On-Company Commercial Awareness Project: Morrisons Supermarket - Case Study Example

ON-COMPANY COMMERCIAL AWARENESS PROJECT REPORT: MORRISON’S By Executive summary Companies are very prevalent in making sure that they remain competitive in the market. The use of both internal and external factors determines the strength of the companies. Morrison’s is operating in an industry that is very competitive. The Pestle model determines that Morrison’s is a company that is well connected to the external environment by all business factors. The Porter’s five forces analysis was used in making sure that its competitive position is maintained in the market. The swot analysis was important in determining the company internal strengths and weaknesses. It is found that the company has strong weaknesses as well as there being open opportunities for improvement. Table of Contents Table of Contents 3 1.0 Introduction 4 2.0 Methodology 5 2.1 The Morrison’s PESTLE model 5 2.2 The Morrison’s Porters Five Forces Analysis Model 6 2.3 Morrison’s Swot Analysis 7 3.0 Findings 8 3.1 External Environment of the Business Using the PESTLE Model 8 3.2 Competitive Market Environment Using Porter’s Five Forces 9 3.3 SWOT Analysis of you Company 9 4.0 Conclusion 10 5.0 Recommendations 11 References 12 Appendices 14 1.0 Introduction This is a report on the five months internship programme carried out at the Morrison’s Supermarket carried out for five months. The report will therefore take to consider the experiences and the learning process that occurred while at the company. In view of this, it will have the methodology part that will analyse the company’s external environment by use of the PESTLE analysis of the retail industry in the UK. It will then make analysis of the competitive market through a porter’s five forces analysis programme. In essence, the SWOT analysis will determine the ability of the company to survive in the industry1. The findings will be determined through an analysis of the findings of the company Pestle, Porters forces and swot. A concluding discussion will be based on the findings of the initial findings in the methodology and the analysis carried out. Morrison’s is a large supermarket chain in the UK and ranks itself as the fourth largest among the supermarket chains in the country. Having been found over a century ago, the company has significantly increased in the market to an extent that it has spread to all parts of the country2. The company has 515 stores in England and also has other stores spread over wales and Scotland. As a large supermarket store, the company has sufficient human resource systems to take care of its large human resource team. Taking an internship at the company therefore was a chance to experience the reality of the human resource systems is any company. At the company, I worked at the supervision section of the HRM division. Most of the work involved supervising the junior members in the supermarket as well as resolution of conflicts which is a common feature at any work place. My contribution was to start seeing work completed on time and there being less conflicts and disputes amongst the employees. If employees are encouraged to reach their work places earlier enough, then work is bound to be completed on time. This report is therefore written from the perspective that sufficient human resource monitoring through supervisions is essential in making sure that work efficiency is increased. 2.0 Methodology This section takes to account the use of company analysis tools referring to the ability of the same company under focus. In this case, Morrison’s will be analysed by use of an effective pestle model, the porter’s five forces analysis and the swot analysis. 2.1 The Morrison’s PESTLE model Pestle analysis is an analytical tool that seeks to analyse the industry in which the company is operating. It includes the political, economic, social, technological and legal as well as environmental issues3. Pest analysis is an easy framework to use in that it directly indicates the value of market characteristics. Moreover, its study helps understand the external factors that are likely to affect a company. Potential threats are therefore diverted. This tool develops strategic thinking which helps progress the value of the company. However, its use is also limited by a collection of factors. First, it is very easy to oversimplify the available information leading to wrong decisions being made. Secondly, its effectiveness is limited by fact that it requires a lot of resources which may not be available for a wide choice of specialists to increase the accuracy of the information. The other disadvantage is that the data collected for analysis is usually subjective due to the assumptions made4. The Pestle analysis for the retail industry with particular attention to Morrison is indicated in appendix 1. These define the ability of the company to survive in the industry. Morrison’s is the fourth largest chain store in the UK and therefore faces stiff competition from the others. 