Analysis of Wm Morrison Supermarkets plc Business Environment Factors

This report provides a comprehensive analysis of the business environment of Wm Morrison Supermarkets plc. It begins with an introduction to the dynamic nature of the global market and the factors influencing business organizations, emphasizing the interplay of internal and external factors. The report then delves into the types of business organizations, focusing on Morrison's as a public limited company, and examines its stakeholders, including customers, colleagues, suppliers, and government agencies. It explores Morrison's responsibilities in social, environmental, and consumer areas. The report further analyzes the impact of different economic systems, particularly the UK's mixed economy, on Morrison's operations, followed by an examination of fiscal and monetary policies and their effects. It also discusses competition policy, regulatory mechanisms, and different market structures, including monopoly, perfect competition, monopolistic competition, and oligopolistic markets, placing Morrison's within the oligopolistic structure. The report concludes by highlighting Morrison's competitive pricing strategies and its efforts to maintain a prominent market position. The report covers the business environment analysis and the impact of various factors on the organization's performance.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 types of business organization..............................................................................................1
1.2 Stakeholders and the extent to which the organization meet its objectives..........................2
1.3 The responsibilities of an organization.................................................................................2
TASK 2............................................................................................................................................3
2.1 Different economic systems and the imp[act of UK's economic system on the organization
.....................................................................................................................................................3
2.2 Impact of fiscal and monitory policies on organization........................................................4
2.3 Impact of competition policy and other regulatory mechanisms..........................................4
TASK 3............................................................................................................................................5
3.1 Different market structures and their impacts on the pricing and the output decisions........5
3.2 Market forces and their impact in shaping the organizations responses...............................6
3.3 Impact of business and cultural environment........................................................................6
CONCLUSION................................................................................................................................7

INTRODUCTION
In the era of Globalization, the market trends are becoming dynamic. The factors
affecting the functioning of the business organizations are changing rapidly in different
dimensions. The business organization operates under the influence of external and internal
factors. External factors refers to the Government policies, macroeconomic factors, technological
changes, political environment and social influences whereas the internal factors has the
narrower domain but has greater influence. Internal factors refers to the customer's preferences,
employment conditions, strategic decisions and the operational management of the organization.
The success of the business organization depends upon the ability to adapt itself with the
changing scenarios and dynamics (Björklund, 2011). To establish the prominent position in the
market place, the organizations adopts various strategies. The report outlines the business
environment of the organization in which it is prevailing. For that purpose, the business
organization Wm Morrison Supermarkets plc. is taken into account. Morrison's are the fourth
largest chain of supermarkets in United Kingdom. This report throws light on the strategic
objectives of Morrison's and the extent to which it fulfills the responsibilities towards the
stakeholders. Further, it analyzes the impact of external factors such as government policies,
market forces and other factors.
TASK 1
1.1 types of business organization
On the basis of the ownership, the degree of profit holding and the structure of formation
the business organization are categorized in the following manner:
1. Sole proprietorship: The type of organization which has the single owner is known as the
Sole proprietorship. The owner is entitled for all the profit earnings and the liabilities.
The company is required to be registered at the registrar of Business names (Welford,
2013).
2. Partnership: The partnership consists of 2 or more owners who enter into the deed of
partnership or the partnership agreement. The partners agree with all the clauses and sign
the agreement with mutual consent. In this type or organization responsibilities get
divided among the partners as per their shares in the finance and investment. Further, it
unlimited liability.
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3. Public Limited Companies: In these organizations, the shares are distributed publicly.
The memorandum is signed between the shareholders. These companies are required to
register itself at stock exchange (Iskanius, Page and Anbuudayasankar, 2010). It posses
limited liability due to large number of shareholder.
4. Co-operatives: The group of people who work together with mutual consent. The
members posses equal rights irrespective of the share of finances.
Morrison's supermarket falls into the category of public limited companies. The
organization has the offerings in the low cost with high quality. There is the board of directors
who are entitles to the responsibility of distributing the dividends to the shareholders. The board
members make the decisions to bring improvement in the organization by taking various
strategic decisions (Chi, Kilduff and Gargeya, 2009).
1.2 Stakeholders and the extent to which the organization meet its objectives
There are various stakeholders of the organization Morrison that impact its working.
Customers: The customers are the central point of the business organization. The working
revolves around the process to satisfy the customers need and choices in all respect.
Colleagues: The efficiency of the organization totally depends on the working capability of the
colleagues. Their productivity of the employees imparts the significant impact.
Suppliers: The supermarket store has the wide family of employees and suppliers. The relational
constructs with the suppliers and the smoothness of the logistics are the soul of the operations.
