Situation Analysis of Morrisons in the United Kingdom - Case Study Example

?Table of Contents INTRODUCTION 2 SITUATION ANALYSIS 3 LOGISTICAL IMPLICATION 6 CONCLUSION 8 LIST OF REFERENCES 10 INTRODUCTION Morrisons is one of the most established retail organisations in United Kingdom. It has been reported that the organisation ranks among the top 5 retailers in United Kingdom in terms of sales. The company operates around 475 stores in Britain (Morrisons, 2012). Due to such fact, the organisation is one of the fastest growing retailers in United Kingdom with outstanding growth and profitable opportunities. The organisation constantly strives to be “different and better than ever”; being ‘different’ means that the organisation must take maximum advantages of its core competencies while being ‘better than ever’ focuses on changing the way the organisation operates in the marketplace. Even though, the organisation faces stiff challenges in the industry but has been able to maintain its commitment to provide the customers with fresh products. The ‘fresh approach’ used by Morrisons have significantly helped in creating awareness regarding the freshness of the foods offered by the organisation along with the organisation’s concern for the environment. To provide the customers with high quality food products, the company has great control over its supply chain which has eventually become a source of competitive advantage for the organisation (Morrisons, 2012). Providing the customers with quality food is the priority of the organisation due to which Morrisons focuses on sourcing fresh produced foods from the local market which is then processed in the company’s own manufacturing facilities. To preserve and conserve the fresh food, the organisation uses its own temperature controlled warehouses along with the packing plants in United Kingdom and other parts of the world. High quality customer service is one of the elements that the organisation highly focuses upon to differentiate its business from the competitors in the market. In order to do so, the organisation focuses on simple customer service strategy i.e. to provide quality service to the customers by motivating and training the employees to set a benchmark in terms of customer service to compete and gain high market share as compared to earlier years. This eventually leads to high customer satisfaction level which creates a significant competitive advantage for the organisation. SITUATION ANALYSIS Morrisons is one of the big four retailers in the United Kingdom. Even though, Morrisons is one of the most established retailers in United Kingdom the organisation witnesses decline in its performance along with weak sales as compared to earlier years. This decline in sales in such a fragile market is causing Morrisons decline in market share along with drop in consumer’s confidence (BBC News, 2012). The environment is getting challenging and tough as the competitors have enhanced their performance and product offering. It has been indicated that the due to such weak performance of the organisation in the trading environment led to decline in market share to 11.5 percent from 12 percent a year ago (BBC News, 2012). Such performance of the company is one of the concerns that should be immediately taken into consideration if the organisation aims to become the leader in the food market and to become the largest supermarket chain by defeating Tesco, Sainsbury and ASDA in the market. On the other hand, the decline in growth is also one of the challenges that the organisation would face in forthcoming years. The recessionary period affected the organisation’s ability to take the customers into its confidence by providing them with high quality products in the market but as the shopper’s disposable incomes are squeezed (Potter, 2012). This would significantly impact the performance of the company in the market as the customers are constantly going back to their favourites in order to reduce the risk in such disastrous economic times. Even though, Morrisons is one of the four leading retailers in the United Kingdom it focuses highly on traditional distribution structure with little or no focus on modern distribution methods and systems. This indicates that the organisation online presence is nil which eventually puts the organisation in challenging situation. The top three retailers in the United Kingdom have high online presence and market due to which such organisations have enabled them to earn high profits by providing the customers with an opportunity to shop while staying at home. But in Morrisons’s case, the organisation still focuses highly on retail outlets i.e. convenience store. Although the organisation focuses highly on retail outlets, it has been indicated that the organisation’s convenience stores are comparatively less than others in the market. The lack of convenience stores not only put the organisation’s performance at stake but also the survival as well. The best options that the organisation currently has are such a competitive environment is to either focus on creating its online presence or to increase the number of retail stores in the market. Another option that the company could consider in order to gain back the market share captured by competitors such as Lidl and Adli is to offer products at lower prices. It has been indicated that major retailers having international presence offer their products at lower prices as compared to Morrisons. The most feasible option from the above mentioned options would be to enhance the online market of the company (Ruddick, 2013). Some of the advantages that are associated with online market are as follows (Phan, 2003): The cost associated with the online market is comparatively lower than establishing and maintaining convenience stores. In addition, going online is quite powerful and the fastest medium to attract mass customers in the industry. The time as well as the investment required is minimal. With an organisation going online, it is provided with an opportunity to provide quality goods and services to mass audience rather than limited target audience. Focusing on online market is the most environmentally friendly way of doing business in the industry. In addition, it has also been indicated that the organisation can easily track and measure the success of the organisation by going online without wasting precious papers which eventually helps to save numerous trees. It has been indicated that focusing on already satisfied customers is quite inexpensive than satisfying potential customers. This all changes when an organisation focuses on going online. Both the potential and already existing customers are provided with several opportunities to provide the organisation with feedback regarding the products and services based on which the organisation can effectively takes corrective measures. Interaction with the customers through going online becomes friendly and the customers have access to all the information regarding the organisation and the processes taken into consideration by the organisation. The advancement in technology have provided the organisation with an opportunity to automate their business which eventually