Strategic Position of Morrisons: Analysis, Challenges, Solutions

This report provides a comprehensive analysis of Morrisons' strategic position within the retail industry. It begins with an introduction to strategic positioning, followed by an in-depth examination of Morrisons' current strategic standing, including STP analysis, and a detailed SWOT and PEST analysis. Th...Read More

Strategic position

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Current strategic position of Morrisons..............................................................................1
2. Challenges faced by company............................................................................................5
3. Evaluation of various solutions company could use to address one of these challenges...6
4. Practical implication of the chosen solution.......................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategic Position could be termed as the overall intended objectives and approach to a
situation. It is the responsibility of business managers to develop strategic position carefully and
should take considerable steps in order to communicate it to staff clearly so that all the efforts
could be directed in one single direction i.e. achievement of organizational goals. In the
presented project report, research is undertaken on Morrisons, which deals in retail products and
fresh food. In this paper, current strategic position of the company is analysed and emphasised
deeply and briefly with the help of SWOT and PEST analysis of Morrisons.
Further, research is also conducted to highlight the challenges that company will be
facing over the next 3-5 years accompanied by their solutions of various challenges being
highlighted. Evaluation is also done of these solutions in order to address one of these
challenges. Moreover, importance is shown of practical implementation of these solutions at the
company.
MAIN BODY
1. Current strategic position of Morrisons
Wm Morrison Supermarkets plc. in a company in retail industry and deals in products
related to lifestyle and retail. This company is known for its quality fresh food across UK.
Strategic position of Morrisons could be estimated with the help of 4 step process and
STP(Segment, target group and positioning).
Morrisons STP
 Segment: In this identification is done of bases for segmentation which helps in
determining important characteristic of each market segment. It also includes customers
and people looking for price, freshness and convenience.
 Target Group: Morrisons targeted group is households, to whom delivery could be done
of fresh and quality foods. Positioning: Morrisons have a food offering with broad appeal i.e. from Aldi to
Waitrose.
Determining strategic position
 Step 1: Strategic Issues
These type of issues are developed and identified on the basis of input that is made from
the planning team (Bohari, Hin and Fuad, 2017). Strategic issues of Morrisons includes:
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1. Due to recent budget cuts and lay off 's, staff morale is low.
2. Impact of health legislation is likely to erode margin.
3. Current value proposition is not resonating with customers.
 Step 2: Environmental Scan
Environmental scan is a process that systematically surveys and interprets relevant data
to identify external opportunities and threats. An organization gathers information about the
external world, its competitors and itself. Following is the PEST analysis of Morrisons:
Political Economical
 After Brexit there was a lot of
uncertainty due to change in policies
and regulations. This resulted in drastic
change in market demands of the
products of Morrisons.
 Multiple government legislation on UK
food retailers had a huge impact on the
organization.
 Brexit created inflationary pressures
and caused significant fluctuations in
currency. Due to the economy was drop
down resulting in losses in businesses
of Morrisons.
 Rise in oil price resulted in tightening
of household budgets for consumers.
Social Technological
 Various business opportunities that are
presented by rising age population.
 Growing health concern among
customers in UK. Consumers will
prefer to have fresh food in which
Morrisons deals therefore poses as a
opportunity for business.
 Investment in technology has helped
business in reducing its wastage of
efforts and also assisted in making the
business more efficient and responsive
to customers. Need for having the latest
technology arises in Morrisons.
 In order to identify the emerging trends
and to better serve customers digital
data is used (Bradbury and Day, 2016).
 Continuous focus is made on research
and development to build in-house
software and systems.
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 Step 3: Competitive Analysis
Basis Morrison's ASDA Tesco
Products Deals in retail
products and fresh
food products.
Deals in clothing and
groceries.
Deals in both financial
and non financial retail
products.
Pricing Uses penetration
pricing method.
Make use of Cost plus
pricing method.
Uses cost plus pricing
method.
Promotion As such no online
promotions or
marketing.
Make use of social
media marketing as
main source of
promotion.
Uses social media
marketing for
promotion purposes.