Morrison has the special focus on this sections. It always intends to improve the supply chain
and make it more effective (Xue, Shen and Ren, 2010).
Government agencies: The Government agencies lay down rules and regulations for the
operation of the organization in the lawful manner. Morrison's supermarkets always abides the
laws laid down by the legislative agencies.
1.3 The responsibilities of an organization
The organization fulfills the responsibilities in different areas.
Social responsibilities: The organization Morrison's understands the responsibility towards the
society and public. It has the continued delivery of the Government's public health responsibility
deal commitments and has the market street deals on fresh produce.
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Environmental responsibilities: The organization fulfills the responsibility towards environment.
It reduces the waste and uses the eco- friendly raw materials (Zulkifli-Muhammad and et.al.,
2009).
Consumer responsibilities: The organization takes care of the customers preferences and always
makes efforts to give the optimum level of services to the customers by giving the products at the
affordable prices.
Health and safety related responsibilities: The organization has the prime concern over the health
and safety of the customers and the employees. The organization focus on making the market
research to improve the quality standard of the food. Further, Morrison's has its own farms for
food and other products (Wu, 2009).
TASK 2
2.1 Different economic systems and the imp[act of UK's economic system on the organization
On the basis of the allocation of resources the economic system is categorized in three
categories: Market economy: The economy in which the allocation of resources is done by the
influence of market force that is the demand and supply of the products and services. In
this type of economy the Government has the minimum control over the decision making
of the management of the organization. The pricing and the outputs are decoded solely by
the organization and the management (Craig and Campbell, 2012). Command Economy: The economy in which the Government of the country has the
control over the organizations' management and decisions in the large extent is called the
Command economy. The government impose regulations and restrictions in the very
significant way. If Morrison's operates in the Command economy, the organization
possess the limited control over decisions related to the prices of the products and the
services it offers.
 Mixed economy: Mixed economy possess the features of both command economy and
the market economy. The organization Morrison's supermarkets operating in this type of
economic system has the power to decide the prices and the quantum of output and also
to take the decision related to the management but with certain regulation imposed by the
government with respect to the consumer protection, environmental issues, employees
related matters (Chavis, Klapper and Love, 2011).
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UK has the mixed economy structure. It has the considerable amount of impact on
Morrison's super market and also vice versa. Being the fourth largest supermarket chain,
Morrison's has the dominance on the UK's grocery market. The government impose certain
regulations such as to abide the laws related to the authenticity of the products that should be
according to the norms laid down by the food and beverages controlling organizations and other
related.
2.2 Impact of fiscal and monitory policies on organization
The economy of the country get affected by the large number of factors. To stabilize the
economy from such changes and fluctuations, Government and other legislative bodies takes
certain and effectual steps. The steps taken by the Government and other legislative bodies has
the great influence on the working and the functioning of the economy. Further, it also trickles
down to the organizations working in this economic environment (Commander and Svejnar,
2011). Fundamentally there are two policies that imparts the considerable amount of impact on
the organization; fiscal; and the monetary policy.
 Fiscal Policy: The government is the key decision making authority to bring the
condition of the economy in the stability from all the external and internal
fluctuations. The steps undertaken by the government and issuing the policies for
the purpose is termed as the fiscal policy. The major tools of fiscal policy are the
taxation and the expenditure done by the Government in the economy. The
changes made by the government in the policies imparts its effect on the
profitability and the pricing structure of the Morrison's.
 Monetary Policy: The central bank of every country is entitled to take the
decisions and make changes in the policies to monitor and regulate the money
supply in the economy (Halbert and Ingulli, 2011). The variation in the circulation
of money is checked by the central bank by adopting certain methods such as by
making changes in the interest rates, bank rates, reserved ratio, liquidity ratio and
also by transacting the government securities in the economy.
2.3 Impact of competition policy and other regulatory mechanisms
Trade between the parties or the states covers the wide horizons of the areas. To regulate
the functioning of the parties and to monitor their activities, there government or non-profit
organizations working for this. There are some policies and commissions made in this regard.
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 Competition policy: The competition policy of UK is made to prevent and reduce the
monopoly power in the trade practices. The parties holding larger share some times
gradually increases the dominance that leads to the unfair practices in trade. Hence, to
prevent such abuse and market failure, the competition policy came into force.
 Oft(office of fair trading): It is the non- profit organization that functions to take care of
the consumer protection (Hamilton and Webster, 2015). Further, it ensures the market
work well without any illegal practices. It prohibits the unfair practices such as scams and
rogue trading.
 Business, innovation and skills(BIS): This organization works to enhance the
productivity of the organization by encouraging the innovations and creativity in the trade
practices.
 Competition commission: The commission is responsible to investigate the legality of the
process adopted for mergers and acquisitions. Morrison's underwent many mergers and
acquisitions, during that processes the organization has abided all the laws and rules of
the commission.
