Strategic Analysis and Recommendations for Morrisons Supermarkets

This report provides a comprehensive analysis of Morrisons Supermarkets' strategic management, focusing on the UK retail market. It begins with a literature review on strategic management principles and then delves into Morrisons' background, including its mission and vision statements. The report applies various analytical models, such as the PESTLE framework, to assess the external environment and the company's strategic capabilities. It examines political, economic, social, technological, legal, and environmental factors influencing the supermarket industry. Furthermore, it analyzes Morrisons' competitive position using Porter's five forces model and assesses its market share relative to competitors like Tesco, ASDA, and Sainsbury's. The report concludes with strategic recommendations aimed at improving Morrisons' sales revenue and profitability. The report also includes a presentation component summarizing the key findings and recommendations.

STRATEGIC
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Literature Review...................................................................................................................1
Knowledge and Understanding..............................................................................................1
Background of the organization.............................................................................................2
Analysis..................................................................................................................................4
PESTLE framework for strategic analysis.............................................................................4
Morrison's Strategic capabilities............................................................................................7
Probable industry scenarios....................................................................................................8
Recommendations..................................................................................................................9
CONCLUSION..............................................................................................................................10
Component 1B Presentation..........................................................................................................11
REFERENCES..............................................................................................................................24

Illustration Index
Illustration 1: Market share of retail in UK.....................................................................................4

