Morrison’s Supermarket is based in United Kingdom. In the recent past it has experienced enormous growth being the fourth in retailing food in major stores. The main products include food and groceries. The company is able to deal with large number of customers every day due to the fact it manufactures and processes its products. This makes their products have high quality. In addition the company has about 132,000 colleagues all over the country who are responsible in ensuring that excellent services are provided.
The company has been able to create a large pool of retailers and customers due to the fact that it provides competitive prices as well as offers. This makes them one of the major leading companies in the market. Morrison’s has gone through various transitions in its management moving from small private owned business to its current state. It has also experienced differences in management where new management has come up with new strategies to ensure that the company is on the path to growth.
I am now going to study the company’s PEST analysis, SWOT, Porter’s Five Forces and McKinseys Sevens ‘S in this report that lead to the company in making formulas to trap the success on their sides. In addition, I will be demonstrating my knowledge of Morrison’s store, which is located at 299 Hatch End in Harrow, London
PEST analyzes micro and micro as well as internal environment. This helps the organization to evaluate itself and hence employ some basis strategies that will enable it to perform in future. The company is affected politically in the following manner. Notably, political influences mainly deal with the environment upon which the company is operating. Thus, the company must comply with certain regulations and legislation in its existence and operations. The first form of legislation that the company should highly observe in its operations especially in manufacturing is the emission of gases and disposal of waste products. The major products that are offered by the company include food and groceries. Therefore, in the manufacturing process, the company is affected by the waste management regulations. The proposal of this legislation by Environmental Protection Agency (EPA) will thereof affect the company politically. Virtually, by the fact that the company has to put new measures to ensure its waste is being managed effectively, it means that the cost of production will go up. Moreover, the coast of the overall will also rise. Other legislation includes food safety laws and regulations. From the past experiences there have been reported cases of food and mouth diseases and ‘BSE’ that are directly related by lack of proper observation of safety while providing food stuff. This infection thereafter leads to potential threats such as tuberculosis and chronic related diseases. Thus, the company will be compelled to strictly observe these regulations both the supra-national as well as national . This is deemed as a measure to reduce cases where the public are being affected negatively for consuming products that do not comply with the safety standards. On the same, since the company deals with food and groceries, one of its main raw materials is milk from cows. Thus, in case the animals are affected negatively by the foot and mouth diseases, it then implies that they will not be in a position to get enough milk in their production. Therefore, to avoid devastation of milk and meat production in their area of specialization, it is important to observe safety standards that also involve conservation of the environment.
The legislations also provide that the manufactured goods must be in line with the right standards as well as the right quality. According to the standards set by the European Food Authority (EFA), the milk produced must be of low and reduced fat. The government is entitled to ensure that such regulations are implemented and followed to the dot. Moreover, no company should deviate from such legislation since the products are inspected before they are releases to the market. Therefore, Morrison has a greater role to play in ensuring that it is in a position to ensure such products are in the market. However, from the fact that it has been able to lead in the market, it implies that it has set its goals higher to ensure that it maintains quality goods in the market. However, with this new legislation, the notable impact on the company’s performance is the increased cost of production . The company has to come up with new and quality process that will involve production to such goods in order to have assurance of market maintenance.
An established body such as UK Competition Commission and the Office of Fair trading (OFT)
This is mainly in inspection of the produced goods as well as monitoring the activities of the companies’ estabsl8hed in United Kingdom to ensure that they comply with the laid regulations. They closely monitor the main players in the United Kingdom supermarkets . On the same, due to the high cumulative market share in the United Kingdom markets, the top five supermarkets in the country have engaged themselves in stiff competition. The stiff competition has led to the increase efficient in production and hence each of them ensure that it is follows the established regulation to avoid collision with the rule of law.
There are also other major issues that highly influence e-business. These include; high fees due to the increased cost of production well as complex regulations that the government of United Kingdom expects such companies to comply with . Moreover, EU also has set its regulations that the member countries must observe in the production of goods for consumption and in particularly conserving the environment. In comparison to other countries such as United States, there are stringent regulations that government the production and operation of business. Due to the complexity involved, it implies that the cost of production goes up which consecutively lead to higher prices of goods in the market. Morrison’s has also experienced these complexities in observation of these legislations. The company’s management has also enacted new strategies to ensure that they readily comply with such regulations.
