Strategic Analysis of Morrison Supermarkets: Unit 32 Business Strategy

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This report provides a comprehensive analysis of Morrison Supermarkets' business strategy, focusing on both internal and external factors. It begins with a PESTLE and SWOT analysis to assess the macro-environment and the company's strengths, weaknesses, opportunities, and threats. Porter's Five Forces model is then used to analyze the competitive environment, followed by an identification and justification of Morrison's existing and potential competitive advantages. The report then explores various strategic options available to Morrison, critically evaluating different strategic directions and recommending the most appropriate growth platforms and strategies. Finally, it evaluates methods for monitoring the chosen strategies to ensure success, concluding with a summary of the key findings and recommendations. The report covers various aspects of business strategy, including market analysis, competitive advantage, and strategic planning.
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UNIT 32 - BUSINESS
STRATEGY
Table of Contents
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INTRODUCTION...........................................................................................................................3
Part A: An internal and external analysis that provides a platform for strategic decision making: 3
1. PESTLE and SWOT of the organisation and an evaluation of the organisation’s resources
and capabilities............................................................................................................................3
2. Competitive environment analysis using Porter’s Five Forces model....................................6
3. Identification and justification of the organisation’s existing and/or potential competitive
advantage.....................................................................................................................................8
4. Valid strategies and tactical objectives to achieve overall strategic objectives.......................9
Part B: On the basis of this analysis critically evaluate and justify strategic options for the
organisation:..................................................................................................................................10
1. Critical evaluation of the different types of strategic directions available to the organisation
...................................................................................................................................................10
2. Justification and recommendation of the most appropriate growth platform/s and strategies
...................................................................................................................................................13
3. Evaluate ways and means by which the chosen strategy/ies can be monitored in order to
ensure success............................................................................................................................14
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16
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INTRODUCTION
The business strategy refers to the strategic planning that assist to help and grow the
business in a proper manner and method (Ukko and et. al., 2019). In this process the organization
use to make different plans and goal which have to achieve by the business in the market. There
are different types of business strategies which help to achieve the end goal of the company in
effective manner. Morrison is one of the largest chain of supermarket having fourth rank in the
Britain having its main brand in Braford, UK (Islam and Mamun, 2017). The company is
offering healthy food products in the market at affordable prices. They are having more than 494
stores all over in UK and earning almost 17,536 million annually. This report will evaluate the
internal and external analysis of Morrison and its porter five forces knowing competitor
environment. Further identification and justification of competitive advantages are explained
with a strategies planning and tactical objectives. Moreover, the different strategies directions are
determined for the Morrison and recommendation is also presented and ways of monitoring the
success are discussed.
Part A: An internal and external analysis that provides a platform for
strategic decision making:
1. PESTLE and SWOT of the organisation and an evaluation of the organisation’s resources and
capabilities
Morrison is one of the largest chain in the supermarket of Britain having four poistion in the
market. There are number of different external and internal factor who are affecting the company
from different sides (Anand and Mantovani, 2021). PESTLE analysis assist to know about the
macro-environment as retailing sector is highly influenced by the change in its extrinsic
environment. So with the help of its external environment analysis Morrison can find the best
way to deal with and make effective change.
Political factors: The retail industry is highly influenced by the political factor of the country
because all the companies of retail have to follow the instruction which are developed by the
political party. In the Britain the main political change is caused due to Britain exit from EU
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market it causes number of issues for the retailing companies. With this there are different
changes in the policies and rules for operating in UK market (AKMAN, 2020). In the market of
food retail the laws of government are higher and multiple so Morrison is highly influenced in
the Britain market. According to the guidelines of government they have to change the functions
so that they can sustain in the market. By adopting to the change within the organization they can
grab the opportunity to present the brand in-front of government in positive manner.
Economical factors: The food retailing companies of Britain are highly influenced when the
economy condition changes. As Britain economy after Brexit is being more complex and
organization have face issues of economy (Abdel-Basset, Mohamed and Smarandache, 2018).
The inflation rate is also being raised after the Brexit people are not having disposable income to
invest more on food supplements. Morrison is offering high quality in the food products and the
customers base of the company is not having the income to buy the products after the higher rate
of inflation in the economy. This is a big threat for the company because I they are selling their
products in the market at higher price then their demand reduced immediately.