 Step 4: SWOT analysis
Strengths of Morrisons- There are numerous strengths of Morrisons that enable it to expand in
the market place. These strengths not only help in protecting market share but also helps in
penetrating new markets. Some strengths of Morrisons are:
1. Superb performance in new markets: Company has built expertise at entering new
markets and this expansion has helped it to build new income streams and to diversify the
economic cycle risk in the retail market.
2. Strong brand portfolio: By investing in building a strong brand portfolio, Morrisons
could get help from these brand portfolio (Morrisons SWOT Analysis, Competitors &
USP, 2008). As, it is extremely useful in case if the organizations wants to expand itself
into new product categories. Company has its own brand portfolio and deals in self made
products.3. Strong free cash flow: Morrisons is provided with resources in the hand of the company
to expand into new projects because company has strong free cash flow.
Weaknesses of Morrisons- These are the areas where Morrisons need to improve itself.
1. Net contribution percentage and profitability ratio of the company are below the industry
average rate.
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2. Line Organizational structure is build in such a way that it limits expansion in adjacent
product segments.
3. Positioning and unique selling propositions of products are not yet clearly defined which
can lead to attacks in this segment from the competitors.
4. The current asset ration and liquid asset ratios suggests that the company should start
making use of cash more efficiently.
Opportunities of Morrisons:
1. Market development can lead to opportunity for Morrisons to increase its
competitiveness as compared to other companies..
2. New environmental policies will represent a great opportunity for Morrisons to drive
home its advantage in using new technology and to gain market share in the new product
category (Chereau and Meschi, 2018).
Threats of Morrisons:
1. In the American economy, the increasing trend towards isolationism can negatively
impact the international sales because it can lead to similar reaction from other
government.
2. Usage of new technology by competitor or market disruptor could be a serious threat to
the company in medium to long term future.
3. Increasing prices in China and rising pay level can result is formation of serious pressure
over profitability of Morrisons.
4. Paris agreement i.e. new government regulations could become a great threat to existing
product categories.
2. Challenges faced by company
Apart from the problem of falling real incomes and rising real prices which was
encountered by its rivals, Morrisons had to grapple with its own problems and challenges of;
northern bias, lack of multi channels and ageing population.
 Lack of multi channel outlets: Morrisons is investing in multi channel retailing while
incurring £40M of extra costs, this will facilitate sales and online offering are yet not
been launched. The sales will remain weak as compared to other competitors that already
have their convenience stores and internet businesses up and running. It is unfortunate
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that many of the best locations are already under the rivals, as Morrison's decision also
failed of buying block bluster stores (Cravens and Piercy, 2016). One of the biggest
challenge and issue that was faced by Morrisons was late offering of online services.
 Bad Markets: Morrisons revealed that it was in discussion with online firm Ocado. Faith
was putted by retailers in online sales and more convenience stores to bring back its
drooping chance, as it reported profit before tax down by 4% to £901M (Morrisons
Annual Report, 2016/17). After securing the UK-wide contract, the company was given
task of transferring all the Morrisons English sites with the sites in which company is
already serviced in Scotland. This transfer was to undertake while navigating a new and
complex market. The online food and grocery market was about to reach £11.1 bn by
2017 which was almost the double of its value of £5.6 bn in the year 2012 (Morrisons
Annual Report, 2016/17).
 Pricing Policy: Morrison's 'move to the middle' was found problematic. The selling of
own meat and farming operations were remained unscathed from the scandal of horse
meat which gripped the wider food industry (Grant, 2009). Its more ethical approach of
winning over customers on a budget was failed while it was tackling the rivals in the
sector on quality. Morrisons have also struggled to achieve satisfaction of its consumers.
 Losing touch with its roots: Morrisons has grown its brand on the basis of two central
themes i.e. value and service and it was a rapidly expanding family business. The
problems arise after it bought Safe-way, which leaded to a costly and troubled integration
into the Morrisons family. Morrisons started to feel the affects of the financial crisis so it
moved to attract more affluent customers and was accused of neglecting the lower end of
the market and therefore its customer base.
Above mentioned all challenges were faced by Morrisons during some years.