Economic influences are another factor that has highly affected Morrison supermarket. Virtually, the retailing of food in United Kingdom is not directly influenced by seasons. This is in exception of Christmas. Christmas are marked by the sharp increase in sales. In normal times, it has been noted that the sales is constant. Thus, a company is in a better position to have a homogeneous growth in its sales for almost all the times in the year. Thus, the prediction of economic growth can be done as the company is able to forecast its performance in the future (Kenneth, 2003). Morrison has been able to predict its performance based on its past performance. However, it sometimes has been a disadvantage as the sales has decreased for the last three years. Therefore, the company cannot use the past slump in growth to predict the future. United States being the major player in the global economy, it has in the past few years’ experienced low economic recovery. Therefore, it is difficult for the cmap0ny to predict its future growth in the near future.
The entire Europe has experienced weak economy. This has affected the economy of United Kingdom. Therefore, the market has not been able to expand as it was expected. Major counties in Europe have a significant impact in predicting the upward growth and the trend of sales (Sullivan, 2003). Economic recession that has affected the entire world has also affected the sales of major supermarkets in United Kingdom. Demand of their products has decreased due to the fact that consumers are not able to buy goods in large quantities due to hard economic times. Low wages as well as the rise in standards of livings has also affected the economy of most countries in the world.
The market of United Kingdom is also highly affected by the Social – cultural factors. Notably, the population in United Kingdom is currently undergoing the emphasis that eating and buying healthy goods as a new lifestyle (Moffatt, 2008). Moreover, people are being sensitized on the essence of consuming environmental friendly packed foods (Sullivan, 2003). People have been made aware of the importance of protecting the environment as well as maintaining the environment in both consumption and manufacturing from the firms.
21st century marked the period under which customers wee able to make free choices on the products. This is so because; customers can now have their preferences and tastes. Thus, they tend to prefer quality products which imply that the products have good taste. Consumer preference has therefore forced the company to conduct regular research to ensure that customer needs and preferences are tended to. Failure to this, the company is risking losing their market share. Nevertheless, this has led to increase overall cost of production. Due to the increased awareness made to the public as well as availability of varieties in the market, people have become more experimental when it comes to making choices on the food to eat. For instance, there has been a notable increase in demand of exotic fruits, fish among other natural products.
The company also has to comply with technology in both production and retailing of their food. This means that the company has to adopt new strategies such a equipments which are specialized in that particular area as well as trucks. The company therefore has to incorporate extra costs in order to cope with the rising cost of production. Other equipments that are crucial include freezer trucks which are used in maintaining food taste and quality (Kenneth, 2003). In addition, due to the fact that the company has to work with technology related equipments, the work force has to be trained and be in a position to use such gadgets effectively. Provision of services should be up to date as people have become more informed when it becomes to customer relations. Training of staff also increases the expenditures of the company. This may affect the company negatively if the work force is not able to return the value of the company.
SWOT is also a major form of analysis that also provides information which assists in developing strategies that enables the company to set its goals and strategies as expected. SWOT normally analyzes Strengths, Weaknesses, Opportunities and Threats for a particular company. Therefore, based on the analysis, the major strengths of Morrison’s company include the following: the company in the recent past has been doing well in the market. In deed it has been rated fourth in comparison with other major supermarkets in United Kingdom. On the contrary, the high performance of the company has been made possible by its size. Morrison supermarket is large in terms of size and hence it is able to operate in whole sale in comparison to other supermarkets. Due to its competitive advantage, it has been able to develop a strong balance sheet in terms of profits, expenditure among other related expenses. Its cash flow is predictable (Sullivan, 2003). Therefore, the cash flow from creditors, debtors and the company itself is predictable. This makes the company to operate on profit. Moreover, due to the fact that the company has been able to win the customers trust with its products, it has experienced higher returns. Thus, the perception of the products manufactured by the company are highly trusted and hence highly consumed. Sequentially, its brand has gained dominion in the market. This has hence made the company to gain market share being able to have significant power among the products supplied into the market. The company’s brand has for yare gained customer trust because they are of good quality and therefore every one longs for their consumption. This makes the company enjoy more advantages when compared with the exiting and new firms in the market. This is in terms of financial position, size, brand, services as well as products.
The major weakness that affects the company as analyses in SWOT includes the following; first, the performance of the company has bee noted to have deteriorated for the past three years. This has made it impossible for the company to predict the future. The fall; in performance has been associated with lack of proper strategies and initiatives to ensure that the set goals are achieved (Kenneth, 2003). Moreover, due to its competitive and large scale production, it has taken for granted that it is in a position to influence the market. This has made it to ignore the increased competition in the market. On the same, lack of regular research in the market to determine customers changing costs and preferences has contributed to deteriorating performance.
