Business Decision-Making - Wm Morrison Supermarkets Plc - Assignment Example

Business Decision Making Table of Contents Introduction 4 Task 5 P1: Primary and Secondary Source Of Data 5 P 1 Plan for Collection of Primary and Secondary Data 5 P 1.2 Survey Methodology and Sampling Methods 5 P 1.3 Questionnaire for the Survey 6 Task 2 7 P2: Range of Analytical Techniques 7 P 2.1 Central Tendency 7 P 2.2 Analysis of the Results 10 P 2.3 Measures of Dispersion 11 12 P 2.4 Quartiles, Percentile and Correlation Coefficient 13 Task 3 15 P3: Presentation of the Data for Decision Making 15 P 3.1 Presentation through Graphs 15 P 3.2 Trend Lines 27 P 3.3 Business Presentation 28 P 3.4 Formal Report 28 Task 4 29 P 4: Project Management and Investment Appraisal Techniques 29 P 4.1 Information Processing Tools 29 P 4.2 Critical Path 30 P 4.3 Investment Appraisal Techniques 31 Reference list 33 Introduction The report is prepared based on four tasks; the first three tasks are related to a case study of Wm Morrison Supermarkets Plc. However, the fourth task follows specific instructions. The case study of Morrison laid emphasis on the change in strategies that are undertaken by the different retailers after experiencing extensive competition at the global level. Along with Morrison other retailer giant also modified their strategies for catering the needs of more customers and increases their customer base. The aim of every retailer is to provide products at cheaper rate by cutting down the price competitively. After collecting adequate information from the case study, the three tasks are executed. The tasks are related to the collection of both primary and secondary data, which will support the management of Morrison to take appropriate decisions pertaining to change in pricing strategies for surviving in the competitive world. For the first three tasks, the primary data is collected through questionnaire survey in few places in Greater London, where supermarkets of Morrison are present. The places include Holloway and Mitcham; in both the places there are potential customers of Morrison or they visit supermarkets for purchasing their daily needs. The data collected from questionnaires are analysed with the help of statistical tools such as central tendency and dispersion. Moreover, secondary data are also collected from the case study and internet in order to depict the threat on the discounted food retailers and how the retailers will fight the challenges. For the fourth task, critical path of a plan is developed, which aims at recommending actions that are to be undertaken by Morrison for new product development. Apart from that, the investment appraisal techniques are employed for choosing the best project among the two. Task 1 P1: Primary and Secondary Source Of Data P 1.1 Plan for Collection of Primary and Secondary Data In order to help the management of Wm Morrison in their decision making regarding the strategic changes, survey is executed in different places of Greater London. The places include Mitcham and Holloway. The main aim of the survey methodology is to collect primary data from the sample regarding consumer behaviour and attitudes towards food discount retailing in Greater London. The reason for choosing Mitchan and Holloway for the questionnaire survey is because of the presence of Morrison supermarkets in both the places. The questionnaires are distributed in front of the supermarkets so that the passer-by and the consumers of Morrison can respond to the questionnaires. Their responses are vital for examining the behaviour of the consumers towards the discounting systems of Morrison and other retailers. A number of questionnaires are distributed among the population in the places near-by the supermarkets of Morrison in Holloway and Mitcham. However, 100 questionnaires are duly filled up by the respondents. Therefore the sample size for the survey is 100. The secondary data for the study is collected from the online sources such as newspaper articles, company websites and journal articles. The main objective of gathering secondary data is to decipher the current state of food discount retailer industry at a global level. P 1.2 Survey Methodology and Sampling Methods Survey mythology is crucial for development of a research. There are different types of survey techniques; however, for executing this plan questionnaire method is applied (Trochim, 2006). The questionnaires are prepared based on the demographic features of the population and thereby the questions regarding consumer behaviour are provided. About 20 close ended questions are developed, which aims at deciphering the opinion of the respondents regarding food discount retailer in the Greater London. The sampling technique used for collecting primary data for the research is random sampling. It is unique among all sampling methods. The members in the population have equal chances for getting selected for the questionnaire survey. This type of sampling is chosen for the research as the researcher has to choose a sample from a large population in Holloway and Mitcham. However, there are chances of getting biased responses from the population (Mathews, 2010). P 1.3 Questionnaire for the Survey There are 20 questions in the questionnaire, which aims at deciphering personal information along with main objective of the study i.e. to study the consumer behaviour