Strategic Assessment of a Morrison's Supermarket - Term Paper Example

Strategic assessment of a Morrison’s supermarket Contents Introduction 3 Analysis and Discussion 4 Porter’s Five Forces 6 Bargaining power of buyers 6 The bargaining power of suppliers 6 Threat of potential new entrants 7 Threat of substitutes 7 Threat of competitive rivalry 8 SWOT Analysis 8 Strengths 8 Weakness 9 Opportunities 9 Threats 10 Porters generic triangle 10 Market segmentation 11 Geographic 11 Value of money 11 Convenience 11 Freshness 12 Service Quality 12 Ansoff matrix 12 McKinsey’s 7's 13 Customer needs canvas 14 Customer Jobs 14 Pains 14 Gains 15 Blue Ocean Strategy 16 Conclusion 16 References 18 Introduction Strategic management refers to the coordination of processes and activities to help organizations in the alignment of resources with the visions, missions, and strategies of an organization. It acts as a basis of transforming the static plan and provides feedback related to strategic performance which assists the decision making process of an organization. Strategy refers to a plan of action which states how an organization will achieve its objectives and mission. The management of these activities can be termed as strategic management. There are various strategic decisions which an organization has to make relating to factors such as the direction of an organization in the long run, the scope of its activities, stakeholders’ values and expectations, responding to the ever changing business environment, building on its capability as a business entity, and acquiring a higher market share relative to its competitors. These decisions tend to be complex as they have to be made in an uncertain situation. There are also various levels of strategy for an organization such as business level strategy, operational strategy, and corporate level strategy. Business level strategy refers to the way a business organization conducts itself in a particular market to be successful. Operational level strategy is about various levels of an organization and their contribution with regard to accomplishment of the strategy. Corporate level strategy deals with the overall scope and purpose of an organization and how to add value to various business units. Morrison Supermarket is considered as the fourth largest supermarket chain in the UK. The company has its head quarters located in Bradford, England. William Morrison founded the company in the year 1899. The company Morrison Supermarket is listed in London Stock Exchange (LSE) and is a constituent of the FTSE 100 index of organizations. The company’s understanding of the food requirements of the consumers along with the quality of service that is provided to them made the company the food specialist in the country as they tend to provide good food at good value to the customers. Morrison Supermarket has secured a strong position in UK retail sector and its business model and objectives are very clear for the stakeholders and employees of the organization. The company has its presence all over the country in the UK and is specifically known for its providing value for money services to the consumers. The company seeks to provide high quality goods to consumers at a very low price which is considered as affordable to consumers. The location of the stores of the company is in such a way such that they offer convenience to consumers. The company seeks to provide fresh food items to consumers as it is renowned for providing quality goods to consumers at an affordable price. The company has a good supply chain network and also has a manufacturing unit which is considered as very strong. The company is financially very strong and as such should consider opening online business service to increase its performance in a significant manner. Analysis and Discussion The company’s vision is to become one for the biggest food specialist chain for everyone Morrison’s vision is highly supported by the company’s objectives and policies which has helped the company to become UK’s food specialist for every category of customer. The company really understands the food requirements of the customers along with the quality of service been provided to customers because of which they have become the food specialist in the country as they provide good food at good value to the customers. According to the company’s official website it offers quality and fresh gods to people and also has got lots of promotional activities to promote itself as a big giant in the country for food service provider. The diagrammatic display of the objectives and values of the company is been given below. Source :( Morrison Annual Report, 2011) The total market share for grocery market was of £163.2 billion in 2012 which had shown an increase of 3.8% from the previous year and is been forecasted that by 2017 the market share will increase to £192.6bn with an increase of 18.0% from 2012. Thus there is a huge market opportunity for the growth in the grocery sector in UK (Morrisons, 2012, Pp. 3-5). Morrison had many other competitor giants present in the same market like Lidl, Tesco, Asda etc. because of which it has very strong strategic plans to keep its position n the market as the leader The strategic marketing plans of the company is been studied using various marketing concepts and theories like SWOT, Ansoff Matrix, Porter’s Five forces, Porter’s generic triangle and many others one by one. Porter’s Five Forces Porter’s five forces analysis helps to know the company’s position in the market and the competitive advantage that it