6EC513 - Global Business and Strategy

External and internal analysis of business

PESTLE Analysis-

PESTLE analysis is the best framework it helps in identifying the significance external factors that affect growth and success of retail sector and companies operating under it. Here, this analysis is conduct in order to identify the several factors that impact on Morrison operations and overall business.

Political factor-

The government within nation is likely to change in few years, the government of UK is also reformed and it bring range of modifications in policies as well as regulations that impact on retail sector the most. All it happens because of Brexit that is the major political action and reason behind change in regulations. The trade procedure or policies related to this is also changed that affect business of Morrisons (Wright, Smith and Hellowell, 2017). Due to this political activity, it gave rise to change in customers behaviour towards some commodities. The rise of taxes makes major impact on company that governed by government for supermarkets which affect profitability and productivity as well. Change after Brexit in taxation policy bring series of problems for retail industry and its companies. The high rate of taxation has the power to demotivate Morrisons from increasing their profit. They have to deal with this issue throughout taking appropriate actions legally.

Economic factor-

Current stage of economic cycle, foreign exchange rate, changes in inflation rate and interest rate and demand for employment after Brexit are the economic factors that affect retail industry and organizations working under it since for so long. Due to Brexit, many people loss their job, they cannot be able to live life and fulfil the needs of their family members (Cappelli, Montobbio and Morrison, 2018). By considering the high level of unemployment in nation, government take significant action they put pressure on retail firms to employed residential people in their companies, that affect employment policies and rules of Morrison. The high rate of unemployment in UK mean that the supply of jobs is greater than demand. Local people are willing to work for lower income which lower costs of company. It would make positive impact on organization, gave opportunity to hire those people who are willing to work for lower wages is save the cost of business.

Social factor-

Changes in consumers preferences, attitudes, belief and values that majority of people hold in community affect the way company manufacture their products or services for people. In simple term, social factors that impact organization is direct reflection of society that firm operates in. it just not affects operational function but also make impact on marketing activities that is quite expensive for Morrison to change according consumers preferences (Steven and et.al., 2017). Changes in buying behaviour and preferences of clients make major impact on business success, without considering all aspects company cannot be able to sustain for longer. Changes happen when the new trends in market will occur that change the current preference of people effectively. But these changes are not good for firm, it affects production procedure and marketing actions regarding products that consume a lot of time and required depth research. Market research activity require more investment and efforts that directly impact on financial budget of business and existing planning.

Technology factor-

Technology quickly dismantle competitive landscape and price structure of retail industry in short amount of time. Thus, the advancement of technology makes positive impact on Morrison food production and packaging system (Innes and Morrison, 2017). It allows to pack the food items without human resource, it also increases the operational efficiencies rather than before. Technology advancement strengthen the delivery procedure and give power to supply products to consumers within short term period that create good image of business in mind of people. In simple words, the wider technologies shifts happing in industry is focusing on computer and information technology with internet business leading way. Due to advancement, organization grab the opportunity for using specialized trucks and equipment specially manufactured for supermarkets. Deep freezer trucks are one of the latest technologies that enhance the power of business to assurance exclusive quality and taste they offer to its consumers.

Legal factor-

These factors define need of company to operate under legislations and laws that beneficial in developing an effective code of conduct and framework. These laws include employment law, future legislations, consumer protection and competitive law that affect business performance and practices within retail sector. Changes in existing employment law put pressure on Morrison to restructure their employment policies and strategies that is quite effective for workers, but it affects business profitability and financial budgeting (Hyman, 2019). In Employment act 2019 government make some changes that drive towards employee safety and privacy at workplace. According to these changes Morrison have to deal with many problems, they had to improve HR practices which consume time as well as money. It caters basic working conditions and terms for workers through core provisions that provide additional protection. All these changes require a lot of efforts and human resource to gather more data about Employment law and its affect.

Environmental factor-

Rise of environmental and ethically conscious consumers who rapidly demand companies to adopt practices such as use of recycled materials and paper packaging instead of plastic is recent trends that influence Morrison business within retail industry (Jones and Morrison-Saunders, 2016). Environmental concern of UK government and people are now international problem, Mintel investigation reflecting that more consumers are now focusing enough about environment safety that they are prepared to practices its economic power to stop purchasing services and products from organizations that do not make contribution in environmental safety and show environmentally friendly credentials.