regarding the food discount retailer in Greater London. The questionnaire is given in the Appendix. Question 1 -10 contains the personal details of the respondents; whereas Question 11 onwards, it aims at highlighting the questions related to discount retailers and the shopping habits of the individuals. These are close-ended questions; the respondents have to tick the correct choice according to their perception. The survey is carried out among the adults in Greater London; hence the age of the respondents are above 18 years. Task 2 P2: Range of Analytical Techniques P 2.1 Central Tendency The data obtained from the questionnaires survey are analysed with the help of different tools such as statistical tools. Central tendency is one the significant technique in statistics, which is used for probability distribution (Hesse-Biber, 2010; Saunders, Lewis and Thornhill, 2009; Somekh and Lewin, 2011). It is also known as centre or location of distribution. The common methods under central tendency are mean, median and mode. Calculation of Mean, Median And Mode The mean, median and mode of the data that are collected through questionnaire survey are depicted in the table. The results are further analysed so as to advice Morrison regarding their pricing strategies and it will also help the company to understand the opinion of the population in Greater London. Question 3: Age? The table highlights the average age of the sample, which filled up the questionnaire, are between 30-40 years and the median age is 38 years. The value that is most likely to be sampled is 36.8 as it is the mode of the dataset. This reveals that the respondents of 36.8 or 37 years (approx) have filled up the questionnaires. Question 6: Number of households in the family? On an average it is observed that the household of the respondents have 4 members in the family as the highest frequency; however the median value is 2 and 7, which is adjacent to the number of household in the family 1 and 3. Question 7: Household income? The average household income of the respondents in the questionnaire is £17,650 and median value of the income is £17, 500 however, the modal value is £10,006. Question 13: Distance to food discount retailers? The average distance which the respondents have to travel to reach the supermarkets is 7.76 miles; however, the median value is 6.6 miles. Question 17: Length of time spent on shopping? The average time spent by the respondents on shopping is 40-60 minutes. This is the time, which they can spend in spite of their hectic schedule. The median value is 46.6 minutes and the modal value is 46.9 minutes. Question 20: Amount spent on discount food? The average amount spent on purchasing discounted food is £36.5; however, the modal value is £ 26.3 and median value is £28. P 2.2 Analysis of the Results Though all the questions cannot be used for calculating the mean, median and modal value but the results obtained from the questions, which can be employed for the analysis are discussed henceforth. It can be concluded that the family members with the age between 30-40 years are the main shoppers in the household. They visit the supermarkets frequently so as to purchase their needful. The analysis also revealed an important factor that the household income of the respondents is not very high to afford luxury goods in fact they would love to avail the discounts so as to reduce their expenditure. It is observed that the respondents do not spend much on the discounted food items; the reason may be they do not get that opportunity to purchase the food items on discount. Therefore, the discount retailers such as Morrison should cater the needs of population by offering high discounts on the food items. As the population in the Greater London does not earn to that they can spend in on luxury items hence the retailer should concentrate on offering discounts on the necessity products. The results of questionnaire analysis revealed that the average time spent by the shoppers for shopping is 45- 60 minutes. Therefore, it is evident that the shoppers purchase the food, non-food and necessary items within that small period of time. P 2.3 Measures of Dispersion The standards deviation of age of the respondents is 8.25. The standard deviation of household income is 9965. The standard deviation of length of time spent on shopping is 18. The standard deviation of amount of cash spent on purchasing discounted food items is 28. The value of standard deviation in this case study reveals that the discount retailers should devise appropriate strategies for considering the needs of the customers in Greater London. The strategies include pricing the products in such a manner that the customers purchase it without much difficulty. In the competitive scenario, Morrison and other discount retailers have to devise strategies for attracting the more customers and sustain in the competitive scenario. P 2.4 Quartiles, Percentile and Correlation Coefficient Quartiles divide a data table into four groups that contains equal number of observations. In this case, the split is 25%, 50%, 75% and 100%. The first quartile is the value which has f-value of 0.25 and this is same with 0.50, 0.75 and 1. However, the percentile is the measure where the percentage of the total value is same below or above the measure. In the business context it is useful in case of market