reduces the cost and methods associated with reaching new markets and customers. Going online is considered a sign of professionalism which eventually is associated with characteristics like commitment and dedication of the organisation to provide the customers with convenience. Going online means that the organisation’s products and services offered are 24/7 available. Due to such global presence, organisations have considered going online to cater the online markets as fewer resources are required. LOGISTICAL IMPLICATION In 21st century, organisations that have little or no online presences are considered to have no commitment to serve the customers in the market. Such organisations are on the bottom of the customer’s list in terms of priority and preference. No matter how strong an organisation is in terms of sales or profits in the market, having an online market means that the organisation cares about its customers as well as the potential customers in the market. The logical explanation of focusing on online market rather than convenience stores is as follows (Funk, 2008): Increasing the number of convenience stores requires great amount of time as well as the cost. In such disastrous situation of the company considering online market would be the best viable option for the organisation as the cost and time associated with the creation of e-commerce website is comparatively lower. Reaching mass audience is quite difficult through convenience stores as convenience stores could only target limited target audience in the locality. On the other hand, reaching mass audience is the specialty of online stores. By establishing online presence, Morrisons would be able to reach variety of audience in the market whether the customers are located in local markets or in international markets. A convenience store might not be able to deal with thousands of customers at the same time and with thousands of customers entering the store at the same time, the employees working at the store might not be able to handle the customers. On the other hand, an online store is designed in such a way that it could handle thousands of customers at the same time while providing the customers with exact information regarding the products along with other relevant information. Attracting new customers is quite difficult for the organisation through convenience stores as the markets are already blanketed with several other retail stores providing similar or alternate products to the customers. On the other hand, attracting new customers along with old customers is quite easy for the organisation through online retail stores. The organisation’s reputation in the market as well as the marketing and advertisement campaigns are some of the critical factor that encourages potential customers to visit company’s online store to purchase products offered by the company. The cost associated with advertisement and marketing campaigns are quite high for convenience stores. On the other hand, interacting with the customers through online advertisement and social media is inexpensive and quite efficient as compared to other forms of communication. With the youth and young adult mostly spending their time on internet would provide the organisation with competitive advantage to effectively influence the customers to prefer Morrisons’s e-commerce website rather than any other competitor’s website to purchase goods and services. Convenience stores have parking areas as well which increases noise pollution which have negative impact on the environment. On the other hand, online market is one of the most advanced ways to reach the customers without harming the environment as well as the natural habitats. Similarly, reduction in prices would never become an option for the organisation as the organisation is charging premium prices due to the product’s superior quality. Reduction in price would reflect decline in quality which would negatively influence the customers in terms of quality. Rather than focusing on decline in price, the organisation could provide the customers with different promotions by visiting and purchasing products offered by the organisation. This would eventually help the organisation to attract and influence the customers to purchase at Morrisons’s website to gain discounts. Focusing on online market would be the most feasible option for the organisation as with this option at work, the organisation could show its commitment to provide the customers with products 24/7 without any disturbance or discrepancies. Furthermore, the organisation is committed to protect the environment which could be effectively achieved with the help of online market as no papers or trees would be chopped down for the construction of stores. CONCLUSION To conclude, it could be said that Morrisons should focus highly on online market rather than any other options available. Online market is the most feasible option for the organisation as with online market the organisation would be able to effectively achieve its objectives in the market. In addition, the organisation would be able to reduce its impact on the environment to significant level providing the organisation with several opportunities to cater the needs of the customers. This will eventually help the organisation to enhance its performance to significant level as with this approach the organisation would be able to reach mass audience in lowest possible time. In addition, the organisation would be able to enhance the customer traffic through the e-commerce website which would eventually bring in higher sales and revenues as compared to earlier years. Furthermore, online market would help the organisation to enhance its online presence which will help the organisation to create awareness regarding the existence of the organisation which will help the organisation to bring in potential customers as well as old customers to purchase the goods offered by the company which will directly impact the performance of the organisation helping it to enhance its market share as well as image in the mind of the customers. LIST OF REFERENCES Ruddick, G. (2013) ‘Morrisons' online dilemma becomes clear after Christmas turkey’, 7 January, The Telegraph. Available at: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9786486/Morrisons-online-dilemma-becomes-clear-after-Christmas-turkey.html [Accessed 10 May 2013] BBC News. (2012). Morrisons sales fall in ‘fragile’ market. Available from http://www.bbc.co.uk/news/business-20248817 [Accessed 10 May 2013] Potter, M. (2012). Morrisons sees tougher 2012 as growth slows. Reuters. Available from http://uk.reuters.com/article/2012/01/09/uk-morrisons-idUKTRE8080B420120109 [Accessed 10 May 2013] Phan, D. D. (2003). E-business development for competitive advantages: a case study. Information & Management, 40(6), 581-590. Morrisons. (2012). Annual report and financial statements 2011/12. Available from http://www.morrisons-corporate.com/2012/annualreport/financial-statements/downloads/PDFs/Morrisons_Annual_Report_2011-12_Online.pdf [Accessed 10 May 2013] Funk, T. (2008). Web 2.0 and beyond: Understanding the new online business models, trends, and technologies. Praeger Publishers. Read More