SWOT analysis-

Strength-

Morrison have much strength for their progress that’s why firm is progressing so fast, they are able to provide quality food products to its consumers. Organization key strength is offering value for price to their target market (Lebo and Morrison, 2015). Providing good and fresh quality food goods at low cost is positive point that plays vital role in consumer retention. Company has wider number of stores in almost every state, maintained by strong distribution network that assure that business goods is available simply to target market in effective manner. They are able to offer low cost products, the lower costs framework of company help it sell their goods at low price, making it affordable for people. Organization have wider asset base, which give it with better solvency. By having the skilled workforce Morrison strengthen their power they are able to serve its services or goods in large area, that happen only due to talented applicants in workplace.

Weaknesses-

The success of business is depending on availability of resources which they have, due to lack of effective online presence the enterprise suffers a lot. It creates major problem for organization, that affect consumer base and sales (Haleem and Jehangir, 2017). Because of company lack of online presence & convenience outlets, the decline in clients spending occur which make negative impact on Morrison business growth as well as longer term success within marketplace. Less consistency in consumers satisfaction is also issue for organization. As compare to TESCO and its competitors’ company has limited geographical reach that affect negatively. Lack of appropriate financial planning is another problem at Morrison regarding cash flows that impact on financial budgeting. Company lead to certain circumstances where there is not quite enough cash flow as needed lead to unnecessary unorganized borrowing. The firm also have low stage of current resources compared to recent liabilities; it creates fluidity issues for business operations.

Opportunity-

Technology developments or advancements give one of the best opportunities for Morrison as they can take benefit form this and increase profit margin rather than. It comes with range of benefits among several departments (Morrison, 2016). Operations in company will be automated to decrease costs, it allows better data to be gathered on consumers and enhance on marketing efforts. With the help of advanced technology firm is able to implement within overall business and increase operational efficiencies that support to gain competitive advantages as well. Company can use technology or new software to conduct research which make them able to gather relevant & proper information about current trends in market and preferences of people. They can use digital technology enhancement give chance to build strong and effective online presence that attract potential and new clients towards company, as it allows increase profitability. With the help of collecting data, production management manufacture products accordingly.

Threats-

Increasing competition within retail sector posses’ threat for Morrison, it put negative impact on company revenue and market share. Due to high competition in market, organization had to deal with major problems that affect business position. In simple words, rises in competition lead to reduced profit for company, they can loss its market share which is not suitable for business, they cannot be able to sustain for within marketplace. There are several struggles that Morrison face due to competition within retail sector as it has negative affect on growth of company. The competitors of firm try too hard to win greater share by cutting costs, lowering price, improving efficiency and innovating by either making new services and products or improving upon old ones. Competition tends to provide customers better product at lower prices. Furthermore, it gives people chance to switch to another brand who can offer the better-quality goods, it possesses threaten for Morrison.

Organization sustainable competitive advantage

Suitable competitive advantages are Morrison attributes, capabilities and assets that is quite difficult to exceed and duplicate; and offer favourable or superior long-term position over competitors. It needed for organization to thrive in current international environment, value investors search for business that are bargains. Without effective suitable competitive benefits business will not be able to recover from whatever triggered stock to become a bargain. There are different types of sustainable competitive advantages available for company which they can use for increasing profitability. It defines through suitable framework;

Porter’s generic model-

Porter’s three generic strategies focusing on making strategies that support to gain competitive benefits from three various bases. The two-common kinds of competitive advantage joint with scope of actions for which Morrison seek to achieve them, it led to three generic plans for achieving above average performance in retail sector; differentiation, cost leadership and focus, the focus strategy is divided into two variants, differentiation focus and cost focus.

Cost leadership-

In this strategy, company sets out to become lower costs producer in this sector, sources of cost benefits are depending and varied on structure of retail industry (Hunjra, Faisal and Gulshion, 2018). They include purist of economies of scale, preferential access to raw materials, proprietary technology and other factors. Cost leadership is developing competitive advantages by having the low cost of operation in organization. It often driven by business efficiency, scale, learning curve, size and scope. It is one of the best strategies that Morrison can use to gain competitive advantage in market and become a leader in market.

