Strategic Management Report: Morrisons and the Chinese Market Entry

This report examines Morrisons' strategic management approach to entering the Chinese market. It begins with an introduction to strategic management and its importance for organizational goals. The report then analyzes the external environment of the Chinese market using PESTLE analysis, Porter's Five Forces, and identifies opportunities and threats. It assesses Morrisons' internal resources and potential through a Value Chain analysis, and evaluates the company's vision and mission statements. The report also includes a SWOT analysis to formulate an international strategy for Morrisons in China. The analysis highlights the political, economic, social, technological, legal, and environmental factors influencing the retail market. It identifies key opportunities such as the growing economy and increasing purchasing power, and threats such as intense competition. The report also evaluates Morrisons' resources, including inbound logistics, operations, outbound logistics, marketing, and technological capabilities. The conclusion summarizes the key findings and implications for Morrisons' strategic decisions in the Chinese market. The report is a comprehensive study that provides valuable insights into the challenges and opportunities for Morrisons in the Chinese retail sector.

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
EXTERNAL ENVIRONMENT......................................................................................................1
FIRM RESOURCES AND POTENTIAL.......................................................................................3
VISION AND MISSION OF MORRISON.....................................................................................5
SWOT ANALYSIS AND INTERNATIONAL STRATEGY........................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8
APPENDIX......................................................................................................................................9

INTRODUCTION
One of the most vital role played by Strategic Management in an organization is to be in
consonance with the goals and objectives determined by the top-level management of any
corporate. With the assistance of this kind of management practice, a company is assisted is
outlining the primary issues which may be faced while accomplishment of the objectives or
goals. In addition, all the functions are consolidated to make an effective deployment of the
resources, and the internal system is structures as well as systematized in accordance to the
strategic plan so developed for achievement of the goals. Morrisons, one of the top most
supermarket chains of Britain, is under a consideration to enter the Chinese market (Strategy –
About Us, 2016). Hence, in pursuance to the same the present report studies the target market, by
application of various models such as PESTLE, Value Chain and SWOT Analysis in order to
understand the fundamentals of the market for development of business level strategies for
Morrisons.
TASK 1:EXTERNAL ENVIRONMENT
1. PESTLE Analysis of the Chinese Market
POLITICAL
 The Chinese market is supported by a
highly stable government
 Rules and regulations have enacted
promote development in the retail
sector Foreign Investment is welcomed and
encouraged by the government (Hitt,
Ireland and Hoskisson, 2012).
ECONOMIC
 The economy of the nation has been
experiencing a high growth rate in
GDP. It shows potential to surpass the
GDP of China. Some of the significant
reasons are availability of skilled labor
in abundance at a low labor cost,
increasing exports, Urban growth and
so on.
 The purchasing power of the public has
been showing increasing trends.
 However, high inflation rates and
property prices poses the threat to
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hamper the growth rate.
SOCIAL
 There is a constant variation in the
demographics, in terms of frequent
changes in population growth, age
distributions and so on.
 The culture prevalent in the nation is
collectivist.
TECHNOLOGY
 Advanced information technological
tools have to be employed by Morrison
in the market of China.
 Online selling of products can be
undertaken which is convenient for
both buyers and sellers in the market.
 Updating of technology is possible as
business is financially strong
 Computer and online systems can be
undertaken for serving customers in
better manner.
LEGAL
 This law is associated with payment of
taxes and duties.
 In the Chinese market e-commerce
legislation have been introduced such
as intellectual property rights
protection, taxes etc.
ENVIRONMENT
 This factor is associated with saving
environment and reducing adverse
impact on surroundings
 By adopting online system pollution
can be reduced as people do not have to
travel to shops for purchasing products
(Slack, 2015).
Porter five forces
Threat of new entrants: In the market of retail threat of new entrants is high as regulatory
authority of China encourages new investors. Further, large number of businesses prefer to invest
into this market due to presence of opportunities. So, this is also one sort of challenge in the
market of China where Morrison is required to compete with other businesses.
Bargaining power of buyer: It is high as buyers are having large number of options in case if
they have to purchase any commodity. Further, they possess capability to dominate the market
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where operations are being carried out. Due to high bargaining power of buyer Morrison is
required to keep prices moderate so as to attract large number of customers.
Bargaining power of supplier: Large number of suppliers are present in the market who are
offering retail products. So, their bargaining power is low and it is possible for Morrison to
choose any supplier who offer products at an affordable price.
Threat of substitutes: Chinese market is having high level of competition in the retail sector.
Further, threat of substitute is high where every company is offering same type of retail product.
Therefore, in this case it is required for business to undertake product differentiation strategy.
