Internal and External Analysis of Morrison's: A Strategic Management Report

This report provides a detailed analysis of Morrison's internal and external environment using various strategic management tools such as McKinsey's 7s framework, PESTLE analysis, and SWOT analysis. The report concludes with recommendations for the company to take advantage of its strengths and avoid its weak spots.

Principles of
Marketing

Table of Contents
INTRODUCTION AND BACKGROUND ...................................................................................3
MAIN BODY ..................................................................................................................................3
Internal Environmental Analysis............................................................................................3
External Environmental Analysis...........................................................................................4
SWOT Analysis......................................................................................................................5
CONCLUSION AND RECOMMENDATIONS ...........................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION AND BACKGROUND
The concept of marketing is very important in the modern business landscape as simply
selling the products to customers and keeping huge margins is not a recipe for success any more
and companies need to provide a full spectrum of services to their target consumers to attain
success in the market including segmentation, targeting and positioning along with after sale
services (Barney and Hesterly, 2019). Understanding the positioning of the company in the
market and the current developments in it's rival companies is crucial to develop strategic market
plans and make necessary changes in the way company is currently promoting it's products.
UK's retail industry is heavily regulated and the barriers of entry are very high as building
efficient supply chains and popular outlets are very costly endeavours which has resulted in a
handful of heavy-duty supermarket chains to dominate the market segment such as Tesco,
Sainsbury, ALDI and Morrison's which are collectively called the 'big 4'. Founded in 1899 by
William Morrison, Morrison's is the current 4th largest supermarket chain in the UK with close to
497 outlets across the country with it's headquarters located in Bradford, West Yorkshire,
England. This report will conduct a thorough internal and external analysis of Morrison's current
position and perception in the market to find out key issues and competitor's strategies.
MAIN BODY
Internal Environmental Analysis
Apart from analysing all the external developments that happen around the company,
evaluating the internal working and processes is equally important as the operative efficient and
workplace productivity of a firm have a direct impact on the quality of work it hopes to achieve
in it's target segment (Kasemsap, 2018). There are many tools available to study internal
functions of a business, out of them McKinsey 7s Framework has been explained below in
context of Morrison's as it is an important strategic tool which analyses all major workings of a
company's interval environment.
McKinsey 7s Framework

Structure - The company follows a strict hierarchy where flow of information and authority
flows downwards, the current CEO of Morrison's David Potts is responsible for most of the
heavy decision making. The future of the structure is uncertain as the company has been bought
out by Clayton, Dubilier and Rice.
Systems – There has been intense innovation done by Morrison's around it's customers and inner
working as it has tried out advanced systems of queue management and has been using AI and
automated solutions in it's stores to make jobs of their store employees easier.
Style – The rise of Morrison's can be attributed to the dynamic leadership exhibited by it's CEO,
David Potts as he has taught all the managerial staff under him to treat their customers and store
workers as priority and has taken care of his workers during the pandemic by giving job security
and pay raises frequently.
Staff – Morrison's employees a lot of people in different retail departments as it has various
stores segmented by different departments such as poultry, lifestyle and groceries. The firm also
takes care of them by giving out many benefits such as discount cards and free insurance but has
gotten into trouble recently with data leaks and pay disputes.
Skills – It is important for Morrison's to keep a well maintained workforce as it is responsible for
feeding the nation in a stressful post pandemic economy of UK which is a big challenge. The
company needs talented and visionary staff at the front-lines which is why it provides leadership
and communication training along with talent enrichment programmes.
Strategy – The current strategic outlook of Morrison's is to focus on prioritizing the needs of it's
customers, source all it's food ingredients locally and build a sense of community and to function
optimally in a post pandemic world, it is also actively digitizing it's operations and setting new
and compact hygienic standards.
Shared Values – Morrison's core ethics and principles which drive the way it conducts business
is to put the customer front and centre in all operations and to be market oriented in it's retail
efforts. Although the company has struggled with increasing market share, it's major behavioural
focus is to provide the best shopping experience it can.
External Environmental Analysis
The success of the firm depends a lot upon it's external developments and happenings
which influence the broader industry within which it operates which makes it necessary to