Social factors: As the society is also being totally changed people preference is changing on
regular basis, and they are buying the products as per their choice. Retail industry influenced by
this factor very much because when people change their buying habit then retailing companies
have to change al of its products. The education and healthcare sector are more expanding in the
UK market so people are also engaging in having higher education, so they are investing their
income over their. When the Morrison will produce its goods as per the UK people then their
sale will automatically enhance.
Technological factors: In any industry technology is becoming the main element which assist to
impact the business very much (Simões, 2020). Every organization to gain competitive
advantage need to change and modify its technologies on regular basis. If the Morrison will not
use innovative technologies then their wastage can not be minimized and customers are also not
attract with the brand. In the current market digital technologies are expanded in the market so
Morrison also need to change its selling and promoting style to digital manner to gain
competitive advantages in the market. This is one of the best opportunity for the company to
compete in the international market. When the technology upgraded in the market and Morrison
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changes its technologies accordingly then they will grab more customer’s in the existing and new
market.
Legal factors: there are number of laws which are made by the government for the retailing
sectors so the organization in the retail sector need to follow all of these laws. Morrison have to
undertake the safety laws for the food and laws of integrity to check the products are good and
there is no illegal practises are being done (Grassi and Vallati, 2019). This laws are also changed
so Morrison need to change the policies of its organization keeping in mind the legal laws. By
following all the rules and laws Morrison can grab the opportunity to become more effective in
dynamic environment.
Environment factors: The area where the business practises are done is also being influencing
the company with different directions. When the climate condition changes then company have
to change their process of production and distribution in the market place. They have to reduce
the emission of carbon so that they can able to sustain in the market for long-term. When any
change take place in environment where morrison operate then it can be bigger threat for the
organization and its functions as well.
SWOT analysis
The SWOT analysis of Morrison assist to know about the strength, weaknesses, opportunity and
threats. Morrison is one of the largest chain of supermarket in food product over market of UK.
Strength: Morrison is having effective food and beverage production skill which they used to
produce, and they are having a strong and more efficient distribution network by which they can
easily reach to their targeted people. Their supply chain is also very wider (Pesce and et. al.,
2018). They are also having my-view feature and more card programmes for the existing and the
new customers of Morrison. They are having large number of products which are being offered
to the customers and also operating in customized food products range. The company always
make use of innovative marketing approach in the market, and they avoid middle man while
distributing their products (Haleem and Jehangir, 2017). They are also trained the employees and
academics manner through which they are regularly improving their services.
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Weaknesses: Morrison is not yet cover the global market they are operating in only limited
market and having limited market presence. When there is change in external environment then
they are not able to take immediate actions for that change and lack behind in the market
(Shatskaya, Komaristaya and Kafian, 2017). The customer of Morrison are less loyal they use to
change their product brand at any time when they feel the Morrison is not offering the right
products according to them. The customers are having less positive image of Morrison in their
mind because they feel there are more brands better than this in market (RASHID, 2020).
Morrison is having less online presence only limited products are available online. Their
employee turnover is also high and overall they are having less revenue in the market.
Opportunities: the Morrison is the international brand, yet they are not able to expand its
business internationally so it is opportunity for the Morrison to expand globally (Wee, 2017).
Morrison need to expand internationally to become the leading brand in the market. They also
sell its products more through online market and provide related discount to attract more and
more customers towards the brand. They also enter the non-food retailing sector so that they can
offer large variety off products in the market (Křupka, Kantorová and Haile, 2018). In the
COVID-19 pandemic situation people preferring online buying of all type of products so by
providing the goods and services to them at affordable price can help to attract more customers.
They can also sale their products in third party applications which use to supply the products
internationally.
Threats: The retailing sectors is having more risk than any other sector or field and Morrison
also exist in retailing. The rules and regulation are regularly changing so the company have to
follow them and if they are not able to do then Morrison not able to sustain in the market
(AlMarwani, 2020.). Further the competition is also enhanced in the market as new and new
companies are entering the market and trying to the best so this is one of the biggest threat for
Morrison. The online retailing is become the threat for Morrison’s because there are large
number of people who are not using internet.