2.2 The Morrison’s Porters Five Forces Analysis Model The porters five forces analysis is used to determine the levels of competition between players in an industry5. The level of attractiveness is the measure of the profitability of the industry. Attractive industries are those that have pure competition and this level is measured by the number of companies in the industry. The Porters five forces analysis is illustrated in the table below; With the noted fact that Morrison is not the best company in the UK supermarket industry, this tool of analysis is very vital. One of the advantages of porter’s model is that it is a very effective method of qualitatively measuring the strategic perspectives of a company. It compares a collection of factors that fully determines that a company is able to be effective in a given industry. It is very efficient in use on smaller market structures. However, it also has disadvantages that render its use very functional. First, the model is not comprehensive in that it only provides a ‘snapshot’ of what the real environment entails. This means that it may not easily capture abrupt changes in the environment that happen between the times data was collected6. It can also not be used in larger market structures. The Porter’s five forces analysis as applied to Morrison’s Supermarket (appendix 2) determines that the company has a position in the market comparable to the other companies. 2.3 Morrison’s Swot Analysis SWOT analysis is important in determining the internal strengths and weaknesses as well as the external opportunities and threats. In use of the SWOT analysis, a holistic position of the company therefore leads to a good understanding of the company. It leads to effective understanding of the strengths and weaknesses leading to capitalization of the opportunities7. This makes the company take advantage of the market opportunities through the realised strengths and weaknesses. However, it has the disadvantage of not prioritising issues. This is because there are no solutions provided for the existing weaknesses as far as is realised by the company. It also has the capability of producing a lot of information that is not however useful. The Morrison’s Swot analysis is expressed in appendix 3. This section therefore determines that Morrison’s has its own ability to remain stable in the market as well as being written out of the market. 3.0 Findings 3.1 External Environment of the Business Using the PESTLE Model The pestle analysis as indicated in the appendix 1 and explained in section 2.1 is important in determining the value of Morrison’s in the market. First, the political system shows the government taking over the legislation of policies that would lead to the company shifting its operation focus. For instance, the new government cut over several benefits as befitting the consumers has led to the consumers failing to enjoy the previous privileges8. This means that there has been an increase in the taxes on certain retail items that has led to the company increasing the prices of their goods. In essence, the political system of all the countries in which Morrison’s operates also affects the operations of the company. Another factor is the economic factor. In this case, it is noted that the industry has a vast competition in which case all the top supermarkets in the UK benefit from the economies of scale. In this case, it is worth noting that Morrison’s has been able to equally benefit from this. For instance, the company has got complete control on its quality because it has used its financial economies to manipulate the supplies. This has led to it having god prices for the customers. Another important factor is the socio-cultural factor9. The company strongly notes that there is needed to keep the health of the people fine. Moreover, there are changing consumption trends where people are turning green and also observing good diets. That is also a government initiative and the company has strongly adhered to this new trend. The company has also strategized at all times to have a strong strategy in which the aging UK population must be taken care of in terms of their conservative consumption trends. This is an important issue because the current generation has a far much different trend as compared to the aging generation. 3.2 Competitive Market Environment Using Porter’s Five Forces Given that these tool of strategic analysis the most important in determining the survival of the company, it is worth noting that the competition in the industry is very high. Companies are taking over smaller ones and growing larger as well as capitalising on the weaknesses of their rivals10. The indication in appendix 2 indicated the owners of the industry in which a very small number of companies own 70% of the industry and the remaining 30% left to the smaller companies. This means that entry into the industry is very difficult without having financial economies. The advancement in technologies by the larger firms makes it even more complicated for the other companies to enter11. On the power of the suppliers, the company has been effectively able to determinately operate in absolute control because of the same financial economies. For the purposes of remaining competitive in the industry, the company is able to remain relevant because it generates complete control over the prices of the goods in the market12. The companies are also sensitive to the demands of the consumers and given their varied choices, the companies are effectively able to adopt and make amends to any new changes and requirements in the industry. 