Morrisons hold one of the highest positionin the UK food retail sector, but throughout my analysis it also shows thatcompared to their rivals Morrisons does lack behind in competition.
One of themajor concerns for Morrisons can be their online retailing is not that strongdue to this they lose out on customers that prefer online shopping. Morrisonscould increase their options for organic food growth as not many of theircompetitors have that option which will also separate them from their rivals inthe grocery industry. Morrisons also wants to focus on providing fresh food fortheir consumers and that too on affordable prices which the consumers canafford. (Morrisons’ annual report, 2015).
Overall Morrisons could improvetheir market share as well by targeting the right market and to become the leadgrocery industrialist. Conclusion Throughout my analysis it shows thatthere is evidence to suggest that the Porter’s strategies and the Ansoff Matrixmodel is still useful in today’s grocery retail industry. Morrisons has beenmaking profit but should increase on their sales a bit more by amending ontheir strategy methods.
One of the recommendations that can be suggested isthat Morrisons should focus on their expansion internationally so that they cantarget different markets in Europe and America which will also give them abrand name internationally. Morrisons could also increase on their market shareby opening more conventional stores so that they get known more and gain morecustomer loyalty. The three terms stated by Johnson (1988) show that thestrategy of the low cost which is Morrisons main strategy could be feasible inthe national markets but could also be imitated by other competitors which doeshas its own risk factor.
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Recommendations Thestock market seems to have an impact on Morrisons as well when the shares forOcado had dropped by 8% where as Morrisons shares had gone up by 6%. This was a vital time for the groceryindustry internationally but the chief executive of Morrisons had stated thathe will be signing a deal to supply fresh, frozen product to the US onlineRetailer to help them. (Pratley,2016)The recent changes in the governmentmight affect Morrisons strategy as it might affect them internationally, sincethe Brexit has been taken place, UK food retailers including Morrisons havebeen put towards risk, Migrant workers are an important part of the industry sotherefore this had a negative impact on the food retail industry as a lot ofpeople came under pressure that they might lose their jobs and a lot oforganisations including Morrisons might suffer from this. (Independent.co.
uk, 2016) GovernmentIssues and Stock Market Crash One of the risk factors for thisstrategy could be that Morisson might not have enough capital or investment tosupport them overseas so therefore to expand they could partner up with otherorganisations to gain more name and financial support. Another strategic option for Morrisonsis their overseas expansion, this option is suitable but Morrisons might faceproblems when it comes to British products. There is not a high risk in thisbut it will be a new experience for Morrisons because if customers like theirproducts abroad chances are that they might be able to open more storesinternationally. One of the main factors to considerwithin the strategic analysis is the organic growth. Looking at suitabilityMorrisons will find it easy to expand on their organic food strategy because ithas been doing that in the past. It is the easiest option available to Morrisonto expanding on their organic growth because Morrisons can easily get fundingfor their investment by their stakeholders.
(Morrisons-corporate.com.) The last step is Acceptability, thisfocuses on two other aspects which are the financial aspects and thestakeholder aspects.
The second option is feasibility which considersthe internal side of an organisation to see if they have the resources toaccomplish certain strategies if not they will exclude these choices. The model focuses on three steps whichare suitability, feasibility and acceptability. To consider suitability theorganisation needs to look at the external environment to make sure that thestrategic choices are suitable for the organisation. The strategic analysis is one of themost common factors to consider when analysing the performance of anorganisation as companies need to keep on changing their strategies to survivein the environment against competition.
To analyse and conclude the Johnson andScholes framework can be adapted to provide a comprehensive result. (Johnson ,2009)Strategicanalysis If Morrisonswants to adapt this method which is quite risky because they will have toproduce products from scratch and would need to get rid of what they areselling now, this could be risky due to the concept of customers not liking thenew products and they might lose out on their customers loyalty. Thesestrategic options can analysis the cost and benefits for an organisation in thelong run.
The last optionis diversification, Doyle (1997) stated that the diversification comes underthree forms which are full diversification, backward diversification andforward diversification. The organisation chooses which method to focus ondepending on the situation whether they are entering a new market or justcompeting against their competitors. Morrisons doesthis by producing new products with little changes and different versions oftheir existing products in existing market so that they do not lose out oncustomers either way and still provide products with changes to them by meetingthe wants and needs of new customers too.The third optionis product development; this is when an organisation wants to focus on a newproduct in the existing market. Morrisons focusshould be on their market penetration as that is one of the safest strategiesbecause they focus on their existing customers and their needs but by followingthis strategy they can also attract new customers with similar needs. Thesection option is market development which focuses on the existing products tolaunch them into the new market. One of the risks that are associated with marketdevelopment has been stated by Hooley also said going into the new market costsmoney and therefore if the strategy fails, the organisation itself will loseout on a lot of money and might also lose the value of the product (Hooley, et.Al (2004).
