Morrison Supermarket China Expansion

This report details a strategic management analysis of Morrison supermarket's potential expansion into the Chinese market. It utilizes PESTLE analysis to examine the external environment, considering political, economic, social, technological, legal, and environmental factors. Porter's Five Forces framework assesses competitive pressures, including threat of new entrants, supplier power, threat of substitutes, buyer power, and competitive rivalry. The report identifies tangible and intangible resources required for successful expansion, including financial, organizational, physical, technological, human, innovation, and reputational resources. A SWOT analysis highlights Morrison's internal strengths and weaknesses, along with external opportunities and threats. The report proposes market entry modes, recommending acquisition of an existing small retail business as the most suitable strategy. Finally, it concludes that expansion into China is feasible with effective strategic management and the chosen acquisition strategy.

STRATEGIC
MANAGEMENT

EXECUTIVE SUMMARY
Strategic management is all about building plans for expansion of business in the new
market with the motive to grab large number of opportunities. The present study being carried
out is based on Morrison which is one of the largest supermarkets of Britain and is linked with
expansion of company in Chinese market. In order to enter new market it is necessary to analyze
the external environment where PESTLE as one of the tools has been undertaken. For regulating
the entire retail market various laws and regulations have been developed by government.
Further, It is well known fact that economy of china is developing and the overall high growth
rate in GDP has positively influenced the entire economy of China. Market of China is highly
advanced where new systems and tools are employed for delivering products to the customers. In
Chinese market threat associated with new entrants is high as government of the nation
encourages businesses to invest into the market. Buyers in the retail market possess capability to
dominate the entire retail market of China. Suppliers are easily present in the market who are
offering retail product.
The range of tangible resources such as financial, physical, organization and intangible
one such as human, innovation etc are required in Chinese market. Further, for expansion
purpose different type of market entry modes are being present which can be undertaken by
Morrison for its smooth function. The ranges of modes present are exporting, licensing, strategic
alliance, acquisition and new wholly owned subsidiary. In case of Morrison supermarket
business can easily acquire existing small retail business in the Chinese market. The entire study
being carried out has supported in knowing about significance of strategic management
especially during business expansion in new market. Morrison expansion in the market of China
is feasible as analyzed with the help of porter five forces and Pestle

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................4
TASK 3............................................................................................................................................6
TASK 4............................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
APPENDIX....................................................................................................................................10

INTRODUCTION
Strategic management is all about building plans for expansion of business in the new
market with the motive to grab large number of opportunities. Further, in the modern era large
numbers of challenges are present in the market due to which it has become difficult for
companies to survive in the market (Ammenwerth and Winter, 2014). Competition along with
other form of barriers is present in the business environment which prevents business from
accomplishing desired goals and objectives. Moreover, at the time of expanding operations in the
new market it is required for every business to carry out proper analysis such as with the help of
tool named porter and pestle. Apart from this, SWOT as a tool is also employed for internal
analysis which highlights internal strength of the company. The present study being carried out is
based on Morrison which is one of the largest supermarkets of Britain. At present organization to
enter into the Chinese market for which analysis has been carried out through models such as
porter, pestle etc.
TASK 1
In order to enter new market it is necessary to analyze the external environment where
PESTLE as one of the tools has been undertaken through which Morrison can know the range of
challenges present in the external environment. Below shown is the PESTLE analysis of Chinese
retail market:
Political: For regulating the entire retail market various laws and regulations have been
developed by government and this is supported by stability in the regulatory authorities which
has allowed in development (Antony and Preece, 2012). Further, foreign investment is
encouraged and businesses are allowed to expand their operations. Moreover, laws are present in
relation with maintaining quality and setting prices which are affordable for customers.
Economic: It is well known fact that economy of china is developing and the overall high growth
rate in GDP has positively influenced the entire economy of China. Due to overall development
skilled labor along with rise in export conditions are present (Arganona, 2014). Moreover,
purchasing power of consumers is also high due to which they prefer to purchase retail
commodities.
