Comparing Resource Based Theory and Profit Maximization Theory in Morrisons

This report compares the resource based theory and profit maximization theory in Morrisons. It also discusses the implementation of strategies in Morrisons and its recovery plan.

SIM336 STATEGIC
MANAGEMENT

TABLE OF CONTENT
INTRODUCTION ..........................................................................................................................3
MAIN BODY..................................................................................................................................3
Comparing theory and theory......................................................................................................3
Comparing theory and practice...................................................................................................5
Strategies implemented in Morrisons..........................................................................................6
Recovery plan..............................................................................................................................8
A risk management strategy........................................................................................................9
CONCLUSION.............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Strategic management is mainly defined as the process which results in planning,
analysing and assessing all the activities for achieving the goal of an organization for attaining
the set targets. Forming strategies and its management mainly results in directing the company
by planning and forming the policies with allocating the available resources which helps in
setting the goals as to attain competitiveness while operating in the dynamic environment. This
report provide details about the Morrisons, it is mainly recognized as the multinational retailers
mainly base for serving wide range of food and non-food products to large number of consumers
while operating in the dynamic market. In this report it comparing tow strategic management
models. Also, comparing the theory and practice with using the porter model. Further, giving
example of business with defining its strategy. Lastly making recovery plan and defining the risk
assessment strategy which helps in attaining competitiveness while operating in large
competitive market.
MAIN BODY
Comparing theory and theory
Strategic management is mainly defined as the process and approach which helps in
specifying the goals and objectives for attaining the competitiveness while operating in the
dynamic environment (Chofreh and et.al., 2021). The main aims for forming and managing
strategically in the company as for attaining competitive advantage. With using the resource
based theory and the Profit maximization theory helps in defining an attaining competitiveness
while managing the operations in strategic manner.
The resource based strategic management theory: In the resource based strategic
management theory, it aims in defining about all the internal capabilities as resource which are
valuable, rare, imitable and aid in attaining competitiveness while operating in the dynamic
market. This theory mainly focuses on the development of suitable resource which results in
attaining competitiveness while working with unique capabilities and skill (Strategic
management, 2022). Taking example of Morrisons, using this theory with strategically managing
all the company resource for attaining competitiveness.

Resources Rare Valuable Imitable Organised Competitive
Human
resources
x x ✔ x x
Financial
position
✔ ✔ x ✔ ✔
Global
presence
✔ ✔ x ✔ ✔
Leadership
team
✔ ✔ x ✔ ✔
Satisfaction of
consumers
✔ ✔ x ✔ Moderate
satisfaction
Thus, with the available table it can be analysed that using the resource based theory in
the company helps in attaining competitive advantage by analysing the sustainable the available
resources by strategically managing the firm performance which results in attaining competitive
advantage. As the firm operating and being recognized as globally, also operating with stable
financial position and good leadership team which is valuable and not imitable in nature helps in
attaining and strategically operating by managing its internal resources in dynamic market. Also
the human resources are imitable and not valuable in nature, as the recruiting skilled and
potential employees for working in company, these are imitable in nature which hinders in
attaining competitive advantage in the staff personnels. Thus. With using this theory in the
company enable the firm to implement the strategies as for managing the internal resources
effective and recruiting the staff personnels for improving the effectiveness and efficiency while
working with different resources.
Whereas with using Profit maximization and competition based theory: The profit
maximization theory is used by business as its main aim is to operate in the dynamic
environment as for attaining profits. This strategy is driven by the rose for developing and
attaining competitiveness by maximizing profits in the company as by reducing the cost for
attracting consumer as for retaining and growing its target base. Example: Tesco using the profit

maximisation theory and the competitiveness for attaining and maximising its profits by
reducing the cost. The company is using wide range of strategies for maximising its profits by
reducing the cost as or Selling the quality products at the lower prices results in maximising the
profits with retaining the loyal consumers while operating in the dynamic market. As providing
one stop shopping experiences, providing good at lower prices with good quality, providing
complementary services and establishing the convenient online shopping experiences for the
consumers. As by reducing the operating cost in the company helps in attaining more profits by
reducing the prices and Selling good quality products to attract large number of consumers and
helps in establishing loyal target consumer market.
Thus, with using the resource based theory helps in managing and strategically operating
with improving the efficiency of the resources used n the company for attaining competitiveness.
But with using the profit maximization theory it is in strategising and making the strategy for
maximizing the profits for earning more revenues of cutting the cost for being and sustain in the
competitive market.
Comparing theory and practice
With using the porter five forces model, this model is mainly use for attaining
competitiveness while operating in the dynamic market (Cleary and Chavas, 2022). This model
helps in analysing the five framework from which it helps in analysing the company in attaining
competitiveness or facing loss while operating in the changing environment.
New entrants: As this aims in analysing about the high amount of new entrants impacts the
business and its operations. As for examples; while operating in the higher competitive market,
for Morrisons the threat of new entrants does not impact the company and its position because
for entering and establishing the large suer market as that of Morrison it required high fixed and
operation cost which reduces the entrant to deal in highly competitive and less profitable market
with large number of existing companies. This helps in attaining competitiveness to Morrisons
as it is globally recognized and serving wide range of profits at global level which results in
attaining success.
Power of suppliers: This aid in explaining about the suppliers derives the cost of
providing raw materials to the businesses. It is important to operate in with high supplier market
helps in attaining competitiveness with supplying unique at low cost raw materials. Example:
Tesco operating in dynamic market with low supplier power this helps in attaining

