Analysis of Impact and Influence of Macro Environment on Business Strategies of Morrison

This report analyzes the impact of macro environment on the business strategies of Morrison, one of the largest supermarket chains in the UK. It includes a PESTLE analysis, Ansoff's Matrix, and stakeholder analysis.

BUSINESS-
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
Analysis of impact and influence of macro environment on an organisation and its business
strategies.................................................................................................................................1
LO2..................................................................................................................................................6
Assessment of internal environment and capabilities............................................................6
LO3..................................................................................................................................................9
Evaluation of a given organisation with the help of Porter's Five Force Model....................9
LO 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
A set of rules and regulations in a business organisation in order to attract customers,
achieve competitive advantage, strengthen performance of business and then achieve all the
objectives and goals are said to be business strategies (Ritte and Andersen, 2014). It makes a
roadmap for future steps of company; it also provides with an outline of planning. In the
following report analysis of business strategies of Morrison is conducted. It is one of the largest
supermarket chains in United Kingdom. It comes on number four when considering all the big
supermarkets in UK. With it headquarter located in Bradfort, England, William Morrison found
this chain in year 1899. In this report analysis is done on all the factors of macro environment on
business as well as its stakeholder analysis is done. Other than this different models of Morrisons
are also discussed in this report. These models include Porters Model, SWOT Analysis, VRIO
Analysis, Pestle, Ansoff’s Matrix etc.
LO 1
Analysis of impact and influence of macro environment on an organisation and its business
strategies
 Mission- Mission of Morrisons is to provide their customers with its good quality
products in best possible prices on their weekly shopping. To provide customers and
clients valuable products by best value for money on weekly shopping.
 Vision- Vision of Morrisons is to become specialist in food industry for all its consumers.
 Objectives- Company aims at providing good quality of products to their customers in
order to attain maximum market share.
PESTLE analysis:
PESTLE analysis is a tool used to analyse the impact of external factors on a
business. It includes macro factors present in external environment. Below mentioned are
all those external factors analysed for Morrisons-
 Political- Political elements such as future legislation, government policies,
international legislation etc. present in a nation have impact on functioning of a
business. Morrisons is also facing impact of such factors on its business. Below
mentioned are positive as well as negative impact of this factor on Morrisons:
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Positive impact: Business operations in Morrisons is affected by various custom duties levied on
it. Company benefits from exports as they give more profits to business. Morrisons exports its
products to countries in Asia (Rowlinson, Hassard and Decker, 2014).
Negative impact: There are some regulations to have negative effect on operations of Morrisons
as well. Due to changing political parties in Asia and democratic rule of China doing business in
those regions have become difficult.
 Economic- Economic factors include monetary issues, taxation, overseas
economies etc. Below mentioned are positive as well as negative impact of this
factor on Morrisons:
Positive impact: Diversification strategy is used by Morrisons to introduce new products in new
markets increasing its presence in foreign as well as domestic economy.
Negative impact: Labour cost in UK are too high. This is causing a hike in expenses of
Morrisons. 4.4% of expenses of wages for Morrisons have increased in past year(Morrison's
SWOT and PESTLE analysis, 2019).
 Social- This set of external factors is concerned with lifestyle, trends,
demographics, consumer opinions etc. Below mentioned are positive as well as
negative impact of this factor on Morrisons:
Positive impact: Morrison is diversifying in its products in order to satisfy needs of all its
customers. This is helping in company to increase its market share and customer base. This also
increases revenues and profits of this firm.
Negative impact: There are disadvantages to company due to these social factors as consumers
perceptions and wants keep on changing. Due to this company needs to change its business
strategies from time to time.
Technological- Technological factors include technological replacements, research funding,
information and technology, advancement in science etc (Storey, 2016). Below mentioned are
positive as well as negative impact of this factor on Morrisons:
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Positive impact: Sales of business is affected in a positive manner that is it is increasing with the
help of technological advancements. This helps in attracting more customers, as it helps in
saving time as well as cost.
Negative impact: This requires a lot of investment for research as well as development. Also
qualified technicians are required for its installation (Pasquinelli, 2014).
 Legal- Legal factors in PESTLE analysis includes all the influences such as
consumer protection laws, discrimination laws, copyrights, patents, employment
laws etc. Below mentioned are positive as well as negative impact of this factor on
Morrisons:
Positive impact: Morrisons is following all the required rules and regulations which are given by
Food Retailing Commission (Aubry and et. al., 2012). This increases loyalty of customers
towards firm.
Negative impact: Employees of company are taking legal actions against it for discrimination in
treatment or wages. This can affect companies’ goodwill and its business strategies.