Competitive rivalry: In the retail market large number of players are operating in the market of
China. Further, in near future it is expected that competition level will rise and due to this reason
2. Identifying Opportunities and Threats in the Chinese Market
The retail market of China is considered as one of the most lucrative and fast growing
markets, which has the potential to even support the sustenance of foreign investors. The
governmental policies applicable to the market has made accessibility to some of the sectors very
easy and at the same time has applied strict entry rules for others (Wheelen and Hunger, 2011).
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In light of the same it can be said that this market has great potentials to produce profits for the
business of Morrisons. It is significant to note that the retail sales of this market has recorded to
reach $1.8 Trillion in the year 2009, which has been increasing at a rate of 15.5% every
year(USCBC, 2010). This reflects great opportunities for any of the company who is targeting to
enter this highly attractive market. It has also been noted that the living standards in China has
made a drastic shift from satisfying the basic necessities to pursuing luxurious and high quality
products(Understanding China's Retail Market, 2010). This in turn provides large opportunities
for different sectors of the retail market. In accordance to some economists, the availability of
liquidity with the general public of the China has almost doubled and in pursuance to the same a
major spending has been recorded for discretionary products and services .
In spite of presence of various opportunities in the market, one of the major threats posed
on the Chinese market is the pace with which it is moving towards development and growth. It
has been observed that the retail players existing in the nation, both domestic and foreign, are
struggling to stay at par with the frequent change in trends and requirements. This has lead to
creation of great amount of uncertainty in the market, thereby posing a great threat for the
existing retail entities in the market (Reinartz and et. al., 2011.). For instance, one of the leading
supermarket brands Walmart has been reported to realize a decline in the sales, in result of which
it has introduced amendments in its way of working and has also renovated its stores.
As mentioned above a fierce competition exists in the retail market of the nation and also,
specifically in the Supermarket and hypermarket industry. Apart from Walmart, which has been
facing difficulties in coping up with the fast changing market, Tesco is another UK foreign
grocer which failed to survive in the market, despite of such great potential and performance in
other markets. I consequence of which Tesco was forced to enter into a Joint Venture with a
local retailer with the name of China Resource Enterprise. It can be stated that an acute level of
competition is faced within the supermarket industry of the nation. There are several foreign and
domestic players existing in this industry with some of the leading names of Walmar, Tesco,
Hualian, Watsons, Renrenle and so on (Foreign grocers struggle in fast-moving China retail
market, 2015)
TASK 2: FIRM RESOURCES AND POTENTIAL
Primary activities
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Inbound activities
It is regarded as one of the most vital function of the business which creates value for
both business and the target market. In the present market Morrison has large number of reliable
supplier which can easily handle stock items. So, at the time of operating in the new market of
China organization has to search for new suppliers so that easily supply retail items at a
convenient price (Uncles, 2010).
Operations
This factor is linked with manufacturing of products as per the requirement of customers.
Morrison focuses on storing products fresh and in safe manner so as to avoid wastage. Therefore,
in Chinese market also this strategy can be employed so that wastage can be reduced to extent
where different employees can be undertaken for looking after operations such as logistics
drivers, cashier and other individuals who are involved in the day to day operations.
Outbound logistics
In present market Morrison has its own delivery vehicles and due to this reason it is not required
for company to hire other deliveries. This directly adds value in the operations of organization
where overall operations can be carried out efficiently (Chuang and et. al., 2011).
Marketing and sales
All the marketing activities of Morrison are considered to be effective and same can be
employed in the Chinese market for attracting customers. But at the initial stage it is necessary
for business to introduce some offer and discount packages to customers as it can act as major
source of attraction.
Services
All the range of services offered to customers are convenient for them and this can be beneficial
in the new market where level of brand loyalty can be enhanced easily.
Supporting activities
Organization infrastructure
The infrastructure developed by Morrison is considered to be quite strong and this has
supported in enhancing market share of the business in the market of grocery and due to this
reason employing same infrastructure can be fruitful for company.
Human resource management
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For effective management of staff members Morrison has employed motivational tools (Murray,
2014). Further, in the market of china business can use effective leadership style along with
motivational techniques for enhancing satisfaction level of staff members
Technological development
Morrison operates with the help of advanced tools such as through official site customers
can find store of company. So, this concept can also be adopted in Chinese market.
TASK 3: VISION AND MISSION OF MORRISON
1. Current Strategic Statements
a. Vision Statement of Morrison's:
'To be the leading utility service provider by delivering a cost effective, quality service to our
clients and achieving acceptable financial returns”
b. Mission Statement of Morrison's:
“We need to trade for today, we need to build for tomorrow and I need to be able to do both
things.”
Mission of organization is to become partner with families and communities to provide
effective services for children and youth as per their requirement. Further, vision of company is
to deliver outstanding services than can strengthen community’s children along with family. One
of the main priority of business is to deliver clients with fair and equal treatment in non
discriminatory manner. Both mission and vision of business highlights the ranger of strategies
employed for conducting operations. In short, they highlight how valuable are customers of
Morrison and the effective ways employed to serve them (Prange, 2016).