2. Competitive environment analysis using Porter’s Five Forces model
The analysis help to identify the competitive landscape of the retail industry each forces
in the model is present a strength that assist the strategic planner. The structure of the industry
uses to change regularly as per the customers preferences. The five forces of porter are as under:
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Threat of new entrants (medium): The retail sector is a sector in which new entrants are being
very common and Morrison is one of the leading brand in the retail sector of UK (Amara and
Tiriveedhi, 2017). It is very difficult for any new entrant to come and compete with Morrison in
the market. Basically new organizations are coming in the market with price penetration
strategies to gain maximum number of profit, but they are not capable to have such a distribution
network. The retail sector is costly so anyone can not come to set up a new business in the
market. As the investment is higher as it require lots of research and development of the market
place. The licensing is also required to enter the new market so it is also berries of the new
entrant companies who are coming to compete.
Bargaining power of Supplier (low): Morrison is having number of suppliers in the market in
which they use to operate who are providing them raw materials. Which represent that the
suppliers in the industry are having less power to control the prices in the market. When the
supplier use to reduce the margin of Morrison in the market then they simply shift to some other
supplier. The Morrison is also having number of supplier who are providing raw material to the
company therefore when any one of them increase the pricing of the raw material then they
immediately shift to some other supplier.
Bargaining power of customers (medium): the retailing industry is very big and having number
of brands who are offering same level of products in the market. As the food supplements
companies are less in comparison of any other retailing organization so the customers are having
choices to buy their products from different companies (Johannsdottir and McInerney, 2018).
The Morrison products are being unique so the customers of Morrison are feel difficult to find
the alternative from the market. The quality which is being provided by Morrison is being more
unique and high and they are also providing such quality at minimal price so bargaining power of
customers are also at medium level.
Threats of substitute products (lower): the Morrison is operating in the food supplements in
which substitute are being very less than compared to any other industry. As the profit earning in
this sector is low and there is no other such substitute which can replace it. There are some
substitutes, yet they are more expensive than the products of Morrison, the company is offering
its product at affordable price then others.
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Rivalry in existing firms (medium): there are favourable number of companies who are
operating in the industry in which Morrison is operating. From those number of companies there
are only few companies who are leading the market shares. The products of the industry of
Morrison are being differentiated from others in the market. All the firms in these industries are
trying to grab maximum number of customer base with their unique products. Morrison is also
offering unique type of products at affordable prices to attract more customers.
3. Identification and justification of the organisation’s existing and/or potential competitive
advantage
Morrison was just a stall when it was formed but the steady growth of the company render it to
develop to the level of giant supermarket today and not just a supermarket only, but one of the
player in the market giving high level of competition to others and also maintaining their
sustainability in such a competitive industry of UK, as the UK’s supermarket industry is
considered to be one of the highly competitive sector in the world. The players in such a
competitive market comprises of Tesco, Asda, Sainsbury, Walmart, ALDI and now Amazon too
after establishing their operations on online platforms. Morrison is having great chain of
distribution which comprises of 500 stores across various locations of UK (Bramantyo and
Asvial, 2019). The unique experience customers avail and the Morrison’s ability to provide the
same to its customer in it’s in – store facility is one the advantage that the company is enjoying
over its competitors. The customer service of Morrison is such a great leading to higher customer
satisfaction and retention which made it possible for the company to stand out from the
competition. Such a competitive advantage that the company is enjoying is just due to the experts
and experience staff who are operating these stores and confronting customers on regular basis.
They are highly trained on how to behave with customers and tackle their grievances if they are
facing any such. This competitive advantage of the company can be justified through the
profitability and revenue the company is constantly generating from many years (Ali and Anwar,
2021). There are many positive views of customers on websites and social networks as well
which is indicating company’s ability to satisfy its customers.
Another such advantage enjoyed by Morrison is its dedication towards providing high quality
and fresh products that is sourced locally to its huge client base is a great differentiating
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particular which is allowing company to stand out from competition and even good recognition
in the market for such offerings.
