Morrison's Key Performance Indicators for Better Investment Decisions

Morrison, a retail company, uses both financial and non-financial Key Performance Indicators (KPIs) to analyze its performance. Financial KPIs include profitability, market share, sales growth, underlying profit, and earning per share. The company also measures non-financial KPIs such as employee stability, charity activities, and environmental protection. By analyzing these KPIs, Morrison evaluates its performance and makes decisions about future expansion, dividend payments, and capital expenditures.

Keep
Performance
Indicator

ESSAY
Keep performance indicator (KPI) is a parameter used by organizations to measure their
advancement towards organizational goals. Therefore, it help an enterprise in attaining strategic
and operational goals. It further help company in determining their own performance. With the
help of keep performance indicator company can identify hurdles in achieving business target
and take corrective steps on time (Krause and Arora, 2010). However, it is also important for
organizations using KPI to monitor them. Furthermore, there are different implication of KPIs in
various organization based on the priorities of business enterprise and their performance criteria.
The KPI serve as a guide to the stakeholders and give a easily understandable overview of
organization working and progress towards overall business goals. Tesco and Morrison are two
giant retailers of UK that use keep performance indicators to keep a track of their own
performance.
Tesco is one of the top most retailer of UK and leader of grocery market. It provide food,
clothing and other household products to its customers through its chain of supermarkets,
superstores and hypermarkets (Ogunlana, 2010). Tesco use keep performance indicators to
ensure its performance is directed towards organizational goals and company fulfill the
expectation of its customers in a better way. The KPI of company are focused majorly on
customers which are key assets for Tesco.
The KPI of company is calculated on the basis of love by customers for the brand where
the management makes an analysis on various factors. Thereafter, it includes analysis on how
many times customer repeat its purchase from Tesco; which was 70% last year which indicates
that company enjoys brand loyalty from its customers. Further, it includes the flow of new
customers within company; which is 29.1 % last year and it reflects that company is able to
increase its customer base by attracting more customers for its brand (Franceschini, Galetto and
Maisano, 2007). Thereafter, it involves the analysis of the easy accessibility for different
products from different channels. The last year 59.7 % customers did their shopping across
channels which means company is providing multi channel offer that enhance customer
convenience. Furthermore, the management determines how many customer purchase other
brands of Tesco; 64.3% customers purchase the family brands of company which means the trust
of customers for the brand is increasing. Therefore, on the basis of overall overview of above
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mentioned factors it can be said that Tesco is mostly loved by customers and people actively
chose it for their shopping ( Performance indicators, 2015).
The other KPI of Tesco are based on the measure of financial performance which are
determined with the help of various ratios like, growth in underlying profit before tax, return on
invested capital, shareholders return and gearing ratio (Bhagwat and Sharma, 2007). Therefore,
by going through these ratio the management of company can analyze its performance and
compare it with last years performance. The KPI of Tesco highlights the performance of
company and assist shareholders in deciding whether they should invest in company or not.
Morrison is ranked as fourth largest retailer of UK which is providing valuable services
to its customers through the chain of supermarkets (Setijonoand Dahlgaard, 2007). The
organization use financial and non financial KPIs for critical analysis of its own performance.
The financial KPIs include measure of profitability of company and market share of Morrison in
UK. It further involve analysis of sales of company, growth of market share, measure of
underlying profit and earning per share. Thereafter, by analyzing the sales company determine
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Il
lustration 1: The key performance indicator of
Tesco
Source:Performance indicators. 2015

the % of growth in share and thus plan for future expansion. Thereafter, company is focused on
increasing its market share with major concentration on grocery market.
Furthermore, Morrison measures underlying profit and basic earning per share. The
underlying profit is required for stakeholders to make investment decision while, basis earning
per share helps company in determining whether it will be able to maximize shareholders wealth
or not. In addition to this aspect, Morrison evaluate the dividend company provide every year to
its shareholders. The company also analyze the capital expenditure which reflects the investment
of company in profit generating assets (Bouckaert and Halligan, 2007).
Furthermore, the non financial profit involves measure of various factors like, employee
stability within Morrison, charity and other gracious activities. In addition to this aspect, the
management also analysis various measures taken towards environment protection. Therefore,
company is focused on reducing the amount of carbon, use of energy and volume of waste.
Therefore, by analyzing the financial incentives it can be said that sales of Morrison has
increased from last year and company is growing as food specialist among its customers. Also,
there is growth in market share in UK as well as in other parts of world (Key Performance
indicators, 2011). Thereafter, the earning per share and underlying profit continue to improve
every year which means performance of company is improving. Furthermore, the non financial
incentives indicate that company is socially responsible as it want to protect the environment by
reducing carbon emission by 20% and waste by 50%. In addition to this aspect, Morrison aims to
increase its gracious activities by contribution £1m per annum for welfare (Parmenter, 2015).
Thereafter, company aims at increasing employee and stability within Morrison.
Hence, by analyzing the key performance indicators of both the retail company Tesco and
Morrison the investors can make better investment decisions. The KPI also highlight that Tesco
is more focused on satisfying its customers while, Morrison consider success of business depend
on satisfaction of overall stakeholders (Yin and et.al., 2014). With the help of KPI, various
stakeholders can overlook the performance of company. Therefore, it can be concluded that keep
performance indicators should be considered for evaluating overall performance of company.
They further help in comparing the operational excellence of different companies. However, one
cannot solely depend on KPI as they are determined by the management and hence, they can be
manipulated easily.
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REFERENCES
Books and journals
Bhagwat, R and Sharma, M.K., 2007. Performance measurement of supply chain management:
A balanced scorecard approach. Computers and Industrial Engineering. 53(1). pp. 43-
62.
Bouckaert and Halligan, 2007. Managing performance: International comparisons. Routledge.
Fenton, N and Bieman, J., 2014. Software metrics: a rigorous and practical approach. CRC
Press.
Franceschini, Galetto and Maisano, 2007. Management by measurement: Designing key
indicators and performance measurement systems. Springer Science and Business
Media.
Krause, H and Arora, D., 2010. Key Performance Indicators.
Ogunlana, S. O., 2010. Beyond the ‘iron triangle’: Stakeholder perception of key performance
indicators (KPIs) for large-scale public sector development projects. International
Journal of Project Management. 28(3). pp. 228-236.
Parmenter, D., 2015. Key performance indicators: developing, implementing, and using winning
KPIs. John Wiley and Sons.
Setijono, D and Dahlgaard, J.J., 2007. Customer value as a key performance indicator (KPI) and
a key improvement indicator (KII). Measuring Business Excellence.11(2). pp. 44-61.
Yin and et.al., 2014. Robust PLS approach for KPI-related prediction and diagnosis against
outliers and missing data. International Journal of Systems Science. 45(7). pp. 1375-
1382.
Online
Key Performance indicators. 2011. [Online]. Available through: < http://www.morrisons-
corporate.com/2011/annualreport/_assets/download/pdfs/KPI.pdf>. [Accessed on 4th
November 2015].
Performance indicators. 2015. [Online]. Available through: <
http://www.tescoplc.com/files/pdf/reports/ar14/download_key_pe>. [Accessed on 4th
November 2015].
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