competitiveness by earning more profits which makes the retail sector to attract wide range of
consumers to purchase the products. Thus, the low suppliers power helps in attaining
competitiveness for working in the dynamic environment.
Power of buyers: The power of consumers mainly aims in expressing about the number
of consumers which aims in impacting the prices of the product offers. For example: the
Sainsbury mainly established for serving wide range of products to the large consumer market
which helps in attaining profits. As serving in the large consumers loyal market helps in
attaining competitiveness due to serving with fair prices with the best quality and delicious
products in nature. Thus, serving the low consumers market induces the company to charge low
prices which impact the profitability, but while operating in the high consumers market helps in
attaining competitiveness with attaining wide range of profits this results in achieving success.
Rivalry: The competitiveness while operating in highly changing market impact the
business and its profit. As for Morrison operating in highly competitive market, its main
competitors is Tesco, Sainsbury, Asda. This impacts the company profits and revenues for
serving large consumers and it hinder in retaining the loyal consumer market with the high
competition level. Due to the rivalry in the competition in impacts and induces the company to
charge high prices as to attain and sustain in the market for attaining profits (Kanano and
Wanjira, 2021). Thus, with high competitive market reduces the profits and earning for serving
at the same prices. This induces to reduce the prices for attaining profits as to attain high sales.
Threat of substitutes: substitute products aims in defining about those products in
nature which is being used in the place of that product and which is recognised as close
substitute. While working and operating with highly substitute products market indues
consumers to shift other another products which is charging low prices for offering same product
in nature (How Porter’s Five Forces Can Help Small Businesses Analyze the Competition,
2022). As for Example: for Morrisons operation in the highly substitute market results in
impacting to the other company to Tesco for charging low prices for the same products offered
by the Morrisons, this impacts the company and results in losing the loyal consumer market
which hinder in attaining competitiveness while operating in the highly dynamic market.
Strategy implemented in Morrisons
Morrisons has used Ansoff's matrix to analyse the business focus of the company. This
tool describes the three important parts of business i.e. cost, product differentiation and market.

The company is engaged in retail business and has to compete with many competitors. The
company has used product differentiation strategy along with lowering the price of products to
remain competitive and to increase the market shares and revenue. Morrisons problem was that
there was no growth and no increase in market shares. Product differentiation has brought
variety of products in the market which has increased the market shares. The variety of products
have attracted the customers and increased the revenue of the company. The corporate strategy
of the company is analysed using Ansoff matrix. This matrix help in analysing and redesigning
the strategy (Bozic, Siebert and Martin, 2019). The company has implemented market
development and product development approach to increase the growth and market share of the
company as its existing strategy.
The company has expanded its business through conventional stores. The establishment
cost of conventional stores are lower than super markets and these stores keep the products
according to the demand of products. The conventional stores have build a strong brand image
and also positively affected the supermarket stores of Morrisons. Company has provided variety
of products according to the customers' needs and preferences. The company has tried to offer
better price proportion with variety of products which has attracted customers and increased the
market shares and revenue. Company has also implemented diversification strategy to expand its
business and to increase its customer base and building strong customer base with diverse
customers. The success of strategic planning depends upon two factors i.e. acceptability from
customer point of view and market point of view. The acceptability will be gained by providing
right product at right time and place.
The existing strategies i.e. product development and market development along with
proposed strategy i.e. diversification strategy will enable company to expand its business
worldwide and provide its customers with variety of product options. This will also enable it to
ensure customer retention as customers will not switch to another product or company if they get
high quality products at reasonable price. Morrison will be able to achieve competitive
advantage as diversification will enable with mix cultural customer involvement. The products
that are to be offered to customers will be in accordance to customer preference and taste which
will ensure customer satisfaction (Lamey and et.al., 2018). Company is required to make sure
that strategy is implemented after evaluation of external and internal factors to ensure success of
adapting diversification strategy. The up gradation in technology has been an opportunity for