The company is also able to produce quality products at a lower cost which allows it to earn
higher profits in the market by selling these products at a competitive price. This benefit is
accrued to the company due to their actions towards establishing their own manufacturing
factories resulting cost saving to a great extent (Dina and Cahyandito, 2018). The company has
even their transport Lorries which distribute its fresh produce directly to its supermarket, and
therefore the company is able to establish itself as a cost leader in the supermarket industry
where it is able to compete with other players on the basis of its lower cost per product.
Accordingly, Morrison is able to generate higher profits which is a factor ensuring long term
sustainability and survival of the company.
4. Valid strategies and tactical objectives to achieve overall strategic objectives
After analysing Morrison from different frameworks and models a particular strategic plan has
been identified which can be used by Morrison (Ropianto and et. al., 2017). To expand
internationally and globally this plan is effective for the Morrison as considering the values that
company consider while providing products in the market. The main values of Morrison are:
Quality of food supplements: To providing the best quality in the food products which can
enhance the health of the customers.
Satisfaction of customers: To satisfy customer by providing the high quality product at
affordable prices.
Easy shopping: To provide easy and healthy shopping experience which provide everything in
that industry.
Tangible objectives of Morrison
Specific: To enhance the sell as well as profitability of the company.
Measurable: To measure the profitability by analysis customer satisfaction and attraction towards
the organization.
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Achievable: To achieve the higher profitability as Morrison operates internationally.
Realistic: To use the resource optimally to increase the profit of the company (Abdel-Basset,
Mohamed and Smarandache, 2018).
Time- bounded: To achieve the set goal by the end of 2021.
Tactical strategic plan/objectives:
Morrison have to influence its targeted customers with the help of effective promotional
activities in the market. They can also tell about the uniqueness and specification of the products
they offer.
The international customer are been targeted to enhance the profitability as per sell of the
products.
They also identify the aspect from which the company can compete in the market place.
With the help of its positive aspects and improving the weaknesses Morrison can easily enhance
its market share and profit as well.
They should also look to the respective competitors who are affect the profitability of the
company.
Part B: On the basis of this analysis critically evaluate and justify strategic
options for the organisation:
1. Critical evaluation of the different types of strategic directions available to the organisation
By conducting SWOT analysis, PESTLE analysis, analysis through Porter’s five forces
model and evaluation of competitive position of Morrison, there are many strategic directions
available for the company has been identified which would be further explained with the help of
Ansoff’s matrix model which is considered to be the best model for evaluating various strategic
directions available in terms of risks and rewards associated with it (Bentley-Goode and et.al.,
2019). The model consists of four elements which helps in carrying out strategic analysis from
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various different aspects. These four elements will be explained in detail in the following section
of this report. The matrix is a very well model used by management in framing strategies while
planning for future course of actions to obtain growth and development in the company.
Ansoff’s matrix diagram
Figure 1: Ansoff's matrix
(Source: Dawes, 2018)
Market Penetration: This particular option can be used to grow and development in the market
where the company is already having its existence and also the growth strategies are formed for
the product in which the company is currently dealing with (Saldanha, 2019). This can be done
through increasing market share to gain leadership in the market by utilising competitive
advantage to create awareness among the existing customers. This strategy of growth is
considered to be quite less risky as the company has enough knowledge of the market and also
there is no need to make any form additional investment for the purpose of advertisements and
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research and development (Martí 2017). Morrison has a strength of producing its food and
beverage segment products in an efficient and effective manner which can be utilised by the
company for growing in the existing market with the existing range of products. The strategic
direction available with regards to penetrate in the market the company is existing and through
its existing products is that it can lower its prices to attract more customers and higher market
share. Also, this strategy can be easily applied by Morrison as it is enjoying cost leadership in the
supermarket industry, thus by lowering its profit margins by small amount, the company can
ensure high growth in the future. The strategy of market penetration is helpful for Morrison in
enhancing their brand visibility and market share and the same can be ensured through
establishing conventional stores rather than supermarkets by Morrison. This strategy will help
Morrison in overcoming the barriers of demographic nature and accordingly Morrison will get
higher position in the market through enhanced market share.