INTRODUCTION
Strategic management is to implement and initiate strategies which ultimately helps in
achieving organizational goals (Eden and Ackermann, 2013). Internal and external environment
is taken into consideration while taking these decisions for the organization. Morrison
Supermarkets Plc is a supermarket chain which is running in UK. The report discusses about
various strategies that has been adopted by the entity since last 5 years. Further, it focuses on
strategic analysis of the retail industry in order to understand political, social, economic, legal
and environmental factors. Moreover, it ponders on various strengths, weaknesses, opportunities
and threats of Morrisons based upon the activities conducted by the entity. In the end,
recommendations will be given discussing the strategies that can be adopted by Morrisons in
order to increase its sales revenue and maximize profits.
TASK 1
Literature Review
According to Eden and Ackermann (2013)Strategic management is to implement and
initiate strategies which ultimately helps in achieving organizational goals. However on the other
hand according to Goetsch and Davis (2014) it involves analysis of external and internal research
of the organization in order to make and implement various strategies in the entity. It also assures
that the strategies are implement all across the organization without failure. It is important to
assess them time to time and make changes as and when required by the internal and external
environment. Further, according to Vogel and Güttel (2013) a systematic analysis of customer
which helps in maintaining optimum business practices for the organizations.
Knowledge and Understanding
Morrisons have been chosen to conduct research on strategic management of the entity.
Secondary research will be conducted in which the data have been collected through various
journals, magazines, newspaper, website and online material that is available on the internet.
Several models will be applied based on the literature collected from varied sources. Models
such as, PESTLE framework, SWOT analysis, VRIO model, Porter's five forces models will be
applied to the data of Morrisons. It will help to analyse and give recommendations based on it.
Further, the company will be able to assess the correct position and consider internal and external
factors while implementing any strategy on different departments.
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Background of the organization
Mission statement: To provide their customers with the best value of money for their
weekly shopping, wherever they live.
Vision statement: To be food specialist for everyone as a food specialist differentiates
them from all the competitors by :
 Facilities of their own manufacturing and packing.
 More number of people for preparing food for the other retailers.
 More expert Butchers, fishmonger, bankers.
 More customers in stores in comparison to the competitors.
The mission and vision statement of The Morrison Company encourages its employees to
provide the services as per the demands of their customers to beat their competitors and to retain
more customers in the stores. The mission of the company is to provide an excellent and
unbeatable customer service by extending the working hours at all the stores, including Sundays,
extensive free car parking, petrol stations with most competitive prices and free glass of loan
services for 10 million weekly shoppers at a low price to fulfil the demands of the market place.
They provide quality products at an exciting range to their customers to receive the highest
standards of services and care, many more facilities are designed to make the customers
comfortable, convenient and visit the store as possible.
The vision of company is to become food specialist to differentiate them form their
competitors by providing the range of fresh food, groceries, household and leisure goods. Quality
fresh food is prepared in stores every day to make their customers retain and to be in the race of
country's largest supermarket chains. They have more than 450 stores in which a number of
people work to prepare food to delivery it to other retailers (Strategy, 2017). They have expert
butchers to offer prime quality meat and poultry and they were first to introduces turkey meat to
the counter in store to cut and prepare individuals requirement, fishmongers to sell fresh fish in
the store for which they won a quality award for all there seafood.
Morrisons Supermarkets Plc is a supermarket chain in UK which has its headquarters in
Bradford, West Yorkshire, England. It is also present online providing consumer products to its
customers and delivering at their homes. The company has adopted various strategies in order to
stay competitive in the market:
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 Be competitive: The entity try to provide the best possible quality products to its
customers. It has its own expert team which analyse the quality and provide at the best
price.
 Serve the customers better: Morrisons take feedback from its customers and make
changes across all the business. It helps them to improve their offerings and make sure
that all the comments are analysed that have been extended by the client.
 Find solutions on local level: The offering of the store is decided based on the
community of that geographical area in which it is situated. For instance, if Morrisons is
situated on petrol pump, than the store will contain all the food that is best suited for the
nearby traffic flow. It helps to deliver what is required by the customers.
 Develop useful services: The main of the entity is to offer one stop solution to the
customers. It keeps changing the look of the store and make available various other
services in the supermarket other than food and consumer products. For instance, mobile
phone repair stations, key cutting, pick up points in case of online order etc.
 Simplify and speed up: Speeding up their transactions and reduce Queue time is the
continuous process that has been adopted by Morrisons. The entity also keep cutting the
cost in order to provide the best at the lowest price to the customers (Goetsch and Davis,
2014).
 Make the supermarket industry strong: Morrisons is involved in refreshing its stores
by new designs. It takes suggestions from its customers and staff and implement their
ideas in their cafes as well. It helps to improve shopping trip of the customers to the
supermarket and they enjoy their shopping. It has helped the enterprise to increase their
customers and their loyalty as well.
By adopting the above mentioned strategies the company have been able to build its
brand very strong. Further, it has helped to provide the best quality products at the lowest
possible price which has increased the loyalty of the customers.
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Analysis
PESTLE framework for strategic analysis
Retail sector contributes a major share towards the success of the country. UK legislation
have taken care of all the legal and economic factors which keep their functioning smooth and
effective. For instance, licensing of alcohol and tobacco, registration of food outlets, legislation
for employment and consumer as well. Selling edible items are required to comply with all the
health and hygiene regulations issued by the government. The Food Hygiene Regulations, 2006
states that the food or any other eat able item that any enterprise is selling should be safe and
clean enough to be eaten. They are also required to maintain food standards in terms of safety,
hygiene, temperature control etc. It helps the government to protect the citizens from health
associated risks. The current business environment in UK is affecting the supermarket
environment at both macro and micro level (Hair and et.al., 2012).
PESTLE Analysis for supermarket industry in UK
 Political factors: Movement of Britain to leave EU has created political and economical
changes in the retail environment. It has resulted in inflation of prices and it is expected
that it will continue to escalate in the near future as well. The products have relatively
become more expensive than before. It has created a greater impact on the purchasing
power of the consumers (Harrison and John, 2013). Morrisons is not been able to import
goods as imports have become relatively expensive that earlier.
 Economic factors: The industry is facing inflationary pressure leading to increase in the
prices of the products. It has lead to increase in transportation cost, raw material, labour,
energy etc. It has further led to increase in overall prices of the products being offered by
Morrisons. However, the company owns 15 manufacturing units in UK which has helped
it to overcome inflationary shocks. It shows Morrisons is less dependent on external
suppliers.
 Social factors: According tot the data of Office for National Statistics, the average age in
UK is 41 years. The ageing population can be tapped by Morrisons and can creates an
additional business opportunity for supermarkets. Pension age consumers have higher
disposable income than the younger ones. It helps the entity to produce which is useful
for older segment of the society and provide tailor made products and services to them.
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 Technological factors: The major technological shift in the retail industry is due to
availability of internet. It represents 10% of the total supermarket sales made are through
online purchasing of the products. Social media also plays an important role to market the
products on online platform (Hitt, Ireland and Hoskisson, 2012). Further, retail sector
have implemented self checkout facility in order to avoid long queues in the store.
Morrisons have adopted this facility in order to save time of the customers and initiated
cost cutting as it reduces the need of employees to be available on checkout counters.
 Legal Factors: Morrisons, being involved in selling food products has to follow certain
food standards that have been issued by the government. It helps government to keep
their citizens safe and away from health related problems. The supermarkets are not
allowed to enter in any anti – competitive agreements in order to avoid price fixing.
Consumers rights also influence the supermarket industry where they have rights to
clarify the standards before buying any product from the store.
 Environmental Factors: The factors such as, harvesting of the crops, heavy rains or no
rains affects the prices and availability of fruits and vegetables. It can create issues in the
supply chain can even influence pricing strategy of the supermarkets and can make the
food items expensive. Weather can create a barrier in delivering online order as well as it
limits the ability of Morrisons. It would also be difficult to transfer products to other
supermarkets as well that can lead to unavailability of various products.
Competitors of Morrisons
The main competitors of Morrisons available in UK market are Tesco, ASDA, Sainsbury
and many others. The market share of the four companies
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As per the reports, the market share of the entity is 11% in 2015. However, the market
share of Tesco is 28%, 16% is for Sainsbury and ASDA. It shows that Morrisons is on fourth in
UK supermarkets. Tesco have the highest number of customer base and revenue as well. The
main reason it due to its financial potential, size and efficient performance of duties towards its
customers. The competitive advantage of Morrisons can be discussed through Porter's five forces
model:
 Bargaining powers of buyers: Buyers switch to other sellers if he is not satisfied with
the services provided by Morrisons. It is due to availability of various alternatives in the
market. Therefore, the entity have to keep its price to the minimum in order to attract
maximum customers at his side (Keupp, Palmié and Gassmann, 2012).
 Bargaining powers of suppliers: Morrisons have expanded its business in various
geographical regions which increases the requirement of suppliers. It also has to contact
with new suppliers in order to meet the demands of different areas. However, Morrisons
owns its manufacturing units which make it less dependent on suppliers.
 Threats of substitutes: The popularity of various other stores such as ASDA, Tesco and
Sainsbury acts as a threat for the entity. Buyers also shift to other small supermarkets
emerging in UK.
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Illustration 1: Market share of retail in UK
Source: Molina-Azorin, 2012