Social: In country like China constant change has been witnessed in the demographic attributes
such as age along with population growth. Further, taste and preference of target market changes
rapidly and due to this reason retail firms have to modify product range accordingly.
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Technological: Market of China is highly advanced where new systems and tools are employed
for delivering products to the customers (Berg, 2013). So, in the Chinese market it is required for
Morrison to work with advanced tools with the motive to carry out operations in efficient
manner.
Legal: This factor is associated with payment of taxes and duties associated with retail sector.
Morrison has to pay taxes and complying with the need of regulatory authorities so as to perform
efficient in the market. Business is required to follow e-commerce legislation along with other
form of duties such as property right, intellectual one etc (Chang, 2015).
Environmental: Different legislations have been introduced in order to save environment and in
case of Morrison also organization is required to comply with the practices so as to reduce
adverse impact on surroundings.
Therefore, in this way PESTLE analysis has represented the impact of each and every
factor on business performance where it is required for Morrison to develop effective strategies
for dealing with such factors (Freeman, 2010).
Further, Porter five forces is also one of the model which is being employed in order to
know the overall impact of external factors on the business activities.
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Threat of new entrants: In Chinese market threat associated with new entrants is high as
government of the nation encourages businesses to invest into the market. Moreover, large
numbers of businesses are investing into this sector by identifying the key opportunities.
Therefore, this can act as a sort of challenge for business where company has to compete with
other organizations (Gregorini, 2012).
Bargaining power of supplier: Suppliers are easily present in the market who are offering retail
product. So, in this case their bargaining power is low where they are not able to dominate
Chinese market. So, it is a kind of benefit to Morrison where business can select any supplier
Threat of substitute: In the entire market of China competition level is high in the retail sector
and due to this reason substitute of products is easily present. Therefore, Morrison is required to
focus on product differentiation strategy for grabbing market share (Hitt, Ireland and Hoskisson,
2012).
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Bargaining power of buyer: Buyers in the retail market possess capability to dominate the entire
retail market of China. So, in this case Morrison is required to focus on product differentiation
along with this delivering other kind of benefits to the customers.
Competitive rivalry: The size of retail market of China is wide and large numbers of players are
operating in the market. Therefore, Morrison is required to focus on development of strategies so
that competition as a challenge can be tackled easily (Hubbard, Rice and Galvin, 2014).
TASK 2
In order to expand successfully in the new market it is necessary for business to identify
the key resources required along with the internal capabilities and competencies. Further,
through this all the range of challenges and other form of issues can be tackled easily and this in
turn acts as development tool for the business. As Morrison carries out all the operations on
wider basis and all the resources are easily present with business but its effective management is
considered to be must (Mahoney and Qian, 2013). Basically two types of resources are being
present which are must for business such as Tangible and Intangible. The ranges of tangible
resources required by Morrison are:
 Financial: At present Morrison is financially strong and has high level of revenue in
every type of market. Further, in case of inadequacy of funds business is able to
borrow funds from large number of institutions. By analyzing the strong repaying
capacity of organization funds are easily provided by banks to company. Apart from
this, the internal capacity of organization is quite strong where all the operations
carried out supports in generating large amount of funds.
 Organizational resources: It takes into consideration the reporting structure of
business (Morschett, Schramm-Klein and Zentes, 2015). Further, the overall structure
developed internally is quite strong and due t this reason all the operations are carried
out as per the system developed.
 Physical resources: This resource is linked with the inventory of Morrison where
business is capable enough in its management. Further, the distribution network of
enterprise is also quite strong where products are delivered in order to provide
convenience to the customers. So, in this way physical resources of firm are also
effective especially to perform in the Chinese market.
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 Technological resource: In every type of market advanced tools and techniques have
been employed by Morrison. Further, the key resources such as patent, trademark,
copyright are easily present with business which delivers kind of advantage to the
company (Rothaermel, 2015).