Although the company has experienced increased cost of production due to the changing technology, it has been compelled to adopt such technology to ensure that it is in line with quality production and packaging services. Therefore, one of the hindrances to the higher success of the company is lack of proper compliance with the consumer needs (Sullivan, 2003). In addition, in order to increase its performance especially in manufacturing, the company should look for more market locally and abroad. This has nor been the case. Therefore, when economic recession struck Europe, it has been affected in one was or another reducing its sales.ver, if it could have expanded into other continents, this could have not been the case. Therefore, the balance sheet of the company has been deteriorating. Moreover, there are instance the company’s brand have been associated with poor quality (Moffatt, 2008). This has created poor perception of the brand losing customer trust. Management is also critical to enable the market retain its market. However, since its performance, the company has changed hand from one management to another over the years. Thus, there are cases where the management has not played their role. This has made the company to go a step back.
External and internal threats
A firm may be affected by either external or internal threats.Internal threats concerns the well being of any given firm. Thus, both external threats and internal threats are closely linked to each other (Moffatt, 2008). Notably, internal threats are said to pave way for external threats if not addressed on time. Some of the internal threats include the following: a company may be facing obstacles internally due to various reasons. These obstacles may be related to financial issues that may make the company to perform as expected. Financial constraints lead to problems of cash flow. In case the company is experiencing decreased performance, it is bound to develop issues with its cash flow. From the fore going, it is evident that if the company is not in a position to cope with the competition in the market, it is likely to fall. This is a major threat to many new firms (Sullivan, 2003). A firm may have largest competitors who may be a threat to its existence. Technology has been advancing at a very high rate. This is a major threat to companies as they are forced to adopt the new technology in their production as well as in operation. Thus, if a company is not able to adopt that technology in its production, there is a likelihood that consumers will shift from its products to another. Therefore, many firms are forced to be flexible when it comes to technology (Porter, 1980). Therefore, it is evident when a firm is facing problems internally; it is likely to be affected eternally. Both internal and external threat work together.
Michael Porters’s five forces analyses
Morrison supermarket can also be analyzed using Michael Porter’s Five Forces. This forced are important as they help in analyses of various concepts that affected affirm. This includes the following: the powers of buyers and suppliers in the market (Porter, 1980). Both buyers have a significant influence in the market. However, suppliers are said to possess more powers as compared to buyers. For example, suppliers determine the price for a particular commodity in the market. Another vital threat to firms is the availability of substitutes. In case where the product of a particular company develops substitutes from a rival firm, such company is likely to loose market. Substitutes reverse the focus of the consumers from the initial product (Kenneth, 2003). This is risk for the already existing firm. Therefore, rival firm may take this as an advantage to intimidate the existing firm by developing substitutes (Porter, 1980). However, the extent of the rival company to compete with the existing is also important. Thus, in case where the rival firm is able to control the market, the other company if at stake. In addition the entry of new firm is a major threat to the existing companies. For example, competition is likely to become stiff due to varieties being produced in the market (Sullivan, 2003). More often that not, when a new firm enters the market, it is likely to develop substitutes in order to find space in the market. This is a threat to other firms.
Morrison super market has not been exempted from the analyses of the Michael Porter’s Five Forces. Various firms have entered the market creating more stiff competition. This has made the company to increase the cost of production to ensure that it is able to retain consumers (Porter, 1980). Moreover, other forces such as substitutes, powers of buyers and suppliers have been a major deterrent to the performance of the company. Thus, over the years, Morrison has been fighting with these forces to be guaranteed of continued performance and dominion in the market in Europe.
Barriers to entry of a firm in the market
There are many factors that limit a company from entry into a market. Some of the factors include the following: first, there may be high fixed costs of operation for a new company to enter into the market; secondly, there is a possibility that there is scare resources that will prevent a new firm from joining the market moreover, the existing loyalty brand that the already existing companies are majoring on. Therefore, a new firm may find it difficult to compete effectively with other players in the market. There are also incentives that are already established for a particular buyer. This may include notable frequent shopper programs (Sullivan, 2003). Thus, a new firm may find it hard to attract potential consumers as they are already attached to particular products by a given company.
The established government legislations
This normally restricts firms from joining the market. For example licensing, safety food production among other legislation may be too expensive to acquire and hence for n a new firm, this may be a major barrier. Moreover, the government may restrict other firms to enter the market as they may require a given number of firms only to operate. Government legislations work hand in hand with other entry protectionism. These include the patent rights among others. Sometimes it is difficult to secure these documents due to bureaucracy and the regular cost involved while in force (Kenneth, 2003). With this high costs, a new firm, may find it difficult to operate as well as acquire and maintain these documents.