survey. It assists the managers to determine certain results in percentage, which are essential for decision making. In the questionnaire survey, it will help in determining the facts related to the percentage of respondents, who are eager to visit and shop from the discount retailers such as Morrison. Correlation Coefficient Correlation coefficient helps in determining the relationship between two or more variable (Dul and Hak, 2012; Crowther and Lancaster, 2012; Bergh and Ketchen, 2009). If the variables are correlated the value of correlation coefficient will be near to 1 and there is no association between the variables (Bryman and Bell, 2011; Burns, 2008). In this case, responses of few questions are considered for the analysis. The main aim of correlation in this case is to find association between the frequency of visit by the consumer of Morrison for shopping and their household income. Here, the dependent variable is the frequency of visit whereas the independent variable is household income. The correlation coefficient between the two variables is 0.81, which is near to 1. Hence, it can be concluded that there is positive and strong relation between frequency of visit of the respondents to the discount retailers and their household income. Therefore, it can be stated that Morrison should consider the household income of the individuals across Greater London so as to cater the needs and demand of the population and provide them appropriate discounts. In the competitive market, it is difficult for Morrison to sale its products. The reason behind this is that the rivals are imitating the discount policies; therefore there is very tough competition in the discount retailing industry. The discount retailers are developing new discount strategies for attracting more customers. Task 3 P3: Presentation of the Data for Decision Making P 3.1 Presentation through Graphs The results of the questionnaire survey are depicted in the graph presented henceforth. Figure 1: Gender (Source: Author’s creation) It can be depicted from the graph that majority of the respondents of the questionnaire survey is male as compared to female. Figure 2: Ethnicity (Source: Author’s creation) The graph indicates that majority of the respondents in the survey belong to mixed group. Figure 3: Age (Source: Author’s creation) The majority of the respondents belong to the age group 30-40 years. Figure 4: Marital status (Source: Author’s creation) From the graph provided above it is evident that 40% of the respondents have partners and 30% are married. Figure 5: Residential status (Source: Author’s creation) Majority of the respondents of the questionnaires survey are home owners followed tenant unfurnished and tenant furnished. Figure 6: Size of household (Source: Author’s creation) From the above figure it is clear that majority of the residents belong to the family where there is only members. Figure 7: Income (Source: Author’s creation) Household income of half of the respondents of questionnaires survey is £20,000 - £25,000, which is their average income. Figure 8: Social grade (Source: Author’s creation) Half of the respondents belong to the working class in the society. Figure 9: Employment status (Source: Author’s creation) The mix between self employed and employed are interesting in this survey. About half of the sample is employed and about 20% of the half is self-employed. Figure 10: Main shopper in the household (Source: Author’s creation) The husband and wife is the main shopper in a particular household and this is also reflected in the survey. Figure 11: Shopping at discount food retailers (Source: Author’s creation) The graph denotes that about 95% of the respondents shop in the discount food retailers. Figure 12: Food retailers (Source: Author’s creation) The higher percentage of respondents of the questionnaire survey prefers to shop in Aldi than in Morrison, which explains that Aldi has challenged the business of Morrision with respect to discount pricing. Figure 13: Distance to regular discount retailer (Source: Author’s creation) The respondents have to travel about 5-8 miles before they reach the discount retailers. Figure 14: Reason for using discount retailer (Source: Author’s creation) The main reason for using discount retailers as identified by the respondents are cheaper products and special offers. The discount retailers such as Morrison, Sainsbury etc offer products at a cheaper rate and there are special offers. Figure 15: Reasons for not using discount retailers (Source: Author’s creation) The main reason identified by the discount retailers for not selecting discount retailers is because of poor products. It is often observed that the food products are not fresh; this is the reason why the discount retailers should be avoided as they habitually keep stale food or low quality food items. Figure 16: Time for shopping (Source: Author’s creation) The average hours taken by the respondents to shop in the retail shops are 45 minutes to 1 hour. Figure 17: Tenure of shopping (Source: Author’s creation) The respondents who have filled up the questionnaires are visiting the discount retailers for more than 1 year. Figure 18: Frequency of shopping in Morrison Plc (Source: Author’s creation) The respondents shop in the discount retailer three times a week for purchasing their regular needs and food items. Figure 19: Amount