3. Evaluation of various solutions company could use to address one of these challenges Lack of multi channel outlets:
Solutions-
1. As a solution to Lack of multi channel outlets, Morrisons should control extra costs that it
is incurring by investing in multi channel retailing for facilitating sales. Ratrher they
should invest the cost in launching online websites and application so that they can reach
to maximum customers which cab help in increasing their sales and earning. The
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planning and marketing team should work together to implement changes in the plans
and policies. However, before starting online services, proper research of target market
and customer should be analysed. and can collaborates with different online retailers to
increase their sales of volume. It will incur sufficient amount of cost for company to open
convenience stores to have a multi channel outlets.
2. As many of the best location are already been undertaken by rivals and competitors in
market. Morrisons should start offering online services with quality product at reasonable
prices which can attract more customers than in retail market (Ho, 2014).
3. After signing contract of transferring all the Morrisons English sites, the company should
initiate the transfer process and should appoint an expert team to look after it. In addition,
a dedicated account manager should also be provided accompanied by transition manager
and specialist team to onboard the sites and ensure the process ran smoothly. As per the
critically addressed has made that it would increase the cost of the company to hire these
managers and expert teams to look after Morrisons sharply.
4. Company should also identify the need to validate each site in order to ensure bill
accurate data. Further, company should interact with multiple wholesalers across each of
the regions in which Morrisons operate, to ensure effective transfer of every single site.
Monitoring system should be placed to enable company is detecting and resolving any
potential billing issue. By taking these steps Morrisons would be provided with
confidence that systems and practices are working effectively and assisted to ensure
accurate billing.
5. To have success in multichannel marketing, or any other digital marketing, efforts,
companies aim to devise campaigns that span multiple channels easily. Since expecting
customers to adapt to the company's preferred channel is an unrealistic hope, companies
cater to the customer and tailor campaigns to fit multiple channels.
6. As company would not be able to implement all the solution. Management has to ensure
about the time, cost that would implement the solutions as extra efforts from the
marketing department employees. The implementation of these solutions may requires
hiring candidates that would increase the cost of the company. (Klaas and Klein, 2017).
7. The spread of available channels, including the growth of email, social media and mobile,
has caused marketing departments to increase their presence on these channels in order to
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develop their customer relationship management efforts. It would help in eliminating the
challenged facing by the company.
Company should consider all the above mentioned solutions to challenges that company
could face in the next 4 to 5 years. It is noticeable that, company has moved to far to attain
growth and increase profitability without considering customer satisfaction and need and
requirement of people. If company fails to do so, then the time is not so far when company
would be facing crisis and losses in business. If Morrisons is compared with other competitors
like Tesco or Sainsbury it stands nowhere in terms of offerings, services, quality, range of
products, etc.
4. Practical implication of the chosen solution
Lack of Multi channel Outlets:
Implementation of the measure in Morrisons:
1. For implementing the above mentioned solution, the Morrisons need to develop plans and
strategies according to the customers demands, requirements, needs and micro & macro
environment of the business. Every aspects of the business are need to reviewed.
Marketing and technical departments have to create new strategies to implement the
online marketing in company in order to deal with the multichannel outlet cjhallenge.
2. Morrisons should ensure the cost effective measures of marketing in order to increase the
revenue of company. The retained revenue can be used to open more attractive outlets in
competitive areas which can attract customers in store (Stones, 2016).
3. Companies needs to develop strategies in order to determine which customers get which
messages based on their demographic information and other behaviours. Customer
analysis is very important to examine the customer wants, which particular channel
customer would prefers to maximize the visibility of their messages. This enables
companies to target the right audience with the right content to facilitate sales.
4. In an effort to gain a competitive edge in the market, company should implemented self-
service solutions to deal with business pressures. The two forces driving companies to
implement this are operating cost and competition. Companies are getting their customers
to do as much as possible on the web, save the cost from opening new centres.
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5. For implementing the online store and websites, the technical departments have research
about the needs and demands of customer. The product line which are offering online
should attract more customers. The IT departments should have to work on the
presentation of the websites and make it more attractive.
6. The marketing department should implement attractive pricing strategies for online stores
with offering different discount at Christmas and new year occasions to in order to
increase sales. The company can use benchmarking to check and improve the company's
marketing strategies with other rival companies.