3.3 SWOT Analysis of you Company This is the most important section of the company that will ultimately define its abilities in the market. The company came with very unique features in its attraction of the consumers. For instance, the company launched provision of fresh fish as opposed to the past frozen fish13. That was a powerful strategy that gave the company strong connection sin the market. In this case, the company developed close ties with its suppliers which meant that sufficient trust was created leading to the desired customer qualities in their products being reached. Therefore, the most powerful aspect of the company has always been its well-coordinated supply chain that makes its products better based on the trust in existence14. The company is however pulled back by some weaknesses that make its market presence quite challenging. First, it has a small market presence compared to other large companies such as Tesco. Another aspect is that it has a very high number of recalls of its products because of noted defects. That has been its undoing given that the other companies are basing on the same weaknesses to win over the customers. The greatest opportunity for the company to take is the increment in the market presence15. Given that it operates in the UK, the Wales and Scotland, its services are missing in the other sections of Europe and the world. 4.0 Conclusion The research was categorical on the important factors that affect the internal and external environments of Morrison’s company. The internship programme was important in noting the factors that affect operations of the company in the competitive supermarket retail industry in the UK. It was therefore noted that Morrison’s is a company that has been in operation for over 100 years and still getting stronger. Pestle analysis determined that the company is in an extremely competitive industry in which companies like Asda, Tesco and Sainsburys still rank above it. The porter’s five forces analysis was used to determine the competitive advantage that the company has in the market. The industry has a small number of big players and the low level companies find it difficult expanding their trade. Swot analysis for the company was importantly used in comparing the internal strengths and weaknesses compared to the external opportunities and threats. It was however noted that the company has a very powerful weakness of product recalls. 5.0 Recommendations Given the study that was established, it has been noted that Morrison’s weaknesses need to be improved. That amounts to almost the only way the company will be able to effectively compete with the other retail stores. First, the company needs to increase its market share from the three countries it operates in to other parts of Europe. Compared to the other companies, Morrison’s is the only company operating in less number of countries. Moreover, there is needed to increase the value and quality of the products so that the number of recalls is highly minimised. The other competing companies are capitalising on such fault to gain much market control (check programme in appendix 4). References Akan, O, RS Allen, MM Helms, and Spralls. "Critical tactics for implementing Porter’s generic strategies." Journal of Business Strategy 27, no. 1 (SA 2006): 43-53. Amrollahi, Alireza, and Babak Akhgar. "Analyzing Open Source Business with Porters Five Forces." International Journal of Computer Theory and Engineering 5, no. 1 (2013): 162. Bubb, Nick. "Discussion and analysis of three major UK retailers, A SWOT analysis." Newsweek, September 18, 2012: 4-6. Diem, Carpe. "PEST Analysis." Australian Journal of Business and Information 4, no. 1 (2006): 112. Ismail, Atiqah. Tesco Plc. - International Business Entry Strategy (SWOT, PESTEL, Porters 5 Forces). 6 5, 2013. http://www.scribd.com/doc/145951074/Tesco-Plc-International-Business-Entry-Strategy-SWOT-PESTEL-Porter-s-5-Forces (accessed 11 7, 2013). Miller, Frederic P, Agnes F Vandome, and John McBrewster. Pest Analysis. London : VDM Publishing, 2011. Morrisons. Company History . 2010. http://www.morrisons-corporate.com/about-us/Company-history/ (accessed May 1st, 2015). Novicevic, Milorad M., Michael Harvey, and Chad W. Autry. "Dual-perspective SWOT. a synthesis of marketing intelligence and planning." Marketing Intelligence & Planning 22, no. 1 (2009): 2004. Tan, JitHuat, Wen Ling Chua, Chee Kong Chow, Mei Ching Chong, and Boon Cheong Chew. "PESTLE Analysis on Toyota Hybrid Vehicles." UniversitiTeknikal Malaysia. 2012. http://www.academia.edu/2064325/PESTLE_Analysis_on_Toyota_Hybrid_Vehicles (accessed 1 31, 2014). Appendices Appendix 1: PESTLE ANALYSIS Political: Change in government might have indirect effects on taxation policies, will result in extreme competition, which in turn minimises the profit margins for Morrison’s. New government has cut several benefits for consumers have resulted in less spending in supermarkets affected Morrison’s sales. performance is highly influenced by the political and legislative conditions of these countries For employment legislations, the government encourages retailers to provide a mix of job opportunities Also to meet the demand from population categories such as students, working parents and senior citizens. Economical: Morrison’s got their own local suppliers supplying fresh produce, meat which in turn gives complete control over quality and provenance of their food High economies of scales to keep their