spend on discount retailers (Source: Author’s creation) The amount spent by the respondents on purchasing discount food items is £25.00 to £50.00. Conclusion Based on the Business Scenario It is evident from the business scenario that Morrison, Sainsbury, Asda and Tesco are trying hard to win the cash strapped customers for the past five years as the economy is turning down and the sale of food had fallen for the first time after a long period of time. In this competitive scenario, the German discount supermarkets like Lidl and Aldi have expanded their business aggressively and also shed their no-frills image. The German discount retailers have provided new products such as luxury Christmas puddings and lobster tails to the middle class families. Moreover, the consumer research group has observed that half of the British consumer has shopped in Aldi and Lidl. This is consistent with the result that is obtained from the questionnaire survey. The respondents of the questionnaire survey have responded that they have visited Aldi quite frequently for purchasing their daily necessities. P 3.2 Trend Lines The trend line indicates the general tendency of some data that is depicted in the graphs. Figure 20: Trend line of sales revenue (Source: Author’s creation) The trend line provided above indicates that the sales revenue of the four companies such as Morrison, Sainsbury, Lidl and Aldi. It is observed that Sainsbury and Morrison had been the key competitors in the discount retailer market from 2009 to 2013 and expected to remain the same from 2014 onwards. However, an interesting phenomenon is observed in the graph that Aldi had concentrated on increasing its sales revenue over the years from 2009-2013 and it is predicted that it will keep up with this trend 2014 onwards. P 3.3 Business Presentation 1292385_presentation.ppt P 3.4 Formal Report Introduction The short report is prepared for highlighting threats in the discount retailing industry for WM Morrison Plc. It also recommends solutions to the company for overcoming the threats in the discount retailing industry. Threats to the company 1) There is severe change in the external environment. 2) The retail environment has witnessed excessive competition in the past few years, which have affected the profit margins of companies such as Morrison. 3) The stock market of Morrison was also underperforming because of the declining market with respect to sales revenue and profit. 4) The market share of Morrison has decreased as compared to German discount retailers such as Aldi and Lidl. Recommendation to the company 1) Morrison should execute extensive market research for understanding the taste and preference of the population of Greater London so that they can devise appropriate pricing strategies. 2) The company should examine the discounting strategy of the new retailers, who have entered the market such as Aldi and Lidl in order to develop exceptional plans for overcoming the competition. 3) The company should also concentrate on the quality of the food products and promote it before the population. Conclusion It can be concluded that Morrison Plc has experienced several challenges in the industry because of the changing external environment and increase in number of competition. Therefore, the company should follow the recommended steps so as to develop a successful business in the competitive market. Task 4 P 4: Project Management and Investment Appraisal Techniques P 4.1 Information Processing Tools Project management is used for developing the critical path and network diagram of the given data regarding to the new project development program that will be undertaken by WM Morrison Plc for tactical, operational and strategic level of decision making. The investment appraisal is done with the appropriate tools such as net present value and internal rate of return. P 4.2 Critical Path The critical path and the network diagram are obtained with the help of Project management tool. Figure 21: Network diagram (Source: Author’s creation) P 4.3 Investment Appraisal Techniques The net present value (NPV) and internal rate of return (IRR) of the two projects are given below. From the above calculation, it is evident that Project A will be selected as both NPV and IRR are higher in this case. Reference list Bergh, D. and Ketchen, D. J., 2009. Research methodology in strategy and management. Bingley: Emerald Group Publishing Ltd Bryman, A. and Bell, E., 2011. Business research methodology. New York: Oxford University Press. Burns, R., 2008. Business research methods and statistics. London: Sage Publications. Crowther, D. and Lancaster, G., 2012. Research methods. London: Routledge. Dul, J. and Hak, T., 2012. Case study methodology in business research. Oxford: Elsevier Hesse-Biber, S. N., 2010. Mixed methods research: merging theory with practice. New York: Guilford Publications. Mathews, P., 2010. Sample size calculations: Practical methods for engineers and scientists. Fairport Harbour: Mathews Malnar and Bailey Inc. Saunders, M. N., Lewis, P. and Thornhill, A., 2009. Research methods for business students. Harlow: Prentice Hall. Somekh, B. and Lewin, C., 2011. Theory and methods in social research. London: Sage Publications Trochim, W., 2006. Types of Surveys. [online] Available at: < http://www.socialresearchmethods.net/kb/survtype.php > [Accessed 8 July 2015]. Read More