has over its competitors. The completion framework of the company is done based on basically 5 factors. Based on the 5 factors the Morrison’s competitive framework is been studied below. Bargaining power of buyers The bargaining power of the buyers is medium because in the retail stores the maximum profit is generated from only 20% of the customers who are loyal to the particular brand. So in case of Morrison also the major profit is earned from the customers who are loyal to their stores and with the increasing competition from big giant like Tesco and also from the online market increasing at a good rate the chances for the customer to move from one supermarket to another is quite possible. All the supermarkets do provide quite the same food items so customers do get lot of opportunity to make choice and bargain before buying. The bargaining power of suppliers The bargaining power for the suppliers in Morrison’s case is pretty low, because the big retail giants have high buying power and they hold big position to drive the cost by forcing the suppliers to supply the goods at a low price. And also the growing suppliers look to grow and create a good market for themselves by supplying their products to big supermarkets like Morrison. Threat of potential new entrants The threat from the new entrants and the upcoming new supermarkets in UK is medium for the company. The rate of threat is medium because of the quality of product, the brand name and the economies of scale that the company has achieved over the years. The company provides goods at low cost because of its economies of scale which is very difficult for any new supermarket to set up new in such a large scale and provide good quality goods at lower prices. For a new company to come up such huge capital is needed and also distribution channel, apart from this the new comer has to also have to overcome and take care of the governmental policies, all these factors will make the new comer take lot of time to get well established and have a strong market share giving good competition to Morrison. Threat of substitutes The threat from substitutes is very high for the company. Substitutes refer to the similar kind product which can replace the original one with new technology or by being less costly. In case of Morrison the threat from the substitutes is very high because of the presence of lot of convenient stores and also the online marketing facility that is growing at a good rate in the country. In case of buying such goods consumers at certain time prefer to buy from the stores which are convenient and near to them than going to some other place for a supermarket or even order online to get the goods been delivered to the door step. These factors do affect a lot to the super market business and in the same way for Morrison as well. Threat of competitive rivalry The threat for the companies form the existing competitors is very high because of the huge market share that the other competitor supermarkets have gained in the market. Supermarkets like Tesco, ASDA, Waitrose, and Sainsbury hold a strong market share in the country and Morrison is at number 4. Customers who are loyal to a particular brand look to stick to a particular brand and buy goods from a particular supermarket only and even the consumer preference do change with the way the service is been provided and also the quality of goods been given. Thus for Morrison the competition from the existing other supermarkets is pretty high which does affects the company’s sales volume and net income to a great extent. SWOT Analysis SWOT analysis is done to know the internal and external factors of the company, wherein strength and weakness are the internal factor for the company while the Opportunities and threats are the external factor that influences the company’s strategic management and running (Böhm, 2009, Pp. 12-15). Strengths The various strengths that Morrison as a super market giant in UK has are been listed below. High service quality Strong manufacturing unit Good supply chain network Strong Unique Selling Point- food specialist for everyone Financially strong, Weakness The weakness in which the company lags behind and needs to improve upon are been listed below. Absence of online business service. Absence of convenient store Is only present in UK thus has the absence of global; knowledge and huge market Company follows a labour intensive model among its employees which affects the employee’s motivation to work. Opportunities The various opportunities that the company can look up to for its growth are been listed below. Expansion in the global market exploring new markets in new countries. Organic, green, ethical products Opening online store for the customers to attract more customers. Open small convenient stores across the country to help customers to buy products from their convenient and nearby stores. Morison can also look to diversify its business. Threats The company being in the supermarket industry has lot of threats in UK from the following listed things. The existing competitive environment in the UK market among all the other supermarkets is very high Company has a huge threat from the upcoming new online retail business and its growth in UK It faces a lot of threat from price competition among its competitors and also from the substitute like the convenient stores. Porters generic triangle Porter’s generic triangle has basically three commodities over which the company’s strategies and its success or failure depends on. The three factors are Customers, Competitors and