9 Pages
2192 Words
Introduction - Morrisons’ Competitive Challenges & Strategic Recommendations
Morrisons is a British company that comes in the retailing industry founded in 1899 by William Morrison. It is the fifth largest supermarket chain in the United Kingdom that offers grocery items, books, clothing, food and drink, home ware, magazines and other things to customers. It is headquartered in Bradford, England. The retail sector is very important part of the UK economy in making contribution. It includes various retailers from small shop worker to large size retailer (Morrison’s corporate, 2023). The vision and mission of Morrisons is to provide high-quality food and services to the customers. The aim of Morrisons is to offer fresh food, greater value and positive experience of shopping to customers. Customers who want high-quality products with affordable prices and short or long families are the targeted audience of Morrisons. They have expertise in selling fresh food and effectively supply chain for delivering of foods. The current strategies of Morrisons is to focused on online delivery systems, invest in digital technology and make changes in their supply chain to make more efficient use (Goi?, Levenier and Montoya, 2021). The market share of Morrison’s is 8.8% as per the research study. According to Ansoff matrix, company is focusing more on opening outlet in developing countries with the motive to enhance both productivity and profitability. Further, in the context of Morrison’s critical success factors mainly include efficient production processes, advanced technologies and competent or skilled workforce. The report will discuss about the environmental analysis of Morrisons Company to evaluate the position of the Morrisons Company in retail industry.
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Environmental analysis
The environmental analysis of retail industry impacted by various environmental and external factors like political, economic, socio-cultural, technological, legal and environmental factors that affect the operations.
| Political factors |
Political factors include trade policies, regulations and taxation policies. They can affect the retail sector by changing in tax related policies & regulations and pricing strategies. It can affect the costs of goods and product-making strategies |
| Economic factor |
Inflation, interest rate, income level etc falls under the category of economic variables. These factors affect the cost and pricing strategies of premium goods and also affect the sales of retail due to changing economic conditions. |
| Socio-cultural factor |
Socio-cultural factors include demographics and consumer preferences (Adefarati and Bansal, 2019). The age, gender, and education elements of people help in analyzing the changing consumer preferences to make changes in retailing. The new preferences of people are mostly related to sustainability practices. Further, after COVID-19, customer’s preferences also shifted towards healthy products. |
| Technological factor |
The rapid growth of technology affects the traditional retail sectors, and there is a need to shift operations online and invest in effective logistics to mitigate the impact. Further, with the rise in technological advancement, now companies are placing more emphasis on promoting products or services via social sites. |
| Legal factor |
The legal factors include laws and regulations of government. The guidelines and rules of government affect international and domestic trade and the cost of goods. On the basis of this, companies which are operating within retail sector need to comply with employment and other related laws. |
| Environmental factor |
The demand for sustainability and green logistics practices in product making is growing rapidly in retail sector, so they need to reduce the wastages and change their style of packaging. |
The issues that are pertinent to retail sector are e-commerce breakdown because of high growth in online shopping, changing behavior of consumers. Due to environmental safety concerns, increasing costs related to labor; rent and logistics; technology adaption; and regulatory changes, health and safety concerns, and sustainability responsibility towards product making (Bakos, et. al, 2020). Retailers can solve the following issues through making innovations in processes, adapting technologies and improving logistics.
The implications for the retail industry impact its operations and strategies by various arising issues. It mainly includes flexible supply chain, high competition, innovation and technology, cost management, operations handling and regulatory compliance. Retailers need to accept these implications to gain a competitive advantage in the market, attract more customers and encourage sustainable practices in operations. They have to adjust their strategies per changing market trends and consumer preferences.
Porter Five Forces Analysis
The Porter five force analysis model is a strong model that helps in analyzing the competitive forces of Morrisons in the retail industry. The Porter Five force analysis contains five elements.
| Threat of new entrants |
The threat of new entry in the retail market is moderate to high. The shift of grocery stores to online platforms reduces some barrier to Morrison’s but there are competitors. Amazon is entering in grocery market increasing the competition in retailing and impacting Morrison’s of the United Kingdom |
| Threat of substitutes |
The threat of substitution is moderate to high in the retail market (Maxim, et. al, 2021). There are many substitutes in the retail industry for shopping goods. Customers have options to shop from supermarkets, hypermarkets, online grocery stores and local markets, rather than Morrison’s grocery stores. The various options in retailing for purchasing groceries impact the Morrison’s productivity and cause a threat. |
| Bargaining power of suppliers |
The bargaining power of suppliers is moderate in the retail market. The bargaining power of suppliers varies from supplier to supplier. The Morrisons Company buy bulk of grocery items and from different suppliers to minimize their per-product cost. It is a big supermarket that negotiates with various suppliers to serve the best deals to customers. |
| Buying power of customers |
The bargaining power of buyers is high in the retailing market. However, it has been seen that customers have high bargaining power in purchasing grocery items. Customers have different options in the market for choosing the best product based on quality, price and quantity, and they can switch from one retailer to another. This thing is a threat to Morrison’s to earn customer loyalty of customers. |
| Competitive rivalry |
Competitive rivalry is high in the retailing market. There are many competitors in the UK market that are competing with Morrison’s like Amazon, Asda, Aldi, Sainsbury’s, Tesco and Lidl etc. it is a big company, especially in the grocery niche there is so much competition to survive in the market. |
The Porter five force analysis models reveals that Morrison's company faces the bargaining from customers and high rivalry in a competitive market (Rashid, et. al, 2023). They makes good relationships with suppliers to offer the best quality groceries at affordable prices to customers and make a strong position in the retail market landscape. The pestle framework helps in recognizing the external factors of the business environment that are impacted by various issues and Porter five force analysis helps in identifying the strong forces and industry dynamics. The both models help in understanding the external market of retail.