Market development: The growth strategy to move into the new markets with the existing
products itself is what comes under market development. The strategy requires the management
to find another segment to make their product available to them either in another country or in
UK itself (Chi and et.al., 2018). This particular strategy is considered to be more risky for
companies as there is no or very less knowledge available with regards to the new market they
are planning to enter. Here, Morrison has a strategic direction towards developing its market
approach of entering into global market where due to its lower cost and higher profit margin can
ensure future growth. It can enter with its product by investing and expanding its operations to
new markets like other European countries, Asian countries and America for going global (Dina
and Cahyandito, 2018). The company can do so in a successful manner by conducting research
about the local market of these countries and need to establish good relationships with these local
suppliers and retailers in order to gain better and deep insight about the market demand and
competitor’s strategy. Morrison should utilize this strategy towards international branding with
the help of joining hands through forming joint ventures which leads to international presence of
the company and accordingly there will be increment in the Morrison’s market share and
revenue.
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Product Development: This growth strategy provide to introduce new product range and
categories into the market where the company already has an existence. To maintain a better
competitive position, the company needs to find more product ranges to satisfy their existing
customer’s need in a much better way and can get some new customers too due to the inclusion
of new product ranges (Wahyuni, Fahada and Atmaja, 2019). The strategy minimises the rewards
received by the company due to higher cost incurred on conducting research for the demand and
perception of the customers before initiating production and offering the new product in the
market. So, the increase in the cost may render the company to earn lower profits. Therefore
under this strategy, the company has a risk of losing rewards it has planned but if the company
over this risk than the rewards are unlimited. Morrison has a strategic direction available through
the utilization of this strategy by developing new products which may not be of their own but by
acquiring another company who is into that business can be a profitable avenue for the company.
The name and fame of Morrison can be used to market such new products in the market where it
has already established themselves (Holotiuk and Beimborn, 2017). Morrison should undertake
this strategy for development and promotion of products of their own brand which leads to
gaining more attention of customers and thus helps in more revenue inflows within very short
duration.
Diversification: This growth strategy focuses on developing new products and offering the same
into new markets. As both the product and market is new to the company, this strategy is
considered to be a highly risky affair as it is believed that company’s core competencies are not
efficient in coping up with the demand of this approach as the company is new to both
production of new product and nature of new market. The strategy is useful as both existing
market and products are no more capable of increasing profits of the company. Morrison can
have a strategic move towards satisfying the needs of new group of customers by offering what
they are demanding. The company is currently operating in food segment, now it can expand its
operations to other markets where the demand of non – food products such as electronics and
clothing are high (Ali and Anwar, 2021). Through this the company can be able to generate more
profits which would allow it for ensuring growth and development in future. Morrison should
use this strategy for utilizing cultural mix of customers which helps in judging local pulses in a
better way and accordingly create more awareness of organic products. This would again leads to
increased revenue for Morrison.
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Application of theories, models and concepts to interpret strategic directions of Morrison
By applying the concept of Porter’s three generic strategy, the strategic choice adopted by
Morrison has been identified as cost leadership strategy as the company is enjoying lower cost
operations which results in low cost per product in the supermarket industry of UK.
The next is the application of Bowman’s strategy clock in the context of Morrison in order to
interpret the strategic directions and choices available with the company. The following is the
diagrammatic representation of this model.
Figure 2: Bowman's strategy clock
(Source: Echchakoui, 2018.)
This model guides an organisational decision making aims at choosing the strategic directions
through which the company can compete in market which is based on three factors that is,
whether to compete with product prices or with product differentiation which acts as a perceived
value of a product and the last one is the competing through specific base of customers with the
help of market segmentation.
As the company is facing a problem of inability to enhance their market share along with not
able to maintain positive inflow of revenue, so by applying Bowman’s strategic clock it has been
determined that Morrison is holding 8th position which dictates the loss of market share. The best
thing that can be done by the management is to opt for 5th position strategy which has a focus on
product differentiation and the 2nd position strategy which would be best in solving the problem
of static market share. With the introduction of differentiation strategy, there will be increase in
the range of the products which would results in more choices available to customers accordingly
leads to higher revenue for the company by selling variety of products. Also, with higher product
ranges there is a need for mass marketing strategy instead of using niche marketing strategy. The
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prices of the company’s product should be kept under control which would results in increased
revenue for the company.