Therefore, in this way all the tangible resources present with business are quite effective
and provides advantage to Morrison in every possible manner. Apart from this, some intangible
resources are also present with Morrison which are as follows:
Human resource: For smooth functioning of business operations skilled and knowledgeable
workforce has been hired by business. Further, this directly provides advantage to the business
where employees prefer to take challenging tasks and their efforts within business operations are
quite high. Therefore, this resource has directly benefitted Morrison where operations are carried
out properly (Bergh and et.al., 2014)
Innovation: In product development systems innovation as one of the resource has been
employed by company where new ideas are implemented in the business operations. Apart from
this, Morrison is highly capable in innovating new ideas which have become one of the main
reasons behind success of business in the market.
Reputational resource: Morrison as one of the brand is well known in every type of market.
Further, customers are having positive perception regarding product range of business which is
known for durability along with reliability. Apart from this, the effective tools employees for
managing stakeholders have also benefitted business. So, in this way this resource has also
positively affected business (Dobbin and Baum, 2014).
Both the range of tangible along with intangible resources are managed by Morrison in
proper manner where it is ensured by entity that resources are utilized efficiently. So, this
becomes one of the main reasons behind success of enterprise in the market where operations are
carried out smoothly. Along with this some capabilities of the business are present and
competencies such as product development, strong unique selling point, innovation in the
product range, supply chain management, distribution network etc. So, this can directly provide
base in the Chinese market where presence of range of resources along with competencies can
assist business in serving customers in better manner. Apart from this, it can allow in
understanding about the need and requirement of target market where favorable results can be
accomplished easily. Further, it is recommended to Morrison to focus on development of core
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competencies in the Chinese market so that situation linked with high level of competition can be
tackled easily. Technological advancement as one of the competency can also assist business to
become leader in the market where all the operations can be carried out efficiently.
TASK 3
With the motive to efficiently perform in the new market it is necessary to reframe the
mission along with vision of the business. For new strategic business unit in China Morrison is
required to develop new mission and vision.
Mission: To deliver large number of customers with value for money products on their weekly
shopping along with this different options in relation with retail products
Vision: To become one of the most popular brand in the market and food specialist for everyone
for differentiating its brand from other businesses.
So, the new mission and vision will provide new direction to Morrison in the market of
China where overall operations can be carried out efficiently. Further, as per the market analysis
in every type of market it is required for business to reframe its mission and vision so that
customers can be easily attracted. These two statements represent the strategies employed by
business for serving customers and in turn develop trust in the target market (Chang, 2015).
Apart from this, it directly provides base in gaining competitive edge where the desired goals of
the entity can be accomplished easily. In case if Morrison continue with the same Mission and
vision then it would be little difficult to attract customers in the Chinese market. Moreover, taste
and requirement of every type of market differs from one another and due to this reason
developing new mission and vision is must for entity in every possible manner.
New mission and vision statements are highlighting what business wants to accomplish in
Chinese market in near future and through this long term directions can be set easily by the top
management. Moreover, these statements have been developed keeping in view the challenges
present in the business environment (Arganona, 2014). So, with the help of this it can be stated
that new statements can provide competitive edge to the enterprise. Continuing with the same
mission and vision can have adverse impact on the business and due to this reason its
reformation is required. But on the other hand no such large difference is being present in
between the new mission and vision with old one. In the new market these statements can act as
source of attraction for customers where they can be influenced to buy commodities of company.
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TASK 4
SWOT analysis as a tool supports in analyzing internal environment of the business
which supports in strategy development and in turn operations can be carried out efficiently. For
expansion of Morrison operations in the market of China it is required for business to identify its
major strengths and weaknesses preset internally along with this it can be known that range of
threats and opportunities present in the external environment.