A barrier because of economies of product differences
Normally, in a given economy, there is likelihood of products being different. A new firm as its initial stage may find it difficult to differentiate the products in the economy. This is because, it may not be in a position to operate and produce in large scale as it is the case with the already existing firms in the market. More often than not, the brand that is present in the market must5 have some form of equity. With anew firm, it may be difficult to produce in line with other firms in the market, thus, producing brand with equity may not only be difficult but impossible. Moreover, the expectations of new firms as t enters the market are that it is going to make profit within a given period of time. However, this might not be the case. Costs are likely to switch from time to time. Sometimes, the cost is even going to sunk something that may be difficult to a new firm to sometime performing in comparison with already established firms.
Barriers of capital requirements, lack of enough access to distribution, lack of cost advantages die to limited market influence
Suppliers have also a notable influence into further restriction of new firms into the market. Suppliers may affect new firms in that they put pressure on given business present in the market (Kenneth, 2003). For instance, if one supplier has a significant impact into the market, it is likely to affect the company’s margins as well as volume sales. Therefore suppliers have substantial power to regulate the market. In addition, suppliers may have power in the market die to the following reasons: there might be few supplier of a given product that may not have substitutes. In such case, the product may be very crucial to the buyer such that he cannot do without. Normally, the supplying industry has more impact and enjoys higher profits that the buying company. This is because, the supplier has the capacity to fix the initial costs something that forces the buyer to fix a higher price based on the price of the seller. On the same, supplier may switch cost any time. This may affect the firm negatively as it is also forced to switch the cost relative to that set by the seller. Thus, supplier dictates the price and stability in the market. Morrison has also experienced some opportunities in its operations (Gregory, 2003). Opportunities are mainly available due to external factors that affect a firm. The ability of the market to gain the market share is important to consider as a major opportunity. The company has attracted new consumers leading to increased sales and hence production. In addition Morrison has been able to combine the product linen to increase sales. Increased competition in the market has made Morrison to seek new markets for its products. The new ventures have influenced the performance of the company in a positive manner. The evaluation in the performance of the company has revealed that due to new markets, the company has made significant profit. The company has also taken as an advantage the troubles of other companies due to the fact that it is large in size therefore; it is able to operate even in low season. Thus, the company has been able to utilize the troubles experienced by its competitors in the market. Moreover, new adoption of technology has been a major influence into the increased performance of the company. Technology has affected manufacturing, packaging as well as transportation of its products. Thus, service provision as well as transportation of quality goods into the market has been made possible. The government has also stepped in to reduce taxes as well as import as export duty. This has been a major opportunity for the company to expand its market and manufacture products in higher quantities. Thus, reduced regulation has favored the positive performance of the company. New initiatives have been adopted by the company due to the fact that the company has been able to adopt strategic investments. This has been followed by efficiencies in performance. This has contributed to reduction of internal threats that affects the company.
Level of differentiation of inputs, substitutes, concentration of suppliers relative to the rims available, the cost of inputs, degree of competition in the market, buyers and suppliers switching costs, perceived level of product differentiation, technology changes and need for innovation, bargaining power among others (Sullivan, 2003). Competition rivalry is also another major barrier to entrance of firms in the market. This is in terms of information, customers, power of buying and selling among other issues that companies may develop rivalry to each other. From the foregoing, Morrison supermarket has also been affected by these barriers.
The Mckinsey 7’s
The McKinsey 7’S is a framework that Morrison’s can employ to ensure that is able to maintain its high performance. This involves a framework of strategies to be adopted by the organization to ensure that its activities that involve management, manufacturing among others are well developed. A well developed strategy enables the organization to have a well structured management. Normally, big organizations such as Morrison’s are comprised of 6 levels in the hierarchy. It is also divided into several departments such as finance, market research, accounting, human resources, human resources, administration as well as production. These departments work together for the good of the company.
The system under which the organization operates according to McKinsey is also important to consider. This is because; the system that is incorporated in the management will deter mine whether the market will develop long terms goals or short terms one. Another vital factor is the shared values within the organization. Shared values enable the members of the company to develop togetherness and hence work as a team. In addition, this helps to prevent conflicts and criticisms among the members of the staff. In an organization where members have well developed shared values, they are able to interact freely in course of their duty. The staff should be highly skilled. The management should ensure that its staff is well trained to cope with the advancement in technology. The style employed in all the departments should also be well developed well in accordance to the needs of the company. Finally, McKinsey states that staff forms a critical components of any company. Thus, in order for any organization to perform effectively, it must have well developed staff.