLE analysis, Porters five force model, Porters generic model which are helpful for planning
effective and strong strategies. Moreover, VRIO analysis is adopted by companies for identifying
resources that have to be compulsorily focussed by the companies. There is another tool i.e.
Ansoff matrix used by organisations for achieving objectives and goals of the company in an
appropriate manner. A strategic plan is developed by companies for making innovations in
service and product.
14

References
Books & Journal
Aubry, M. and et. al., 2012. Organisational project management as a function within the
organisation. International Journal of Managing Projects in Business. 5(2). pp.180-194.
Burgess, N. and Radnor, Z., 2013. Evaluating Lean in healthcare. International journal of health
care quality assurance. 26(3). pp.220-235.
Cacciolatti, L. and Lee, S. H., 2016. Revisiting the relationship between marketing capabilities
and firm performance: The moderating role of market orientation, marketing strategy
and organisational power. Journal of Business Research. 69(12). pp.5597-5610.
Cserháti, G. and Szabó, L., 2014. The relationship between success criteria and success factors in
organisational event projects. International Journal of Project Management. 32(4).
pp.613-624.
Eason, K. D., 2014. Information technology and organisational change. CRC Press.
Hoque, K., 2013. Human resource management in the hotel industry: Strategy, innovation and
performance. Routledge.
Kohtamäki, M. and et. al., 2012. The role of personnel commitment to strategy implementation
and organisational learning within the relationship between strategic planning and
company performance. International Journal of Entrepreneurial Behavior & Research.
18(2). pp.159-178.
Knott, P. J., 2015. Does VRIO help managers evaluate a firm’s resources?. Management
Decision, 53(8), pp.1806-1822.
Lee, G. L. and Smith, C., 2018. Engineers and management: International comparisons.
Routledge.
Lee, W. L., 2014. Environmental uncertainty affects inter-organisational partner selection: The
mediating role of cost and strategy in alliance motivations among SMEs. Journal of
Management & Organization. 20(1). pp.38-55.
Linn, A., Sanden, G. R. and Piekkari, R., 2018. Language standardization in sociolinguistics and
international business: Theory and practice across the table. English in business and
commerce: Interactions and policies. pp.19-45.
Milovanovic, S., 2015. Balancing Differences and Similarities within The Global Economy:
Towards A Collaborative Business Strategy. Procedia economics and finance. 23.
pp.185-190.
Morton, J., Wilson, A. D. and Cooke, L., 2015. Collaboration and knowledge sharing in open
strategy initiatives.
Kim, S. C., Lee, J. S. and Shin, K. I., 2015. The impact of project management assets on the
VRIO characteristics of PM process for competitive advantage. International Journal of
Productivity and Quality Management, 15(2), pp.153-168.
Pasquinelli, C., 2014. Branding as urban collective strategy-making: The formation of
NewcastleGateshead’s organisational identity. Urban Studies. 51(4). pp.727-743.
Rasula, J., Vuksic, V. B. and Stemberger, M. I., 2012. The impact of knowledge management on
organisational performance. Economic and Business Review for Central and South-
Eastern Europe. 14(2). p.147.
15

Ritter, T. and Andersen, H., 2014. A relationship strategy perspective on relationship portfolios:
Linking customer profitability, commitment, and growth potential to relationship
strategy. Industrial Marketing Management. 43(6). pp.1005-1011.
Rowlinson, M., Hassard, J. and Decker, S., 2014. Research strategies for organizational history:
A dialogue between historical theory and organization theory. Academy of Management
Review. 39(3). pp.250-274.
Storey, D. J., 2016. Understanding the small business sector. Routledge.
Online
Morrison's SWOT and PESTLE analysis, 2019. [Online] Available
through:<https://www.swotandpestle.com/morrisons/>
16