 Environmental- Environmental factors in this analysis consists of weather,
climatic changes, various environmental policies, working of various NGO’s etc.
Below mentioned are positive as well as negative impact of this factor on
Morrisons:
Positive impact: Morrison is adopting a number of processes which do not have a negative
impact on environment. It helps company to maintain positive relationship with its customers as
well as society. It also helps in building goodwill of company.
Negative impact: Negative impact is cost to company in order to develop techniques which are
eco-friendly and does not affect environment negatively.
There are various layers in a business which includes competitors, industry and macro
environment. When taking Morrisons in to consideration an analysis of its macro- environment is
helpful in telling about reasons for future success or failures and setting a platform to make
strategies. It also offers different opportunities and challenges for expansion of company in
various countries globally (Burgess, N. and Radnor, Z., 2013). Morrisons is positively
developing its strategy after analysing all these factors in order to achieve its organisational goal
and objectives.
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Ansoff's matrix:
Ansoff Matrix provides company with management tools for a company to plan its
strategies of growth and development for future. Ansoff’s Matrix is divided into four strategies
which offers businesses with opportunities of growth and development. In context with
Morrisons this model is used and then those strategies which best suits for attainment of its
objectives and goals are adopted by it. Following are all these four strategies studied in detail:
1. Market Penetration:
In this type of strategy, a company focuses on its already existing products in its already existing
market to gain customers of their competitors. Usually deduction of cost is done in order to
achieved this objective (Cacciolatti, L. and Lee, S. H., 2016) rather than just focusing on price in
order to attain this strategy significantly. Increase in any one which are cost and quality of
product will attract more customers resulting in increase in customers and revenues for company.
Morrisons have been using strategy of market penetration from a long period of time which is
why they provide high quality products to its customer in minimum prices. This strategy has
helped company to make its position in market and gain market share. This is how company is
one of the major supermarket chains in UK. Competition in this industry is very complex which
makes this strategy useful for Morrisons.
2. Market Development:
In this strategy company does not innovates in its product line but they choose to target
new markets with different geographical areas. It helps companies who want to trade globally
and export their products to other nations. A lot of research and analysis is required before
entering into a completely new market in order to know its customer preferences and their
differentiated demands. Morrisons have faced a number of challenges while expanding with
similar product range. With all these difficulties they tried to manage their business
effectively by analysing market and then entering into new market.
Product development:
Another expansion strategy included in Ansoff’s Matrix is product development. In this strategy
company deals in same market while they introduce new products in the market. Creating a new
product for same customers can be difficult as they are already aligned towards old product and
bringing new product might result in decrease of sales of their older products. This is why
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companies are seen introducing products which complement their older products. Morrisons
however does not use this strategy much as rather than product development it focuses on market
development (Kim, Lee and Shin, 2015). It wants to cover more geographical area and
increasing product line might lead to complication in its functioning in different global markets
Diversification: It is a strategy which is used by most of countries to cater different
customers with different needs in different markets. In this expansion of product line as well as
market both takes place. However, diversification strategy requires a lot of investment by
companies (Cserháti and Szabó, 2014). Morrisons have used his strategy a number of time when
they are looking for expanding into such markets which consists of customers of different
cultural background who have different need and wants. Company have successfully used this
strategy but however this strategy requires a huge investment so company have to conduct proper
study of market and customers before adopting this strategy
Stakeholder Analysis
Stake holders are all those who get affected by functioning and operations of a business
either directly or indirectly. Below mentioned is stakeholder analysis of company and how are
they affected by companies functioning:
Stakeholder Effect on Morrisons
Customers
Morrisons have loyal customers as they have
been providing products of good quality from a
long period of time.
Suppliers
Morrisons is required to build relationship with
its suppliers so that functioning of business can
be carried on smoothly without any problems
(Morton, Wilson and Cooke, 2015).
Governments
It is necessary for a business to follow all the
laws implemented by government as they are
an important stakeholder for company.
Following all the rules will also help build
goodwill and reputation of company in market.
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Shareholders
Another important stakeholder of company are
its shareholders. When discussing about
Morrisons shareholder are important as they
are the one who provide business with
investment for development and advancement
when required.
Employees
Employees are also stakeholders in a company
as a company cannot run without them. They
are behind working and functions of an
organisation. Morrisons believe in sharing their
profits as well as their growth with employees
to provide them motivation as well as
satisfaction. They motivate, train and pay their
employees effectively to make sure that quality
of work and productivity of employees never
decreases.
From above description of stakeholder analysis for Morrisons it is clear what importance
stakeholders hold for company and how is it important to gain loyal stakeholders in firm.
