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Strategy- the question below - Essay Example

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Wm Morrison Supermarket is made up of a retail network comprising 1500 discount stores, 100 Pal’s Clubs and 15 Supercenters that are served by 20 distribution centers across the country.The supermarket is currently in operation in 45 states only. The new entrants into the…
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Download file to see previous pages expected to rise gradually and record a steady flow of revenue, the economy is going to recover, and consumers are going to have more disposable income available for purchasing both premium and private label brands. This will enhance the average transaction sizes for grocery stores and supermarkets. According to Quelch, the Supermarkets and Grocery Stores Industry, which is in the mature stage of its life cycle, will be in the next couple years preceding 2019.The supermarkets and grocery industry contribution to the GDP of the economy is predicted to remain flat. An industry’s contribution to the economy is measured by the industry’s value added or simply (IVA).However, the country’s GDP is expected to rise to an estimated average level of 2.5% annually despite the fall in the growth of the supermarket industry. According to Korda, 2012, an industry is terms as declining when its growth falls below the GDP’s annual growth level. This should however not alarm you because supermarkets and groceries have in the past-recorded low profit margins leading to a lowering of the whole’s industry contribution to the economy. Other factors contributing to the industry’s slow growth include the intense competition in the food retailing industry which cays a reduction in the profit margins of the retail stores. The introduction of new entrants to the industry (Edli and Aldi) are bound to result in lower profit margins for our company in the future if necessary measures are not taken like adopting a cost advantage strategy.
There are a number of reasons why the supermarket should adopt the cost advantage strategy. Berinstein, 2003, argues that a firm pursuing a cost-leadership strategy attempts to gain a competitive advantage primarily by reducing its economic costs below its competitors. Wm Supermarket is a big supermarket. It therefore has the advantage of economies of scale. The supermarket has a very high level of production and is therefore able to buy and use ...Download file to see next pagesRead More
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