Cost-Advantage Strategy - WM Morrison Super Market - Outline Example

The company has been enjoying a good run in its business operations since hitting the ground in the consumer industry (Felsted 2014, 8). This development has prompted the company to develop a competitive strategy that can help it create competitive advantages and a sustainable market position (Low & Arain 2010, 15).

One of the important approaches to increasing efficiency in business activities is the use of strategies that reduce a company’s operational costs. This is important since companies can take advantage of the reduction in costs to maximize on the returns from the services and products they sell. Across various businesses in different industries, competitive advantages have often been achieved when firms attain high levels of profits from the activities they engage in.

It is important to point out that particular industry structures play a crucial role in determining the number of profits that businesses get from their operations (Plunkett & Research, 2010, 47). This is because; the particular forces shaping the industry and the same ones that determine the profits those firms derive from their operations.
In the retail industry, like other industries, the particular forces affecting the company and business performance include competition, like that which Wm Morrison is facing currently, the bargaining muscle in sellers and buyers of goods and services, as well as availability of complements and substitutes in the products and services being offered in the market(Worthington & Britton 2006, 13).

Porter Five Analysis of Wm Morrison’s Competitive Strategy
Porter's five models are used in analyzing the viability of a business toward making competitive advantages and market position (Sadler 2003, 32; Grant 2008, 51). Businesses that want to grow and expand are expected to make environmental planning and analysis to align their strategies accordingly.


Bargaining power of suppliers
According to the Porter five models, Wm Morrison has not received any major threats with the entry of new suppliers in the market. This can be attributed to the company’s policy in the process of in-house sourcing for the majority of its products. The company’s expansion approaches especially geographically have necessitated the search for new suppliers. In this case, the bargaining power of the new suppliers cannot be easily predicted. Wm Morrison expects to rely on its economies of scale in the process of subduing the suppliers.


Bargaining power of buyers
Buyers make up the customers of Wm Morrison supermarket. Because many alternatives exist, the bargaining power of these customers is always very high. When the buyers feel that their needs are not being effectively addressed. They often change their choices and preferences for where they are going shopping. Because of the hyped information and awareness about market dynamics, most of the company’s customers are fully aware of the real market prices for goods and services offered.

Threat of substitutes
In this case, substitute products can be seen to be individual groceries, special outlets, and off-licenses and among other store chains. Currently, most of the threats posed by substitute products have been subdued. However, it is important to realize that the idea of store chains that are small and franchised is progressively becoming popular. In this case, they are poised to become major threats in the coming future.

Industry Competitors
It is important to realize that the retailing industry is one of the most competitive in the UK and other countries. Four major players, Asda Tesco, Morrison, and Sainsbury, have so far dominated the industry. Among the four players, Tesco is the leading, followed closely by Asda, which is the retail giant in the United States. These two companies pose real competition to wm Morrison because of their particular sizes, cost efficiencies, and financial economies. On the other hand, Sainsbury does not pose a major threat to Wm Morrison, possibly because of its inefficient operations and the financial challenges it is facing. Read More