TASK 3
3.1 Different market structures and their impacts on the pricing and the output decisions.
In an economy the organization operating belongs to different industries. Those industries
possess different market structures with different number of sellers and buyers. The main market
structures and their impacts are as follows:
 Monopoly: The market in which there is only one seller and many buyers is termed as
Monopoly. In this type of structure, the seller has full right to decide the pricing and the
output quantity. The seller experiences no customer bargaining and suppliers influence.
 Perfect Competition: The market structure in which there are large number of sellers and
buyers, the market is called as the perfect competition. In this the sellers doesn't have any
control over the pricing decision (Gecevska and et.al., 2010). The prices of the services
and products are decided by the market forces that is the demand and supply of the
goods.
 Monopolistic Competition: The market structure where there are few sellers and buyers.
The organizations operating in this market structure comes up with the different market
strategy and the products with distinct features.
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 Oligopolistic market: The organizations in this market structure experience the fierce
competition due to the presence of few numbers of sellers. These sellers have the
interdependent pricing and output decisions. The chosen organization Morrison's falls
under this category of market structure. The supermarket chain is fourth largest in UK
face aggressive competition from Asda, Sainsburry and Tesco. They have the competitive
price structure (Wetherly and Otter, 2014). Morrison keep its price low to provide the
quality products at affordable prices to their customers. To maintain its prominent
position in the market place, the organization comes up with the variety of products and
services to satiate the needs of customers.
3.2 Market forces and their impact in shaping the organizations responses.
To manage the organization with 662 stores and 1,25,000 employees, the manager is
endowed with the slew of duties and responsibilities. Further, the organization get influenced by
number of factors including the market force. Market forces that affects the functioning of the
organization are the demand and supply of the offerings in the market, the elasticities of demand,
the interest rates, market trends and other related (Porter and Rivkin, 2012). These factors have
the significant impact on the pricing, cost control, acquisitions and mergers undertaken by the
organization.
Demand and supply: The fundamental factor that affects the cost structure of the organization is
the demand and supply of the products and services. When the demand of the products increases
the prices get reduced and vice versa. Morrison's aspires to increase the customer base hence it
keeps the prices low as compared to its competitors. Due to low prices of the products and
offering the demand increases and affects the profitability positively.
Elasticity of demand: The elasticity of demand refers to the tendency of the customer to retain
with the organization inspite of all the changes in the prices. When the elasticity of demand is
high the customers of the Morrison switch to other organization with the similar offerings when
it increases the prices (Su and Cui, 2009).
Interest rates: Interest rates of the banks play the crucial role in the flow of capital in the
economy. When the rates are low the economy attract investments. Hence, when the Government
attracts the foreign investments through various measures it brings lucrative results to the
organization by increasing the customer base and the revenue generations.
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3.3 Impact of business and cultural environment
The organization working in the impact of the diverse environment has the great
influence of the business and cultural environment in all the aspects of the organizational
working of Morrison's. The impact is analyzed by using the model PESTLE analysis.
Political environment: The political environment inculcates the policies framed by the
government, the ease of operating the business with the formalities, tariffs and taxes, the
government measures adopted to bring positive changes in the country, the political scenerio
existing in the nation affects the decision taken by Morrison's (Our Strategies and Objectives,
2010).
Economic environment: The relaxation and the incentives given for the organizations operating
in the grocery market favors the organization in revenue generation.
Social environment: Morrison understands the customers choices hence keep the prices low and
gives the quality products at affordable prices.
Technological environment: UK is the technologically advanced economy. The advent of
communication and infrastructural advancements enable the organization to process the
operations in the smooth and effective manner.
Legal Environment: The legal environment refers to the rules and regulations imposed on the
organization to pursue the operation in the lawful manner. For instance, Morrison's abides the
laws laid down by the UK government with respect to the consumer protection ad other related
areas (Wu, 2009).
Environmental factors: It refers to the organizations' responsibility towards the environment that
is to follow the norms related to the minimization of wastes and the use of raw material and other
resources by keeping the environmental issues in consideration.
CONCLUSION
The fourth largest supermarket chain Morrison's has the vision to become the first choice
of the customer in the industry. The organization fulfills its responsibility to the great extent.
Various external and internal factors affects the working of Morrison' supermarket stores. The
organization follow all the norms laid down by the government and other legislative bodies with
respect to consumer protection, employees related issues and environmental issues.
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Our Strategies and Objectives. 2010. [PDF]. Available through: http://
www.britishairways.com/cms/global/microsites/ba_reports0910/pdfs/Strategy.pdf>.
[Accessed on 9th December 2015].
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