Differentiation-

In Differentiation strategy, a company seeks to be different or unique in their sector along some dimensions that is broadly valued by consumers (Shen and et.al., 2015). It chose one or more attributes that customers in retail sector perceive as essential, and uniquely positions themselves to match those requirements. When Morrison use this strategy, they rewarded for their uniqueness with premium price. It makes organization products unique in existing market and allow building consumers loyalty. Furthermore, by using this strategy firm has to make their products as exclusive as possible, creating it more good-looking than competitors do.

Cost focus-

When Morrison adopt this strategy, they can be led to cost advantages in their target segment (Uluskan, Godfrey and Joines, 2017). The third strategy of porter, is focus, it rests on choice of narrow competitive scope within sector. Focuser choice segment in industry and tailors their strategy to offering them to exclusion of others. This strategy has two alternates, such as cost focus and differentiation focus. When firm use this strategy, they have to select to target a clear niche market, through comprehension needs of consumers, they can assure that costs remain lower.

Differentiation focus-

It is one of the focus variants that help Morrison to lead competitive advantages and gain benefits within market place that is suitable for business (Sidhu and Mather, 2017). This strategy focus organization seeks differentiation in their target market. It includes strong brand loyalty among existing customers, it is very essential to assure that Morrison products within their supermarket remains unique in price and quality in order to sustain for longer and to stay ahead of possible competition.

Strategic recommendations based on above analysis and discussion

From above analysis, it has been summarized that Morrison face several issues due to political, social, economic, technology, environmental and legal factors. In order to deal with these major problems company has to take appropriate action. They are highly recommended to follow the rules and pay taxes according to changes in previous. To retain consumer for longer with business, company suggested to understand its consumer preferences. Through comprehension of people, their lifestyles, beliefs in community and segment of society Morrison can be achieve its business objectives. It would help produce and design goods and marketing messages that lead to organization becoming success.

To reduce the impact of changes in Employment policies and make business progressive, Morrison are recommended to modify their employment structure. Company must hire local people and provide all facilities that prevent workers from harm. They have to implement all changes in employment policy, offer training opportunity that help applicants to enhance their current skills and develop the new one.

To become a leader in retail sector and gain competitive advantages, company is suggested to adopt cost leadership. They must target broad market and offer lowest price with this strategy. Organization keep costs lower that help to retain consumer, it allows to attract the new ones. Company apply this strategy effectively as they have substantial investment capital at its disposal, low costs and efficient logistics when it comes to labour and raw materials.

Firm must adopt low pricing strategy; it helps them to keep competition out by being low cost provider. It supports to build brand loyalty and consistently retained people.

CONCLUSION

From above, it has been concluded that company is facing different problems after making changes in government policies, legal factors and technology as well. With the help of taking appropriate decision after considering the current environment within retail sector, Morrison is capable to gain competitive advantages. Furthermore, by adopting new technologies within their business organization enhance their operational and functional efficiencies.

REFERENCES

Cappelli, R., Montobbio, F. and Morrison, A., 2018.Unemployment resistance across EU regions: the role of technological and human capital(No. 1831). Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography.

Haleem, F. and Jehangir, M., 2017. Strategic Management Practices by Morrison PLC, UK. Analysis, Lessons and Implications.Middle East Journal of Business.12(3).

Hunjra, A.I., Faisal, F. and Gulshion, F., 2018. The Impact of Cost Leadership Strategy and Financial Management Control System on Organizational Performance: An Empirical Investigation of Pakistani Service Sector.The Lahore Journal of Business, Forthcoming.

Hyman, R., 2019. Unions and employment in a market economy: strategy, influence and power in contemporary Britain: by Andrew Brady, London, Routledge. 2019. 209 pp., ISBN: 978 1 138 48987 5.

Innes, M. and Morrison, B., 2017. Projecting the future impact of advanced technologies: Will a robot take my job?.InPsych: The Bulletin of the Australian Psychological Society Ltd.39(2). p.34.

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