SWOT analysis
The SWOT analysis framework helps in finding the strengths and weaknesses of Morrisons Company including opportunities and threats of external parts (Strengths and weaknesses of Morrison’s, 2023).
Strengths
- Strong brand image- Morrison’s has a strong brand reputation in UK market because of its high-quality services provided to customers.
- Wide network- The wide global network of the company supports its operations and functions from different places. It has physical grocery stores in different locations within UK.
- Focused and dedicated- The Company’s focus is on providing better quality services to its customers at affordable prices (RASHID, et. al, 2020). They are dedicated and doing hard work to achieve it.
- Vertical integration- The Company make vertical integration with its manufacturing units means they have control over their manufacturing or factory processes of product making.
Weaknesses
- Limited presence- Morrison’s has a limited presence on international clients compared to other competitors like Amazon, Tesco and Sainsbury’s.
- Dependent on the economic market- The Company is mostly dependent on UK economy for its operations handling and working.
- Slower adaptation process- They have slow adaptation processes if compared to other UK competitors like Tesco and Amazon.
- Small market share- This Company has a small share in the UK market as compared to Amazon, Tesco and Sainsbury’s.
Opportunities
- Expansion in e-commerce platform- The Company can make growth in the online grocery market by improving its e-commerce channels and including digital technology in it.
- Diversification into novel markets- They can expand their services in different fields (Maxim, et. al, 2021). And also can include other services like personal care, health care and convenience items in their list to enter new markets.
- Develop new partnerships- Morrison’s can develop new strategic partnerships with other countries to promote their products and services everywhere.
- Sustainability adoption- They can establish sustainable practices in their operations to meet new consumer demands related to eco-friendly products.
Threats
- Economic uncertainty- The uncertainty in the economy affects the demand for products and the spending power of consumers.
- Intense competition- Morrisons faces high competition from many retailers in the United Kingdom.
- Changing consumer behavior- The changing market trends and high technology involvement in the market affect the behavior of consumers and cause a threat to the company.
- Supply chain disruptions- Supply chain disruptions sometimes affect the availability of products in stores, so it is a threat to the company.
Conclusion
In summary, the Morrisons Company of the United Kingdom identifies their external and internal factors in this report to make the best strategies to stay in the retail market. By this, firm can deal with other competitors like Amazon, Tesco, and Sainsbury’s to reach more potential customers of different locations. In this, they conduct an environmental analysis of the retail sector to understand the impact of external factors of the economy on the retailing industry. The Morrisons have a favorable position in the retailing sector as per their strengths and weaknesses, quality services, and manufacturing facilities, but the changes in market preferences need business to adopt innovation and technology and improve operations to make a good position in the retail market. Morrisons focus on their threats and opportunities to make possible changes in their procedures and improve their operations that are not fully developed.
References
Books and Journals
- Adefarati, T. and Bansal, R.C., 2019. Reliability, economic and environmental analysis of a microgrid system in the presence of renewable energy resources. Applied energy, 236, pp.1089-1114.
- Bakos, J., Siu, M., Orengo, A. and Kasiri, N., 2020. An analysis of environmental sustainability in small & medium?sized enterprises: Patterns and trends. Business Strategy and the Environment, 29(3), pp.1285-1296.
- Goi?, M., Levenier, C. and Montoya, R., 2021. Drivers of customer satisfaction in the grocery retail industry: A longitudinal analysis across store formats. Journal of Retailing and Consumer Services, 60, p.102505.
- Maxim, L.G., 2021. STRATEGIC ANALYSIS MODEL. PORTER'S 5 FORCES MODEL: CASE STUDY. Turkuaz Uluslararas? Sosyo-Ekonomik Stratejik Ara?t?rmalar Dergisi, 3(2), pp.1-7.
- Maxim, L.G., 2021. The importance of efficiency of the supply process for retail companies: case study. Journal of Management Marketing and Logistics, 8(4), pp.197-202.
- RASHID, C.A., 2020. Balanced Score Card and Benchmarking as an Accounting Tool to Evaluate Morrison’s Performance. Journal of Global Economics and Business, 1(3), pp.59-72.
- Rashid, C.A., 2023. PESTEL Analysis and Porter’s Five Forces as marketing tools to evaluate Morrison’s performance and strategy. Journal of Global Social Sciences, 4(15), pp.75-83.
Online
- Morrison’s corporate, 2023. Online. Available Through. : < https://www.morrisons-corporate.com/about-us/>
- Strengths and weaknesses of Morrison’s. 2023. Online. Available Through. : < https://www.howandwhat.net/swot-analysis-morrisons-morrisons-swot-analysis/>