2. Justification and recommendation of the most appropriate growth platform/s and strategies
Growth platforms are those initiative options available for companies through which the business
can be able to grow their revenues and earnings. So, strategic platforms are meant for ensuring
achievement of desired results for the long term success in the market. Therefore, the various
growth platforms available with Morrison are as follows:
Morrison can grow their revenues through penetrating deeper into the market in which it is
already existing (Bayo-Moriones, Galdon-Sanchez and Martinez-de-Morentin, 2020). This can
be done by framing strategies related to enhancing its market share like opening more
distribution centres in those areas where its products are not accessible to its potential customers.
Morrison can grow its revenue by entering into new markets by offering their existing products
there. The company has an opportunities for entering into global markets by using the strategies
such franchising, direct export and licensing which does not require company to even incur any
kind of cost of physical establishments.
Also, the company by advertising excessively on social platforms like social networking sites,
digital marketing and website marketing can enhance its customer acquisition rate and
accordingly customer base.
It would be recommended that the company can enhance its online presence, as modern
customers are involved in buying online more than the offline purchases. By providing additional
attractive services to customers through such online platforms, the company can grow to much
higher level.
Another strategy available to Morrison is of including more ranges of products into its product
line, so that market share can be increased by approaching and satisfying new group of
customers (Agustina and Karyono, 2019). The company can utilise this strategy by producing
new products like electronics and clothing by utilizing its current production facilities. The new
product can be developed in terms of changing and finding new ideas for existing products and
incorporating some features of specialisation and customisation in the existing products to
enhance market and accordingly growth of revenues and earnings can be ensured.
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The last strategy available as a platform for growth for Morrison where it can diversify its
operations both in terms of products and markets which can enable the company to grow its
revenue and earnings both (Bramantyo and Asvial, 2019). The company by forming strategies
for developing new products by studying the needs of new markets can do so, like if there is high
demand for apparels in Asian countries than Morrison can produce cloths for satisfying the needs
of Asian customers through which its revenue and earnings would definitely grow.
The most appropriate growth strategy which is considered to be feasible keeping in mind the
financial record of Morrison is establish more of conventional stores across UK rather than
establishing super markets. The company needs to concentrate on promotion and marketing of
their private brands along with introducing product differentiation in order to achieve the
objective of diversification which is the best way to attract large group of customers. Also, it is
advisable to focus on the pricing strategy of the company’s own or private products.
3. Evaluate ways and means by which the chosen strategy/ies can be monitored in order to
ensure success
There are many ways through which the company like Morrison can establish monitoring, so that
the strategy as framed can be implemented in a desired manner in order to ensure success. Some
of these ways and means are as follows:
The global expansion can be successfully achieved by monitoring costs of operations, as if there
are inconsiderable rise in costs of offering new or existing products in the global market, then the
ultimate goal of growing revenues and earnings can’t be achieved.
The strategy so adopted should be alignment with the already developed vision, mission and
objectives and goals of the company (Farrukh and et.al., 2020). As if the company has a mission
of increasing its earnings to two fold in the upcoming five years, but the strategy of growth made
it impossible due to unnecessary cost incurred on producing new products. This would lead to
failure of the new strategy.
The strategy so formed should be kept secret and not to be spread among competitors because if
something like would happen, then the company would not be able to reap the benefits of the
new strategy as planned.
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CONCLUSION
From the above report it has been concluded that after conducting strategic analysis of
Morrison, it has been identified that the company has enough growth opportunities in future
through which they can ensure sustainability and survival for long term. It has been evaluated
that Morrison is an established brand known for its freshest and high quality products and is
successful in satisfying its customer’s need. Also, the company is enjoying its efficiency in
offering low cost products and earning better profit margins through setting competitive price.
Morrison can frame strategies to expand its production into global market by adding non - food
products as it has been evaluated that currently the company is into food sector only and also has
an operations across UK only. The company has enough scope in enhancing its market share in
UK market also which can be achieved by it through adopting better pricing strategy for its
existing products.
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