Strengths
 Strong USP
 Production of goods and directly supply
of commodities to its local stores
 Own training academy which supports
in development of knowledge
 High revenue and profitability level
 Large product portfolio
Weakness
 Product recall on higher basis
 Limited geographic reach as
comparison with other brands in the
market
 Shorter product life cycle
Opportunities
 Expansion at global level
 Rising demand for organic foods
 Increase in demand for private labels
Threats
 Rise in level of competition in the retail
sector
 Increase in taxes and other form of
duties which leads to decline in level of
cost
 Rising manpower cost
So, above shown is the SWOT analysis of business which highlights the key strengths
and weaknesses of business on the basis of which operations can be carried out. Further, for
expansion purpose different type of market entry modes are being present which can be
undertaken by Morrison for its smooth function (Morschett, Schramm-Klein and Zentes, 2015).
The ranges of modes present are exporting, licensing, strategic alliance, acquisition and new
wholly owned subsidiary. Further, attribute of each and every mode differs from each other
where it is necessary to decide well in advance which mode can be undertaken for obtaining
large number of benefits. Exporting as the type of mode is costly where low control of company
is present, licensing delivering slow return along with control, strategic alliance involves shared
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cost, acquisition holds quick access to new market, new wholly owned subsidiary is complex,
often costly and consumes time.
So in case of Morrison supermarket business can easily acquire existing small retail
business in the Chinese market. Further, the major benefits which company can obtain is linked
with access to new market as the established business has knowledge regarding Chinese market
and same can be used for serving customers. Apart from this, both the firms together can
efficiently carry out business operations are per the market needs. Morrison is not at all aware
about the Chinese market and due to this reason this kind of option is preferable for business in
every possible manner. Acquiring existing company in the market saves time in relation with the
market research as the existing players are well known about it (Market Entry Modes., 2016). So,
this is beneficial for Morrison in every possible manner where organization can focus on major
gals being set for the Chinese market and in turn benefits such as higher revenue along with
market share can be gained easily. In short, it can assist in enhancing customer base in the new
market.
CONCLUSION
The entire study being carried out has supported in knowing about significance of
strategic management especially during business expansion in new market. Morrison expansion
in the market of China is feasible as analyzed with the help of porter five forces and Pestle.
Further, challenges are present in the market but through development of effective strategies it is
possible to focus on long term goals and objectives. Apart from this, acquisition as one of the
strategies can be easily employed by business so that operations in the new market can be carried
out efficiently keeping in view customers needs and requirement.
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REFERENCES
Books and journals
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Introduction to Hospital Information Systems. Springer.
Antony, J. and Preece, D., 2012. Understanding, Managing and Implementing Quality:
Frameworks, Techniques and Cases. Routledge.
Arganona, A., 2014. On Ethical, Social and Environmental Management Systems. Journal of
Business Ethics.51(1).pp. 41-52.
Berg, D., 2013. Managing information systems for service quality: a study from the other side.
Information Technology & People.16(2).pp. 183-202.
Bergh, D.D. and et.al., 2014. Signalling theory and equilibrium in strategic management
research: An assessment and a research agenda. Journal of Management Studies. 51(8).
pp.1334-1360.
Chang, J., 2015. Business Process Management Systems: Strategy and Implementation. CRC
Press.
Dobbin, F. and Baum, J.A., 2014. Introduction: Economics meets sociology in strategic
management. Advances in strategic management. 17.
Freeman, R. E., 2010. Strategic management: A stakeholder approach. Cambridge University
Press.
Gregorini, P., 2012. Diurnal grazing pattern: its physiological basis and strategic
management. Animal Production Science. 52(7). pp.416-430.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012. Strategic management cases:
competitiveness and globalization. Cengage Learning.
Hubbard, G., Rice, J. and Galvin, P., 2014. Strategic management. Pearson Australia.
Mahoney, J.T. and Qian, L., 2013. Market frictions as building blocks of an organizational
economics approach to strategic management. Strategic Management Journal. 34(9).
pp.1019-1041.
Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international management.
Springer.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill.
Online
Market Entry Modes., 2016. [Online]. Accessed through < http://st.merig.eu/?id=69>. [Accessed
on 18th Nov 2016].
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APPENDIX
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