Evaluation of the Company's Strategy - Report Example

Evaluation of the Companys Strategy Executive Summary This paper mainly deals with the analysis of the strategies adopted by Morrison Supermarket to operate in the market place. The paper was mainly aimed at analysing the present situation of the company and at the same time, identifying the issues faced by the company. On the basis of that, the study has provided recommendations to the firm in order to achieve competitive excellence. The study also investigated and critically analysed the organisations strategic position and strategic direction, with a clear identification of the methods by which the organisation has been pursuing its strategy. While doing this, the study has made use of Ansoff matrix and BCG matrix. In addition, the study has also critically evaluated the organisations strategy in terms of its suitability, acceptability, feasibility and sustainability. The key findings of the study were that certain segments of company are witnessing low market share and low growth rate. Hence, in order to overcome this issue, the company has been recommended product development strategy. The external audit has also shown that the company is yet to make an online presence, thus, the company has again been suggested to launch an online store to boost up sales. Table of Contents Table of Contents 3 Introduction 4 Analysis and critical evaluation of the organisations strategic position 4 Analysis of the organisations strategic direction 6 Critical evaluation of the organisations strategy 8 Conclusions and Recommendation 9 Reference List 10 Appendix 11 Introduction The success of any good organization is based on the measures that are laid by the stakeholders of the firm (Gilmore, 2003). In the business world, the strategy of the firm plays a fundamental role in the achievement of its objective. In the commercial setting, the principal aims of a company usually revolve around making profits, embrace growth and expansion and most importantly, diversification (Garrick, 2011). The aforementioned factors are the keys for the achievement of success in an industry that is flourishing. Most of the companies that have experienced success in the market have either followed a strategy that has been functioning properly for a number of years or with the ability to adapt to the changing environment (Alkhafaji, 2003). However, proper management is one of the main activities that help companies to realize its objectives and is thus deemed as a determinant (Hitt, Ireland and Hoskisson, 2009). Reports have shown that business strategies have continuously been performing commendable jobs in ascertaining success within the organization. Hence, the above discussion has made it evident that strategy is one of the four pillars of a business venture and the backbone supporting and guiding the operations of a firm (Davis, 2008). In this report, the strategy adopted or pursued by the company, Morrison Supermarkets Plc., will be evaluated. In the last assignment, environmental audit of the company had been carried out, but this project deals with the evaluation of the strategies being pursued by the company. This report seeks to investigate and critically analyse the organisations strategic position along with its strategic direction, with a clear identification of the methods by which the organisation has been pursuing its strategy. While doing this portion, the study will make use of Ansoff matrix and BCG matrix. In addition, the study will also critically evaluate the organisations strategy in terms of its suitability, acceptability, feasibility and sustainability. Lastly, on the basis of the findings, a conclusion to the study will be drawn. Analysis and critical evaluation of the organisations strategic position In the first assignment, critical analysis of Morrison’s internal and external business environment has been carried in order to identify the position of the company within the firm. The external and internal environment of the company was carried out with the help of PESTEL analysis and SWOT analysis (Janczak, 2005). The study has made it evident that one of the key factors, that influence the strategies of retailers, is the growing number of health conscious consumers. As a result of that, the government is also taking stiff actions against companies who fail to abide by the law. Economically, inflation rate acts as a decider for the industry as often high inflation rate leads to low profitability of the company (Johnson and Scholes, 1997). To add to that, reduction in disposable income rate coupled with the economic downturn is affecting the purchase behaviour of the consumers to a great extent. In the similar way, factors such as, changing consumer dynamics, shifting technological pattern, increasing waste and pollution and strict regulation pertaining to the health and hygiene is affecting the company and compelling them to undertake strategic shifts. One of the key findings of the environmental audit was that the company needs to offer innovative products with balanced nutrients and materials (Ahlstrom and Bruton, 2009). The biggest strength of the company lies in its strong brand identity which makes high brand recognition, in addition with wide range of products and better position strategy. The biggest weakness of the company lies in its poor technological infrastructure. In this age of technology, the company hardly has any kind of technological brilliance (Porter, 1998). Moreover, the company do not have an online selling platform which further worsens the scenario. Despite that, the company has the opportunity to take its business offshore and has the scope to manage better customer relationship. As per the findings, high brand image and recognition in the UK market is increasing the sales of the company at a rapid rate. Furthermore, the wide range of products is an additional competence of the firm. Hence, it can be stated that Morrison has a reputed position in the market (Adler, 2010). Hence, from the above analysis, it is evident that the company is presently enjoying a stable position; however, a minor flaw in the formulation of strategy or improper assessment might lead the company towards various threats. Together with that, the company is expanding at a rapid pace and equity is increasing at a robust rate. Analysis of the organisations strategic direction A strategic direction enables a firm to take the right path in the process of its operation. A number of authors have argued for the fact that it is paramount for the organizational success. One of the biggest factors that make the notion of strategic direction vital is its ability to mitigate environmental risks. A company is always vulnerable to external threats and thus, the presence of strategic direction allows a company to be aware of where it is heading and even allows the firm to create an alternative plan on the failure of a plan. In the context of Morrison, the analysis of the strategic direction of the firm will be carried out with the help of Ansoff Matrix and BCG matrix. The same has been detailed below: - Ansoff Matrix Ansoff’s product or market growth matrix allows analysis of the strategic direction of a firm. It seeks to explore whether a firm is attempting to increase penetration with its existing product in the existing market or planning to introduce