7. Reaching potential customer using online marketing is more a matter of commitment and
strategy than it is a financial expenditure. Company should be cost effective to reach
online customer effectively. Less expenditure of company will help the investing in other
operations. Using a market-led approach to Internet marketing, build an effective website
and attract customers through various Internet-based marketing tactics.
8. Social media channels, like Facebook, Twitter, and Pinterest, can be used by companies
which are great methods for increasing profitability with Internet marketing. Companies
can set up official brand pages or accounts on social media sites, and post updates.
Managing social media can be very time consuming, but to expand the business channels
social media is an important way to attract the young age customers.
Above mentioned are the practical implications for the solutions that were chosen for the
challenges faced by Morrisons over the next 4 to 5 years. Through these implications Morrisons
would be able to receive a single, accurate and consolidated bill for all of their water, waste
water and trade effluent services which can result in saving a significant amount of time and
money making the process effortless from their perspective.
CONCLUSION
The concluded report is a brief understanding of strategic position of Morrisons and
challenges that are faced by it over the years. In this paper, current strategic position of business
if highlighted with the help of STP and 4 step process i.e. strategic issue, environmental scan,
SWOT analysis and competitive analysis which represents that Morrisons has 9 main
competitors. Further, research is conducted to identify challenges that are faced by business over
the years which summarises that, lack of multi channel outlets, bad markets, pricing policies and
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losing touch with its roots are some challenges that company faced. In addition to it, solution is
also given to each of the challenges to foster growth and profitability index and prevent losses in
business. Practical implications of these solutions are also highlighted in this assignment, where
company is suggested to implement benchmarking technique in order to prevent financial crisis
and that can result in effective utilisation of available financial resources.
It was summarised that company is facing losses continuously and to prevent that,
company should start providing consumers with online offerings and with value and services
according to the quality standards.
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REFERENCES
Books and Journals
Bohari, A. M., Hin, C. W. and Fuad, N., 2017. The competitiveness of halal food industry in
Malaysia: A SWOT-ICT analysis. Geografia-Malaysian Journal of Society and Space,
9(1).
Bradbury, J. and Day, N., 2016. How do supermarket ‘healthy’range ready meals compare with
the ‘standard’equivalent. Proceedings of the Nutrition Society. 75(OCE3).
Chereau, P. and Meschi, P. X., 2018. Defining Strategic Positioning. In Strategic Consulting (pp.
39-79). Palgrave Macmillan, Cham.
Cravens, D. W. and Piercy, N., 2016. Strategic marketing (Vol. 7). New York, NY: McGraw-
Hill.
Grant, R. M., 2009. The resource-based theory of competitive advantage: implications for
strategy formulation. In Knowledge and strategy (pp. 3-23).
Ho, J. K. K., 2014. Formulation of a systemic PEST analysis for strategic analysis. European
academic research. 2(5). pp.6478-6492.
Klaas, T. and Klein, J., 2017. Strategic airline positioning in the German low cost carrier (LCC)
market. In Strategic Management in the Aviation Industry (pp. 119-142). Routledge.
Porter, M. E., 2018. From competitive advantage to corporate strategy. In Readings in strategic
management (pp. 234-255). Palgrave, London.
Stones, C., 2016. Online food nutrition labelling in the UK: how consistent are supermarkets in
their presentation of nutrition labels online. Public health nutrition. 19(12). pp.2175-2184.
Zineldin, M., 2016. Bank strategic positioning and some determinants of bank selection.
International Journal of Bank Marketing. 14(6). pp.12-22.
Online
Morrisons SWOT Analysis, Competitors & USP. 2008. [online]. Available Through:
<https://www.mbaskool.com/brandguide/lifestyle-and-retail/2039-morrisons.html>
Morrisons. 2018. [online]. Available Through:
<https://www.business-stream.co.uk/about-us/case-studies/morrisons/
Tesco, Sainsbury and Morrison face up to fresh challenges. 2018. [online]. Available Through:
<https://www.ft.com/content/dd53b83c-9cc5-11e4-a730-00144feabdc0>
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