2. Critical Evaluation of the Vision and Mission Statement
In the Chinese market it is possible for Morrison to continue with this mission and vision.
It is not required for organization to re frame its vision and mission. Both statements are clearly
indicating that main focus of organization is on satisfying requirement of its target market and
this has become one of the main reasons behind success of entity in the market. Vision highlights
what business wants to accomplish in near future and in case of Morrison it has been analyzed
that business wants to enhance level of customer satisfaction and main stress is on offering them
unique services (Webber and Smith, 2014). Through this mission and vision statement
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organization can easily become leader in the market of China and this can allow in gaining
competitive edge.
On the other hand, the challenges faced in the market of China can be easily tackled
through this mission statement which can built trust and confidence in favour of customers.
Further, it is well known fact that without effective vision it is not possible for any company to
survive in the market and sometime it may have adverse impact on the overall performance. So,
it is feasible for Morrison to continue with this mission in the new market as it will highlight its
brand in the market. Apart from this, mission along with vision of organization can be modified
by considering quality aspect where in the Chinese market people consider quality as one of the
most crucial factor before purchasing product. So, this can surely act as development tool for the
company where sales volume can be enhanced easily (O’Connor, 2011).
TASK 4: SWOT ANALYSIS AND INTERNATIONAL STRATEGY
SWOT analysis
 OPPORTUNITIES- It is on
considering both above points of
strengths and weaknesses where
Morrison can hereby relate to varied
work opportunities. It is with a
fundamental association of their
strengthening factors that can duly
eliminate their impotence.
 It is mainly with reference to a growing
market of organic products where
Morrison can set up their operation in a
broader format.
 It is mainly due to more health
conscious consumers in the prevalent
market where this particulate strategy
will also benefit them in their newer
market set of China.
 An international enlargement of
 THREATS- It is in order to assess the
future of Morrison where despite of
making a prompt usage of the
recognized possibilities, the quoted firm
can hereby face some reluctant issues in
their business with a growing trend of
market competition (Hammad, 2015).
 A rising market share of the contenders
in both its domestic and international
marketplaces is a biggest concern to
proceed towards a succeeding business
consent.
 Emergence of taxation rates with
altering policies of government is yet
another cautionary statement for
Morrison, especially at the rime of
extending their business operations in
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business operation is yet another vital
chance of making an illustrious market
position where this will also tend to
reveal their weakening factors of
limited geographical extension.
 An increasing demand of market for
private label is also another potent
measure that can be considered by
Morrison in their newer marketplace.
the foreign market sets.
 Augmenting manpower costs is yet
another substantive mean that is
referred to be the biggest concern for
Morrison while operating in their
chosen marketplaces.
Apart from this, different market entry modes are present which can be adopted by
Morrison for entering into the foreign market and this in turn acts as development tool for the
business. Different modes are licensing, franchising, direct export, joint venture, merger,
acquisition etc. It totally depends on the structure of business along with internal capability to
decide which entry mode to select for carrying out operations in the new market as per
expectations of customers. Pros and cons of every entry mode is present and due to this reason
firm has to select the most appropriate mode in proper manner. In case of Morrison foreign direct
investment is one of the most suitable market entry mode.
It is a type of mode where direct ownership of facilities is being present in the target
country. Morrison can transfer its major resources in the market of China such as technology,
finance and human. Through this organization can efficiently carry out overall operations. Main
advantage that business will obtain is linked with development such as in case of human resource
if it is shifted into Chinese market then organization is not required to carry out training.
Technology of the organization is also upgrade which can be easily used in the Chinese market
also. This will allow performing better in the new market and all the challenges present can be
faced easily. Moreover, no doubt due to presence of direct investment business has to allocate
large amount of funds in the market of China but in near future this amount will be recovered
easily by earning higher profits (Cohen, 2015). Morrison is working with advanced technology
and skilled workforce which can allow organization in gaining competitive advantage and goals
developed for the market of China can be accomplished easily.
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CONCLUSION
In light of the above facts and figures, it can be concluded that the Chinese Market retail
market offers great potential and scope for any of the foreign players to enter into the market.
The rationale behind this trend is that the public in general is possessed with high liquidity
power, on the basis of which they prefer to purchase goods and services of only high quality. On
the contrary, one of the biggest backdrops which may be faced by Morrisons is that of the high
pace of growth of this market and the fierce competition existing at all the levels of the market.
However, it is believed that on the basis of the capabilities of Morrisons and some alterations in
the Vision and Mission of the business, there is vast scope for the company to prosper in the
market. Further, this shall enable the brand to carve out a strong position for itself in the market.
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REFERENCES
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