the Company itself. According to Porter based on these three factor any company in any business can make its strategies in three fundamental forms Cost focus, differentiation and leadership. LIDL and ALDI has gained the position in the market based on the low price strategy and holds its position from the last 5yrs. Morrison is always followed the differentiation strategy providing fresh food and homemade foods but the survey processes has shown that the companies prices are higher than average. But from the last two years the company has tried to compete with its competitors also in the price terms and created a M kitchen and M saves brand for the company in the market based on which it provided the goods at an affordable price to the customers. But as per Porter the major problem is faced by companies which are stuck in the middle and it can be seen that Morrison is stuck in the middle as a result it gets low profitability as a result of which the profit margin every year is seen to be coming down when compared with the other competitors in the existing market (Cole, 2003, Pp.98-110). Market segmentation The market segmentation is done to find the market position of the company based on various factors. Based on the various acquisitions and growth the factors are been differentiated based on which market segmentation is done. The segmentation based on the factors which are like freshness, service quality, value of money and convenience. Based on the factor Morrison’s segmentation is been shown below (Kotler, 2003, Pp. 76-82). Geographic Morrison has looked to spread all over the country and look to cover the overall UK market segment. Value of money The Variable that is taken into consideration in this factor is the price, based on which the company has looked to segment by providing food items at a low price rate which is affordable to the customers. Convenience Convenience refers to the location of the stores in the country. Morrison has looked to have its stores in all the popular towns and places. Freshness The variable taken into consideration here is the quality of the food items the is been provided by the company and Morrison has placed itself segmenting it in the category of providing fresh and best food items among all the other stores. Service Quality This is based on the factor of the products being available in the store. Morrison looks to segment itself by stating that all the products are always available in the stores in the best quality and in the best value. Ansoff matrix Ansoff’s matrix helps to know the growth strategy that the company’s are implementing for its growth in the global market. The matrix is been divided into 4 parts Market penetration, market Development, Diversification and product development. Based on these four factors the growth strategy of Morrison is been studied. For Morrison the best strategy that can be implemented is the market penetrations strategy. Using this strategy the supermarket can gain more use from the existing customers and also look forwards towards attracting new customers in the already existing UK market by spreading at every place in the country by coming up with convenient store and also online business in the UK market itself to gain more customers. Market development I a riskier strategy for the company as for entering into a new market it has do understand the markets condition and other factors which will help it to grow for which a lot of research has to be done on the new markets on various factors and after that also the company might not achieve a good growth and liking. On the other hand the company can look towards coming up with new products and try the strategy of product development by launching new product varieties or even better quality products that are already been sold in the store. Diversification for the company is the most risky strategy as it needs to launch new products and also enter new markets which will create lot of cost expense for the company, thus this strategy should not be used by the company. McKinsey’s 7's The McKinsey’s 7’s model explains that for an organization to perform in a good way seven key elements are required to perform well. The seven elements must be interlinked to each other and perform together well for the growth of the company, and also for making any successful changes in the whole process. These seven elements are divided into two subgroups soft elements and hard elements. The soft elements are Shared Values, staff, style and skills while the soft elements are Strategy, systems and structure. For Morrison the analysis of the seven elements is been studied the companies most shared value is its quality and freshness of food products at an affordable rate to the customers. The staff employed in Morrison is very high skilled and trained people providing the best service quality to the customers but they lack motivation because of the intensive labour structure been followed in the company. The strategies implemented by the company is good enough for the current ,market but it needs to penetrate new market by opening convenient stores and also come up with new products (McDonald, 2012, Pp. 87-96). Customer needs canvas The customer needs canvas refers to the value proposition that the company creates for the customers with its products and services. For Morrison the products are the food items and other goods available in the stores while service are related to the way the customers are been treated in the stores and assisted. The major factors on which the companies values are been