Morrison deals in supermarket change in various parts of world which makes it necessary for
company to have loyal stakeholders (Eason, 2014).
How analysis determines strategic management decisions of Morrison
In order to increase its profits, it is essential for Morrison to expand its business
effectively and efficiently. It is management of company which develops a number of strategies
in order to achieve goals and objectives of firm in mentioned time frame. Due to its wide product
range Morrison can easily develop a huge customer base and increase its profit.
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LO2
Assessment of internal environment and capabilities
SWOT analysis of Morrison:
Strengths Weaknesses
Morrisons build good brand image in the
market. They perform well and generating
revenue in the market. Morrisons manage
good distribution network and maintain
stability in their potential market. They also
maintain good relation with their customers.
Always try to fulfill the demand. Morrisons
adopt good market strategies for their
products. Morrisons good at customer
relationship management which increase level
of customer satisfaction. Maintain skilled and
intelligent workforce
Morrisons profitability ratio is average as
compare to their competitors. Company do
less investment in new technologies. Need to
change structure of an organization according
to the changes taking place in the market.
Ineffective and improper financial planning.
Morrisons need to develop or plan strategies
for expansion of the business. Morrisons
spend more on workforce, training and
development.
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VRIO analysis of Morrisons
VRIO Analysis is used as a tool in order to analyse all the internal resources as well as
capabilities of an organisation in order to sustain in the competitive market. There are four
requirements that define the sustainability competitive advantage of an organisation which are
valuable, rare, organized and imitable. Below mentioned is this analysis conducted on
Morrison’s:
Valuable: The financial resources which have been developed by Morrison’s over a period of
time are valuable for the company. Company have developed their financial resources over a
period of time which help them in creating various market opportunities and dealing the threats
in the market. The valuable work force and human resource which have been developed by
Morrison are also an important internal resource for the company which helps the company in
generating more profits and increasing their productivity. However, research and development
department of the company is not much valuable for the company as they require a lot of
investment. Even though the effect of these investment of profits cannot be seen.
Rare: Financial resource of Morrison’s as well as the employees of Morrison’s along with all its
patents are a rare resource for the company. These help the company in standing in the
competitive environment effectively. Company have maintained training and development
programmes for their employees which help them in effectively managing all the objectives of
the company and increasing the productivity as well as profitability for the organisation. Also,
distribution network developed by Morrison’s have helped them stay in the competitive
environment and sustain in the market.
Imitable: The financial resources developed by Morrison’s is difficult to be imitated by other
competitors of Morrison’s in the market as they took a long time to generate such financial
resources. Also the human resource of company is unimitable as a lot of training and
development programmes are provided to their employees so that they can develop their skills
and effectivity in the organisation. A lot of investment is required in order to make sure that
these resources cannot be copied by the competitors of Morrison’s.
Organized: The patents which have been developed by Morrison’s are organized well along with
all their financial resources which helps the company in generating huge profits. The
maintenance and organisation of distribution network of the company has also been generated in
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such a way that there are no flaws in the distribution system of company. Proper planning and
strategies developed by management of the company helps in effectively managing the
objectives of company and also achieving all the goals. These help the organisation in staying in
the competitive environment for a longer period of time effectively.
These are all the internal resources and benefits these resources bring for Morrisons. It is
important for organisation to use these resources in a manner that benefits can be brought into
organisation with the help of financial resources, human resources, patents and distribution
network of company. It also states the need for development of research and development
department of Morrisons.
LO3
Evaluation of a given organisation with the help of Porter's Five Force Model
In order to analyse all the forces for business environment which is affecting its operations
Porter’s five force model is carried out. In order to analyse business effectively this model is
very helpful for company.
Bargaining power of buyer: Consumers are understood to be biggest asset present for an
organisation. In order to increase its revenues, it is important for Morrison to keep its customers
satisfied (Linn, Sanden and Piekkari,2018). Morrison is tending to make profits from providing
good quality product at affordable prices. Also, there are a number of competitors for it in
market. This makes bargaining power of consumers of Morrisons high. Consumer can easily
change their shopping centre from Morrison to any other super market. It is necessary for
company to understand demands and needs of consumers and fulfil them without any negotiation
Bargaining power of supplier: Morrison have a huge range of products which can be
found in its supermarkets. It is necessary for company to make good relationships with its
suppliers so that company can get good prices of their supply. It helps company in reducing
bargaining power of supplier for Morrison. When supplier demand for high bargaining power
company simply changes its suppliers. In this way company can easily maintain its relationship
with supplier and give them low bargaining power.
Threats of new entrants- Morrison is thinking of expanding its business in global market
from time to time. There are a number of other supermarkets already present in market. This
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makes it essential for company to analyse all its competitors and study their strategies. Only after
this analysis company can make its strategy. It is necessary to survive and maintain their profits.