cost low. High unemployment levels, which decreases the effective demand for many goods, adversely affecting the demand required to produce such goods Socio-cultural: Morrison’s have launched a new way of recognising colleagues job profile by providing with National Qualified Certificate, and this is their plan to changing lifestyles. Through "Lets Grow" campaign Morrison’s provide free gardening equipment to local schools, helps to maintain social balance and values in society. Current trends indicate that British customers have moved towards ‘one-stop’ and ‘bulk’ shopping, which is due to a variety of social changes Demographic changes such as the aging population, an increase in female workers and a decline in home meal preparation mean that UK retailers are also focusing on added-value products and services Consumers are becoming more and more aware of health issues, and their attitudes towards food are constantly changing Technological: After take-over from Safeway Morrison’s went through down-grade of technology to minimise excess expenditure, which was much needed for expansion. Morrison’s planning to launch "Pegasus" very advance technology which includes automated product ordering system and new integrated till system to provide excellent and quicker customer service. Environmental: By increasing the sales of long-life reusable bags instead of giving away free non-degradable plastic bags Morrison’s can also maximise profits along with much needed support for global warming. Legal: Morrison’s have their own policy for energy saving it helps government with pollution control. Morrison’s as a public limited company also follows the legal basis for business by following Joint Stock Companies Act of 1862. In 2003, there has been increased pressure on many companies and managers to acknowledge their responsibility to society Appendix 2: PORTER’S FIVE FORCES Threat of New Entrants The UK grocery market (70%) is primarily dominated by few competitors with high capital and operating strength Majority of large chains have built their power due to operating efficiency, one-stop shopping and major marketing-mix expenditure and hence it possesses a strong barrier for new companies who desire to enter the grocery market Advanced technology for checkouts and stock control systems that impact new entrants and the existing ones. Economies of scale and differentiation (in the provision of products or services with a higher perceived value than the competition) achieved  Bargaining Power of Suppliers Better promotional prices from suppliers that small individual chains are unable to match UK based suppliers are also threatened by the growing ability of large retailers to source their products from abroad at cheaper deals The forces of competitive rivalry have reduced the profit margins for supermarket chains and suppliers Bargaining Power of Customers Consumers also have become more aware of the issues surrounding fairer trade and the influence of western consumers on the expectations and aspirations of Third World producers Ecologically benign and ethically sound production of consumer produce such as tea, coffee and cocoa is viable, and such products are now widely available at the majority of large chains. Threat of Substitutes General substitution is able to reduce demand for a particular product, as there is a threat of consumers switching to the alternatives Bargaining Power of Competitors The grocery environment has seen a very significant growth in the size and market dominance of the larger players, with greater store size, increased retailer concentration, and the utilisation of a range of formats, which are now prominent characteristics of the sector As it was mentioned above, the purchasing power of the food-retailing industry is concentrated in the hands of a relatively small number of retail buyers. This highly competitive market has fostered an accelerated level of development, resulting in a situation in which UK grocery retailers have had to be innovative to maintain and build market share. Appendix 3 Strengths Efficient distribution networking Well planned supply chain management Portfolio Market presence Larger quality human asset strengths Weaknesses Lesser geographical presence Very high number of product recalls Opportunities Growing customer awareness regarding organic products Scope of international expansion Rising demands Threats Tax burden Increasing costs of human effort Constant increment of the market share for the competitors Appendix 4: Recommendation Programmes Rec. One Example Action Risks Identified Method of Evaluation Responsible Timescale Cost Implications Production team training Effective re-training for the production team. Training manuals for effective production Poor quality products The human resource teams hire specialists to check the quality of products before selling The production manager Semi-annual meeting Training costs for the production staff. The staff time invested in the training programme. Increase market reach Open new branches in new countries in Europe The company may miss out on the new markets and overtaken by other smaller programmes Market researches through surveys to ascertain market strengths The company chief executive One year programme Costs of setting up new structures in new countries. New human resource hiring, training and inculcation Read More