decided are seen below. Customer Jobs It is important for Morrison do understand the major reason why customers buy products from their stores. The different aspects of jobs that is need of the customer are the functional jobs like to specify a particular task or ole a problem, the social jobs like the status symbol, looking good and for emotional jobs like the feel good factor, trust and security and aesthetics are to be known by Morison for the customers so that it can provide the best service. Pains It describes the problems that the customers might have faced in the stores of Morrison. The problems can be of performance-based, emotional or fiscal. Morrison should look to analyze three questions to know the exact problems faced by the customers so that they can improve upon them and achieve maximum customer satisfaction. The basic three questions are been listed below. What are the risk factors that customers fear of? How are the current services not able to provide the best service to the customer? What are the key factors that keep the customers disturbed and awake at night? Gains This factor describes the outcome or the gains that the customers get from the service of the company. Morrison needs to analyze this to understand the real gains that the customers are getting from the present services in the stores. These gains can be of various forms like cost savings, positive emotions and functional use. To know the exact gains the supermarket needs to get answer to these questions listed below. How customers are delighted from the current solutions? What does customers expect, and what factors will go above the customers’ expectations? What are the various special social factors that customers desire to get? Morrison needs to analyze all these points to know the exact requirement of the customer and also it will help the company to grow (Henry, 2011, Pp. 56-65). Blue Ocean Strategy Morrison is in UK in the supermarket sector where there are many competitors and it is implementing the red ocean strategies to compete with the competitors. But the company can also try and stop competing instead look to create a blue ocean which means the company needs to come up with a certain unique characteristic product which will help it to create a unique position in the market and give it a competitive advantage over all the competitors (Kim and Mauborgne, 2013, Pp. 113-115). Conclusion Morrison Supermarket is 4th largest supermarket in UK and has a good market share in UK. It is in a strong competitive environment where the company has to have strong marketing strategies for the growth and keeping up in the market position with the growing competition. WM Morrison has secured a strong position in UK retail sector and has its business model and objectives are very clear for the stakeholders and all the employees. Looking at the porters 4 forces the competitive position of the company in the market is been studied and it does implies that Morrison being the 4th largest supermarket of UK is growing and also shows the threats it has from the competitors and the existing substitutes. Based on this analysis it is important for the company to understand the market position and the threats from the online retail business, convenient stores and also from the existing competitors. SWOT analysis helped to know the things towards which the company has its opportunities to grow and also the biggest of threats it is facing in holding the market position, it should look to work hard and grow towards its opportunities. As per the Porter’s Generic model the company must look to either move toward providing products at low price or at high price and move out of the middle position. Based on the market segmentation the company positions itself in the competitive market among all the other competitors as the supermarket which provides the best quality of food items at an affordable price to the customers. Ansoff matrix analysis helps to understand the correct market strategy that the company needs to adopt into grow by market penetration and developing new products. Thus for Morrison to grow up and move ahead from the 4th position towards becoming the leader in the market the company need to have a god structure and keep its employees happy instead of making it intense for them and motivate them for working in the best way and also make the strategy of market penetrations and product development which will make all the elements of 7’s to work together towards the growth. Morrison needs to analyze all points of customer needs canvas to know the exact requirement of the customer and also it will help the company to grow. The company also needs to come up with a specific unique product to have a competitive advantage and create a blue strategy. References Böhm, A. 2009. The SWOT Analysis. Munich: GRIN Verlag. Cole,G. 2003. Strategic Management . London: Cengage Learning EMEA Henry, A. 2011. Understanding Strategic Management. London: Oxford University Press Kim, W and Mauborgne, R. 2013. Blue Ocean Strategy: How To Create Uncontested Market Space And Make The Competition Irrelevant. Boston: Harvard Business Press. Kotler, P. 2003. Marketing management: analysis, planning, implementation, and control. America: Pearson Education. McDonald, M. 2012. Market Segmentation: How to Do It and How to Profit from It. London: John Wiley & Sons. Morrisons. 2012. Annual report and financial statements 2011. [Pdf]. Available at: < http://www.morrisons-corporate.com/Documents/Morrisons-Annual-Report-2011.pdf>. [Accessed on 13 March 2014]. Read More