Strategy Analysis In Morrisons Marketing Essay

What is strategy. Why do strategies are important for organisations. Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations.(Johnson, Whittington and Scholes, 2007).

The paper relate to strategic analysis of Morrisons, retailing industry is highly competitive market in the United Kingdom; supermarkets are still fast growing industry across the nationwide. Morrisons become challenger for major national and global competitors since took over Safeway.

Introduction

WM Morrison supermarkets Plc was founded in 1899 and headquartered in Bradford, it is the 4th largest supermarket in the UK after takeover Safeway in 2004. Morrisons mainly focus on food and grocery products (Morrison’s profile, 2013). The company offer the high quality of customer service by well trained staff to attract more customers to shop in Morrisons. HOT service has introduced to colleagues in all stores. Motivate staff work as a team; support each other to achieve goals. The purpose of this essay is critically access strategic improvement of the Morrisons by using analytic modules such as potters five force, SWOT.

Morrisons’ Current Corporate Strategy

Driving the topline: strengthening the brand image, crate leading range and offer high quality produce. Offer customers the best fresh food in the UK; provide great value and experiential engage shopping environment. Build new stores help customers easy to access.

Increasing efficiency: introduce new solution for Morrisons’ five manufacturing produce sites to improve efficiency. Increasing network efficiency by reducing costs throughout supply chain.

Capturing growth: create different things by leveraging its vertical integration and fresh, also value credentials to develop a really distinctive and compelling fresh food experience, offering customers great food at affordable prices at a location which is convenient for them (Morrisons’ annual report, 2012).

Strategic analysis: Porter’s Five Forces Model

By applying porter’s five forces to conduct a situation reviews to advice Morrisons Plc., analyse the current marketing environment for the company; identify and analyse forces that affect an industry.

Rivalry: the UK’s retail market is oligopoly; this industry has high competition, “big 4” have already occupied most markets across the country, including Tesco, Sainsbury’s, ASDA (America owner Wal-Mart), Sainsbury’s and Morrisons. Tesco is market leader, which has 30.7% market share, followed by ASDA with 17.6%, Morrisons at the 4th position with 11.9% market share (The Guardian, 2012). Tesco and ASDA have almost 50% market share due to their size; both of them are international companies who have business worldwide. The threat of rivalries is high.

Threat of New Entry: global competitors have penetrated into the UK retail market, ASDA owned by Americans. German giant Lidl has opened many stores in many UK cities. However, Lidl only shared 2% market; the threat is low at the moment. On the other hand, there are also internal competitions, cooperative plans expand their business by open more shops to gain market share, and Waitrose do so. The threats of new entrenchers are high for Morrisons.

Buyer power: customers will compare the prices with other supermarkets chains, easy to switch, buyers always look for value. Morrisons has price strategy to keep the price down and satisfy customers, hundreds of products offered great deals, such as special offer, buy one get one free, half price and reduce to clear. In this case, buyer power is medium.

Substitution: nowadays, individual and franchised groceries could be challengers, such as londis, budgens; it is convenience for local buyers. The company’s own brand products to be able to substitute other brands of items, due to the cheaper price, many products have low quality. For instance, Morrisons has replaced pork sausage rolls from its own built factories, the size has been shrink and the taste is not satisfied consumers, even remain the same selling price. Substitute level is medium.

Supplier power: Morrisons have own manufacturing factories and farms, which can help to reduce the power of suppliers. By build great relationship with suppliers to ensure the costs lower. However, this threat is low.

SWOT analysis

SWOT summarise the key issues arising from an analysis of the business environment and the capabilities of an organisation to gain an overall picture of its strategic position. (Johnson, Whittington and Scholes, 2011).

Strengths: Morrisons is a very different with other supermarkets in the UK, because of fresh food. It has own fresh produce distribution centres with fast delivery. Focus on customer service is other strength, the visiting numbers has been steady increased compared with past 4 years. Many buyers chose Morrisons regard to their price strategy, by offer cheaper prices than any others.

Weakness: as the 4th biggest supermarket, it does not provide online shopping system, other large retailers have already benefited from their online websites, and this is also

Convenience for consumers. All Morrisons’ branches built on large size or super stores, in addition, many stores located in remote areas. It is difficult for buyer’s to access them.

Morrisons lacks of non-food products, such as electronics, clothes. Buyers will have alternative choices shopping in rival supermarkets.

Opportunities: Morrisons should focus on non-food products, provide variety products. This is the great opportunity to develop electronics and clothes, it will help the company to expand the business, introduce new products for consumers.

The first Morrisons local convenience store was opened in IIKley, Yorkshire in 2011. The M local strongly focus on fresh food with competitive price, it will be 4%-11% cheaper than other local shops such as Tesco express and Sainsbury’s local (Morrisons, 2012). The new strategy will build smaller local stores to increase market share.

Threats: Morrisons should concern with environmental protection, due to many packing products produced which generate extra landfilling waste. Increasing numbers of rival retailers, such as Tesco express and Sainsbury’s local.

Positions of competitive advantage

Competitive advantage

Lower cost Differentiation

1. Cost leadership

2. Differentiation

3A. Cost focus

3B. Differentiation focus

Broad Target

Competitive

Scope

Niche

Adopted from Porter (1985).

Cost leadership: low cost producer in an industry for a given level of quality, the firm sells its products either at average industry prices to earn a profit higher than that of rivals, or below the average industry prices to gain market share. Morrisons has built their own manufacturing factories, save the costs. Supplies direct to its stores through 12 distribution centres and using its own fleet which works around the clock to deliver the freshest food to stores. Employing 2,700 people, Morrisons’ produce sites produce 29 million packs of fresh fruit and vegetables every week for sale in all stores. For Morrison to compete on cost bases then it must address issues about overheads, materials, labour, and other costs, and to design a system that lowers the cost per unit of its product or service before entering the global markets. Often, the lowering of costs requires extra investments in automated facilities, equipments and employees skill.

Differentiation: development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition. The company differentiates itself from the competitors through its actually marked products, concept the market-strit, for example, the kernel of its competitive advantage is in its ability to provide a privilege of cost for its clients.

Focus: concentrates on a narrow segment and within that segment attempts to achieve either a cost advantage or differentiation. Morrisons as a whole could not be considered as the player of a focus strategy because it has resources and abilities to compete on wide basis.

Overall, by applying Porter’s generic competitive strategies to Morrisons, Cost Leadership strategy is appropriate.

Ansoff’s matrix model

Market penetration

Product Development

Market Development

diversification

Existing products New products

Existing

Markets

New

Markets

Adapted from Ansoff (1957)

Ansoff’s matrix is a decision making tool for corporate planning and provide a useful framework for analysing a range of strategic options in relation to risks and rewards.