company to reach customers through online channels and provide home delivery services. This
online platform has enabled company to attract more customers through effective promotional
activities. Morrison has ensured success of diversification strategy giving opportunities to its
customers to select products of their own choice and opening of new stores and business through
online platform has made availability of products to customers at any place where company had
no reach before. The partnership with Ocada for providing home delivery services to customers
has made it easier for company in low cost expansion of its business.
Recovery plan
Recovery plan refers to the plans and strategies implemented by the organization after
the incidents which have impacted the operations and growth of the business. Morrisons was
facing problem of no growth and decline in the sales which has impacted its revenue and profit.
As the company become static and there was no increase in market shares. The management of
the company implemented different strategies and plans to solve the problem which has affected
the growth of the company. Company implemented product differentiation strategy along with
lowering the price. The variety of products in the market has attracted the customers of different
segment which has helped to build strong customer base. This increase in customer base has
enabled the company to increase the sales and revenue leading to increase in profit margin.
Product differentiation has enabled the company to continuously engage in the development of
innovative ideas. Company has also focused on lowering the product price to ensure that
customers do not switch to other products because of price.
Company has launched new stores in different countries to increase the customer base
and profit margin. Morrisons has taken advantages of advanced technology and digital platforms
to increase the sales. Company has used online platforms along with home delivery services to
reach its customers (Morrish and Jones, 2020). The food products launched by the company has
ensured customer satisfaction and customer retention as the products were according to the
targeted customers preference and taste. The company has used innovative idea of promotions to
make customers aware of its products along with the benefits the products provide. To attract the
young customers it has used online promotional activities by giving ads in social media. The
proposed strategy and plan will enable company to recovery from the losses by increasing the
sales margin and building a strong brand image.

The company has cut prices of the products, improved the standards of stores by
providing effective customer services and made products available in the market according to
the taste and preference of its customers. The high investment of company in research and
development will enable company to implement new strategy i.e. diversification strategy along
with its existing strategy of product and market development. Company is required to have good
market research of countries or market where it can plan to expand its business and is also
required to study the customers and its behaviour to ensure success of adapting diversification
strategy. By entering into contract with Ocado for enabling home deliveries to its customers,
Morrisons has surprised the market as this enabled company to achieve competitive advantages.
This has increased the online sales of the company as company has also implemented the
wholesale supply through amazon. The company has introduced vocational education training
for its employees to improved their skills and enabled them to easily adapt the changing
environment (Paul and et.al., 2021). These development trainings has enabled the employees to
learn new technical skills and made them aware of changing technologies. The skilled and
talented employees in the company has enabled company in continuous innovation after
analysing the current trends and changing preferences of the customers. The efficient HRM of
the company implemented different HR strategies to ensure employee satisfaction. This has
increased productivity and played a major role in increasing the revenue and profit margin of the
company which has been declined in last few years.
A risk management strategy
Risk management strategy is the tool that is used by organization to mitigate the risk that
are being identified by the organization which may impact the operation and growth of business.
Morrisons has set risk management model to identify, assess, control and monitor the risk. The
company has six priorities i.e. to be more competitive, to serve customers better, find local
solutions, develop proper and useful services, to simplify the operations and to make
supermarkets strong. The company has threat of competition and there was risk of decrease in
market shares (Dang, Jasovska and Rammal, 2020). The company has mitigated this risk by
implementing corporate and business strategies. Company introduced variety of products with
unique features to compete with other companies. Company has reduced its product price to
attract the customers and to increase the sales which has decline in last few years.

The expansion of company was very expensive as opening supermarkets need high cost.
This was mitigated by the company by opening conventional stores which requires low
establishment cost in comparison to supermarkets. Company has also switched to digital
marketing which enabled it to reach all the customers worldwide and increased customer base.
The company has used these strategies to mitigate the risk of customer turnover. The company
has used many ways of promoting its products to attract the customers from different segments.
As company is dealing in global market there is risk of non-compliance of rules and regulations
of different countries. Company has ensured that it is complying with all the rules and
regulations of every country in which it is dealing in. During the pandemic company's profit
margin decreased due to decrease in revenue (Deng and et.al., 2019). Company switched to
online platform to recover the losses which were incurred by it during pandemic and this enabled
company to expand its business and to enhance its brand value.
The company has started to provide home delivery services to its customers to ensure
customer satisfaction as this has made shopping easier for customers. Company has
implemented turnaround strategy to mitigate all the losses incurred in past few years and to
increase the revenue. The company switched to product development and market development
strategy to increase its market share and to increase customer base. The development of
company website has enabled company to make its customers aware of its products along with
its prices. Company has understood importance of Artificial intelligence (AI) in future
development of business. It has entered into partnership with Blue Yonder, to use its AI for
increasing productivity and automate ordering system. This has reduced manual ordering and
enabled employees to concentrate on other tasks which has improved customer satisfaction.
CONCLUSION
From the above report it can be concluded that, strategic management is mainly defined
as forming and setting with the goal and objectives for attaining competitive while operating in
the dynamic market. As with using the resource base theory and the profit maximization theory
in the business aids in attaining competitiveness while operating in the dynamic market. Further
more with using the porter model and defining various examples helps in comparing the success
and failure of the companies while operating in large competitive environment. Also, with using
and defining the recovery plan mainly helps in Taking actions for mitigating the issues while
arrived with implementing the strategy.

REFERENCES
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Resource and Business Administration. 3(9). pp.385-399.
Bozic, B., Siebert, S. and Martin, G., 2019. A strategic action fields perspective on
organizational trust repair. European Management Journal. 37(1). pp.58-66.
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relations: The risk management strategies of MNEs in emerging economies. Journal of
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