analyse dimensions of business environment to conduct proper strategy formulation and
competitor analysis (Kwon and Cho, 2020). A PESTLE framework has been used below to
reflect the current market state of Morrison's and it's retail competition which separates the
business environment into various layers with each one having distinct effects on a business.
PESTLE Analysis
Political – The company is still reeling from the effects of Brexit and the pandemic as it has led
to disruptions in supply chains leading to short inventories and rise in prices. The opposition
parties in UK have also been concerned with the effects of it's buyout will have on food supply
and job security. Compared to it's rivals, the political scenario of Morrison is uncertain.
Economical – Morrison's initially struggled in the initial days of the pandemic as the UK
economy was subjected to constant lock-downs but after the restrictions were relaxed the sales
growth has been noticeable especially in take away snacks. Compared to it's competition, it has
more money to sustain future operations as it confirmed it's buyout for 6.3 Billion pounds.
Social – Compared to market leaders like Tesco and Sainsbury's, Morrisons has found itself in
hot waters recently and has received numerous backlashes damaging it's public image. It was
found paying it's staff minimum wages despite promise of high pay and also axed school staff
discounts which made it's customers very angry.
Technological – The company has been focusing on rapid digitation of it's operations and has
been ahead of the curve when compared to Tesco and ALDI as it is actively using AI and
automation in it's stores and has been testing a completely cashier less outlet at its headquarters
at Bradford. It's fresh technological outlook is a major competitive advantage.
Legal – When it comes to payment of fair compensation to it's store and lower level shop-floor
workers, Morrison's has regularly caught the legal and public heat more than it's competition as
recently it lost a major court case where it's retail workers fought for equal pay as workers in
distribution departments.
Environmental – When it comes to sustainability, Morrison's is way ahead of it's competitors as
it has received various official honours and recognition from authoritative bodies on it's work on
reducing plastic consumption. The company is also ahead of the competition as it is aiming zero
carbon emission by 2035.

SWOT Analysis
It is a widely used tool of strategic management which is used to analyse the overall
business environment of a company to ascertain it's complete strengths and weaknesses along
with identifying untapped avenues in the target market while perceiving threats (Sukhobokov,
Galimov and Zolotov, 2018). The SWOT analysis of Morrison's is described herein.
Strengths
 Huge network of supply and
distribution all over UK
 The company offers a large variety of
products targeting multiple niches
Weaknesses
 The workforce is not happy with the
pay provided and are not motivated
(More than 1,100 Morrisons staff could
strike over pay dispute, warns Unite as
balloting starts, 2022)
 The supply chain has been affected by
COVID-19 and Brexit which will take
time to recover
Opportunities
 Tapping into the growing healthy and
organic food market
 Using AI and automation for smooth
and contactless shopping experience
(How AI is giving Morrisons a very
British boost, 2022)
Threats
 Upcoming governmental policies which
restrict promotion on unhealthy goods
 Uncertain future after confirmation of a
hefty buyout
CONCLUSION AND RECOMMENDATIONS
From all the above conducted internal as well as external analysis of Morrison's, the
picture of the company's current situation in the market becomes quite clear as there is now a
definitive idea about what is working in favour of the company and what isn't. The best
recommendations that can be given to Morrison's is that the company should immediately focus
on lowering the cost of it's products as discounters like ALDI are cornering the retail market
through sheer price differentiation. The company should also focus on paying it's workforce

equally and well to avoid further damage to it's public image and make peace with all of the
worker unions to avoid further complications.
The above concluded report went into detail regarding the various tools and models of
strategic management which are deployed to study the business environment of a firm in internal
and external aspect. There was use of McKinsey's 7s framework for detailed analysis of a firm's
internal capabilities and a PESTLE analysis to study the external happenings in various
dimensions such as political and economical. The report was concluded with recommendations
for companies to take advantage of their strengths and avoid their weak spots with the help of a
SWOT analysis.

REFERENCES
Books and Journals
Barney, J.B. and Hesterly, W.S., 2019. Strategic management and competitive advantage.
Pearson Education, Limited.
Kasemsap, K., 2018. Mastering business process management and business intelligence in global
business. In Global Business Expansion: Concepts, Methodologies, Tools, and
Applications (pp. 76-96). IGI Global.
Kwon, K. and Cho, D., 2020. Developing trainers for a changing business environment: The role
of informal learning in career development. Journal of Career Development, 47(3),
pp.310-327.
Sukhobokov, A.A., Galimov, R.Z. and Zolotov, A.A., 2018, August. A strategic management
system based on systemic learning algorithm. In Biologically Inspired Cognitive
Architectures Meeting (pp. 290-295). Springer, Cham.
Online Referencing
More than 1,100 Morrisons staff could strike over pay dispute, warns Unite as balloting starts,
2022 [online] available at <https://www.business-live.co.uk/retail-consumer/more-1100-
morrisons-staff-could-22180716>
How AI is giving Morrisons a very British boost, 2022 [online] available at <https://www.retail-
week.com/supply-chain/how-ai-is-giving-morrisons-a-very-british-boost/7028739.article?
authent=1>