 Threats of new entrants: Morrisons is an establishes brand in UK hence, the degree of
threats from the new entrants in less. However, people switch their brands based upon the
prices which are currently offered by the new emerging entrants up to a great extent.
 Bargaining power of competitors: Competitors try to get the highest market share in the
industry where various types of promotion schemes are run in order to attract the highest
number of customers. Prices becomes the crucial factor when various stores are available
in the market. Tesco owns the highest market share due to customer's loyalty towards that
brand.
Morrison's Strategic capabilities
SWOT analysis can be conducted on Morrisons in the following manner in order to
analyse its capabilities:
Strength
 It has an efficient supply chain and
distribution network.
 It owns large product portfolio with
diversified product range availability.
 One among top four supermarkets in
UK.
 It has 450 stores in UK with
approximately 130000 employees
working in the entity.
 Quality products are offered.
Weakness
 Its presence is less in comparison to the
other big brands such as Tesco and
ASDA.
 It does not have any foreign expansion.
Opportunities
 Market of organic products is growing
in UK
 It can expand in other countries as well
in order to increase its reach.
 There is a rising demands of private
Labels in UK.
Threats
 Market share of the competitors is more
in comparison to Morrisons.
 Continuous change in government
policies after Britain has moved from
European Union.
 There is a rise in manpower cost which
has increased overall cost for the
enterprise.
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VRIO Analysis of Morrisons
Resource Resource
Type Valuable? Rare? Imitable? Can be
exploited?
Implication
s
Morrisons
brand Business Yes No Yes Yes Temporary
Relationship
with the
customers
Operationa
l Yes Yes Yes Yes Temporary
Quality
products Business Yes Yes No Yes Sustainable
Promotional
activities Marketing Yes No No Yes Sustainable
Pricing
policies Financial No No Yes Yes Temporary
According to VRIO model of Morrisons, it can be estimated that the quality products
offered by the entity is sustainable and the entity should continue with the same in near future as
well. Further, promotional activities conducted by the entity is also sustainable for the entity.
Moreover, relationship with the customers is temporary as retail industry is quite priced sensitive
and people attract to the places where the lowest prices are offered. Further, pricing policies are
set based on the competitor's pricing strategy in due to availability of substitutes in the market.
Probable industry scenarios
Morrisons is the fourth largest supermarket store present in UK which is gaining
competition from national and global brands available in UK. The main strategy of Morrisons is
to sell fresh food items to its customers and aims at selling all types of packaging food such as
pizzas, pie, cooked meats, sausages etc. It provides products on value for money basis and offer
great savings to its customers (Morschett, Schramm-Klein and Zentes, 2015). It has been
opening various stores in local towns and shopping towns.
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The pricing policy of the entity has become problem as it provides its own meat and
farming products. It does not compromise with the quality and carry out ethical approach to deal
with the customers. It restricts the entity from cutting the cost and giving deep discounts to its
customers, However, customers keep the prices on priority and move to the substitute in order to
gain products at lowest possible prices.
Tesco, the major competitor of Morrisons, have already captured the market of UK which
provides consumer products at minimum possible prices. There are various stores of Tesco at
every locality are present in UK. Morrison's presence in UK is not on top priority location which
makes its reach difficult to the customers.
The customer satisfaction level in case of Morrison's experience during shopping is quite
low. They feel that there are not enough variety of products are available as compared to Tesco
and ASDA. Moreover, unavailability of adequate staff is also another problems faced by the
shoppers (Wheelen and Hunger, 2017).
Recommendations
Morrisons have high market share but lower than Tesco, Sainsbury and ASDA. It is
advised that the entity should adopt following strategies in order to grow and expand:
 It can opt for global expansion where it can settle its store and provide products in
different geographical regions. It will help the entity in global presence and maximize its
profits. Penetration in global market plays an essential role in expansion of a brand
(Vogel and Güttel, 2013).
 The entity should improve its promotional strategies in order to keep the customer loyal
towards the brand. It can opt for discount offers, coupons etc so that customers gets
attracted towards Morrisons and gain shopping experience as well.
 It is advised to improve staff structure in order to reduce queuing time. It will bring larger
customer satisfaction in comparison to the previous year.
 Distribute the budget in different categories in order to have safe fund for every activity.
It will help to reduce excess cost involved and increase efficient use of resources (Rahm
and Riha, 2012).
 It can deliver extra services to its customers in order to increase customer engagement. It
is believed that it generates extra income for the enterprise as well. Other services
includes, shoe repair, bank service etc.
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