Morrisons could focus on this strategy by expanding overseas inEurope or America, but to ensure that they implement this strategy properlythey would need to carry out market research that would provide them with thebest results and will need to find out about their supply chain management.Ansoff matrix was oneof the most common methods used by organisations and was developed by IgorAnsoff in 1957 and highlights the four major strategic options for anorganisation to adapt. (Lynch, 2009) thefirst option is Market Penetration,(see Figure 3) according to Hooley, the option to enter within the marketplaceis a low risk option that makes use of the existing resources. (Hooley, et. Al (2004)One of the disadvantages for this strategy is that the company loses out on newinvestments due to their focuses on existing customers which you could be arisk for their regrowth in the market.
Morrisons can consider expanding theirmarket by providing more organic foods, to do this they could focus on openingmore stores throughout the country. Ansoff Matrix Morrisons should focus on thedifferentiation strategy because they need to increase their market share toensure that happens they need to focus on producing different products for newcustomers to regain their growth. Due to adapting this method of strategyMorrisons would need to ensure that they concentrate on mass marketing a lotmore than usual as they should keep their prices the same but should changetheir prices if needed with the trend as this would help the organisation createrevenue in the long run. (Newburry,2006)The last strategy focuses on being non –competitive. This strategy is the riskiest one, if you are not competitiveagainst your rivals then in the long run the organisation will be affected. The third strategy is Hybrid which looksout to achieve different products and low prices compared to their rivals. The second strategy is the low pricewhich focuses on the pricing of a product. Differentiation strategy focuses onproducts that are different from their rivals and will benefit the business bygaining profit.
it shows that the strategy clock is madefrom 4 segments which are differentiation strategies, hybrid strategies, lowprice strategies and non-competitive strategies. (See Appendix 3)This model itself is one of the usefulmodels to expand further into an organisations market structure and to focus onthe important parts which are cost, product differentiation and marketsegmentation. Rhyne stated that the model either focuses on the differentiationwhich is the perceived value or with the customer needs which is marketsegmentation.
(Ryhne, 2009). BowmanStrategy Clock As stated by Porter, an organisation canalso combine two strategies to ensure that they get the best results but it isbest to stick to one strategy because failure to do this can also lead to arisk for the organisation itself. Morrisons should not use focus strategy as theirmain because they would not be able to cover earthing and will not be able toachieve their goals.Focus is alsoa part of the Porter Generic Strategy model and it focuses on targets that havebeen narrowed down to achieve advantages for the organisation in the long run. Considering theanalysis cost leadership is the most appropriate strategy for Morrisons as thecompany sells products based on average market price to earn higher amount thentheir competitors.
Another strategy Morrison can also use is their differentiationon lower cost products against their competitors which sets them apart.Morrisons provide food at a lower cost that are harder to find at stores suchas Lidl and Aldi which gives them their uniqueness, to ensure that they gainmore customers they should bring the products more to attention by consumeronline and in store. Differentiationis also a part of the strategy model which tends to focus on the products toensure that they are different and unique so that they meet the demands and arevalued by the customers. Differentiation is an important part of this model becauseif the product is not different and unique it will have the same price as theusual products as their competitors but if the products are unique anddifferent the pricing will also increase and so will the demands of theproducts. Costleadership strategy focuses on a strategy to ensure they become the lowest costorganisation.
Morrison’s focuses on the cost leadership as they ensure thatthey provide different experiences for their customers and provide productswith different designs to ensure that their competitors do not stand a chanceagainst them. According toPorter’s Generic strategy model, there are three options available toorganisations to gain advantage for competition which are cost leadership,differentiation and focus. (Porter ,1985)Morrisons will need to emphasis on theirstrategy by providing different products and services for their consumers toensure that their company stays in lead. Competitive advantage is something thatgives an organisation lead against their competitors. Competitive Advantage Morrisons is awell-known retail grocery industry that focuses on their wholesale performanceand ensures that they provide the best for their customers. Looking at figure 1(in appendix 1) it’s showing that their turnover was up by 1.2% in the year2016 and 2017, Since 2011 it’s the first time that the sales have been sopositive for Morrison’s.
The performance for the organisation has been rapidlygrowing due to new in store experiences the customers are experiencing. Lookingat figure 2 (in Appendix 2) It is showing that from 2013 to 2017, Morrisonshave expanded their stores in Rontec petrol stations and have also launched anew flower website to ensure they target audiences that tend to buy flowers foroccasions so they can provide next day delivery for them. (Mintel.
com, 2018) Morrisons hasalso introduced online and in store options which are also known as “food toorder” to provide different types of party food that customers can pre-orderand collect from stores. This has been beneficial for Morrisons as not many oftheir competitors have launched this option.Within thisreport the tools that will be used and the techniques will evaluate thestrategy of Morrisons and will be extracted from the SWOT analysis usedpreviously in assignment one.
Introduction