a new product(s) and explore new markets (Cohen, 2004). Ansoff matrix plays an imperative role in the process of portraying an alternative growth strategy. The strategy principally deals with the four dimensions namely existing market, new market, new product and existing product (Clifton, 2012). In the context of Morison, the same is presented below: - Market Penetration: - The firm seeks to realise growth with its existing product or a new product in the current market segment. Market Development: - In this context, the firm seeks growth with its existing or a new product in a new market. Product Development: - This is the phase where the company aims at developing new products and tries to explore both existing market and new market. Diversification: - In this context, both the things are tried i.e. new market as well new product is being used by the company to experience profit. In the context of Morrison, the Ansoff matrix is presented below: - Existing Product New Product Existing Market Market Penetration Product Development New market Market Development (Moriston) Diversification Hence, the chart above clearly illustrates the position of Morrison in the market place. It shows that the company tries to explore new markets with the existing products. BCG Matrix This is another strategic management tool that allows a firm to identify the relative position of the strategic business units or products of a firm. The BCG matrix articulates four different situations and is labelled under question marks, stars, cash cow and dogs. Each of these stages signifies different meanings (Dess, Lumpkin and Eisner, 2009). Question marks: - This stage is characterized by the high growth rate and low market share and hence, its future is a matter of doubt. In management terms, it is often referred to as ‘problem child’. Stars: - This is probably the best stage that an SBU or a product could reach. It is characterised by high market share and high growth rate. Cash Cow: - Cash Cow stage is characterized by high market share and low growth rate. However, it generates high revenue for the firm. Dogs: - The dog stage is characterized by low market share and low market growth. In the context of Morrison Super market, their situation is presented below in the matrix: - High Market Share Low Market Share High Market Growth Grocery Segment Alcoholic beverages, Meat, Fish and other Sea foods. Low Market Growth Books, Baby care products, cosmetics, Flowers Diet Foods, Greeting Cards, Lottery Tickets The above analysis shows that the company has several products which are at a stable position, but at the same time, some of them have become ‘problem child’ and therefore, it is evident that the company must take steps so as to ensure that it does not incur financial losses or loss of reputation. Critical evaluation of the organisations strategy The current strategy pursued by the organization will be analysed with the help of SAFS analysis. The analysis encompasses four factors namely suitability, acceptability, feasibility and sustainability (Ferrell and Hartline, 2010). Suitability As per the findings, it is evident that new product development is the most suitable strategy for the firm (Henry, 2008). The company has already explored various markets but development of new product will give them an opportunity to target more customers. Acceptability In terms of the acceptability of the strategies, it is an important task of the organization to ensure the satisfaction of local communities and other share holders of the company. Thus, the strategy to develop new products must remain in line with the expectations of the stakeholders. Feasibility Since Morrison has been functioning in this field for a long period of time, it is obvious that the company has been able to generate huge sense of trust among the customers. Thus, development of new products for the purpose of increasing profit and revenue is a feasible decision as the company will hardly face difficulties in launching the products. Sustainability The company has always abided by the rules and regulations of the government and is known as one of the socially responsible players of the country. The company is active in various kinds of CSR works such as, investment in societal development and ensuring production of recyclable materials. Conclusions and Recommendation The study was meant for analysing Morrison’s strategy and based on the analysis, recommending a suitable way out for them from the issues that they are currently dealing with. As such, the study did not find any major issues impacting the operations of the firm, but there are some products which are causing the firm to experience financial losses. Furthermore, the study also made it evident that lack of technological development and stringent legal regulations are posing as difficulties for the firm. However, proper development of strategies allows a firm to overcome these issues. Hence, it is concluded that strategies devised by a firm plays imperative role in its success and achievement of the overall organizational goals. The following are the recommendations for the firm: - 1. The company is strongly recommended to carry out an in-depth market research before the development of a new product. This will greatly assist the firm in devising the most relevant product. 2. The company must open online stores which will naturally boost the sales, which in turn will create more awareness about their physical outlets. Reference List Adler, M., 2010. A Study of Marketing and Online Marketing Tools Which Improve Online Success. Munich: GRIN Verlag. Ahlstrom, D. and Bruton, G. D., 2009. International Management: Strategy and Culture in the Emerging World. Connecticut: Cengage Learning. Alkhafaji, A. F., 2003. Strategic Management: Formulation, Implementation, and Control in a Dynamic Environment. 21st ed. London: Routledge. Clifton, B., 2012. Advanced Web Metrics with Google Analytics. 3rd ed. New Jersey: Wiley Publishing. Cohen, W. A., 2004. The Art of the Strategist: 10 Essential Principles for Leading Your Company to Victory. New York: AMACOM Div American Mgmt Assn. Davis, J. R., 2008. Does Environmental Scanning by Systems Integration Firms Improve Their Business Development Performance? Michigan: ProQuest. Dess, G., Lumpkin, G. T., and Eisner, A., 2009. Strategic Management: Text and Cases. 3rd ed. New York: McGraw-Hill Education. Ferrell, O. C., and Hartline, M. D., 2010. Marketing Strategy. 5th ed. Connecticut: Cengage Learning. Garrick, G., 2011. The evolution of organisational psychology in the 21st century. Journal of Organisational Research, 36(5), pp. 3-8. Gilmore, A., 2003. Services Marketing and Management. London: SAGE. Henry, A., 2008. Understanding Strategic Management. Oxford: Oxford University Press. Hitt, M. A., Ireland, R. D., and Hoskisson, R. E., 2009. Strategic Management: Competitiveness and Globalization: Cases. 8th ed. Connecticut: Cengage Learning, Janczak, S., 2005. The Strategic Decision-Making Process in Organizations. Problems and Perspectives in Management, 3 (2005), pp. 58-70. Johnson, G., and Scholes, K., 1997. Exploring Corporate Strategy. 4th ed. New York: Prentice Hall. Porter, M. E., 1998. Competitive Advantage: Creating and Sustaining Superior Performance. New York: Simon and Schuster. Appendix BCG Matrix Ansoff Matrix Figure 1 – Morrison Financials Read More