Threat of substitutes- Morrison has a number of substitutes in market. However, in order
to deal with them company is making sure that they provide better quality than others. This
quality enables them to be above their competitors and makes it difficult for others to produce
substitutes for company.
Rivalry within market- Morrison is required to attain competitive edge in marketplace
over its competitors. Morrison adopts good strategies at very initial stage to position their
product (Knott, 2015)
. Morrison makes strong strategies to compete with their competitors in marketplace.
These are various aspects of porter’s five force model when applied to Morrison. Which
help in understanding various factors in competitive market for Morrisons. This helps the
management of Morrison in taking decisions regarding there strategies to face competition in
industry.
LO 4
Applying of theories, concepts, models to understand and interpret strategic directions available
to a company
There are four strategies in Generic Model of Porter which are leadership, differentiation,
focus. Below mentioned is this model-
The three major component of this model are mentioned below:
Cost Leadership- This is a way to develop competitive advantage. Cost leadership can
be attained by increasing profits as well as minimising cost by charging average prices. Other
one is increasing market share by decreasing prices. This is an effective strategy to gain
leadership in market. 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 (Lee
and Smith, 2018).
Differentiation Strategy- This is how companies differentiate and make their products
different from their competitors.in order to do this it is required by company to make high
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quality products. Morrison requires to make sure their products are innovative enough to
compete in market. Its main focus is providing distinguished characteristics to its consumers.
Morrison provides with a number of extra benefits to its customers such as restaurants, cafes,
playing arena for kids etc.
Focus- Concentration on a particular niche market is done by companies who use focus
strategies. Understanding market dynamics is included in focus. In this unique need of
consumers can be focused on by company. It may be low-cost, high quality products, products
differentiation etc. Brand loyalty is focused on in order to serve customers uniquely when
compared to their competitors. Market segment of brand loyal customers is then ignored by
competitors. Morrisons focus on two types of strategies namely cost focus and differentiation
focus. Differentiation focus is used for narrow segments, when emphasizing on just a small
segment in market strategies can be made and executed easily in order to meet demands of
customers.
Morrisons is focusing on cost in order to provide products and services in minimum
possible costs. Economies of scale is tried to achieve so that companies profit margin can be
maintained while minimising its cost. This will help company to raise its revenues along with
raising its profits.
Strategic management Plan
The following management plans describes all the objectives, strategies tactics etc. which
can be used by organisation in future. These help company to achieve its mission and visions. A
plan which is designed and documented in order to communicate functions and operations in an
organisation is known as strategic plan (Lee, 2014). There are a number of things included in it
such as goals, focus energy, resources and priorities that makes sure that all stakeholders are
working efficiently in order to attain all its goals and objectives. Following is strategic
management plan which is devised by executives of Morrisons-
 Missions- Mission of Morrisons is to gain cost leadership in its industry by
providing better quality products in minimum cost possible.
 Vision- Providing better experience to customers with better quality product and
huge product range.
 Objectives- Company aims at providing best quality products to its customer at
affordable prices so that companies can attain maximum customer satisfaction.
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 Extensive Marketing- Morrisons have created a marketing team which will only
focus on enhancing its product and bringing innovation in it. This will help them
gain a benefit over all their competitors in marketplace.
 Market research – Morrisons is focusing on conducting a deep analysis of market
so that they come to know about preferences and demands of its customers. This
also helps in targeting potential customers. Through this research companies make
strategies to expand their business.
 Tactics- company aims at achieving all its objectives, by adopting tactics which
will provide more satisfaction to their consumers. They also focus on using latest
technologies in its business and all its operations.
With the help of all these strategical moves company can draw a plan and work on its n
order to achieve all its objectives and goals effectively. This provide a path to all the
employees in organisation. It also clears the roles and responsibilities of all the
managers and subordinates in the organisation.
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CONCLUSION
The above report says that it is necessary to observe and analyse very aspect of business
strategies which can affect business strategies and its functioning. It is necessary for businesses
to develop and grow to survive in market for a longer period of time. There are various tools for
this analysis such as SWOT, PESTLE, Porter’s five force model, VRIO etc. This helps in
planning for future of company. It also helps in identifying important resources of firm.
Company can remove resources which do not generate enough output. Ansoff’s matrix is also
used which helps company to achieve its goals as well as objectives. Companies create strategic
plans after this and try to bring more and more innovations in their services as well as products.
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Online
Morrison's SWOT and PESTLE analysis, 2019. [Online] Available
through:https://www.swotandpestle.com/morrisons/
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