Introduction
Morrison PLC is one of the UK largest food and drink retail stores. Headquartered in Bradford UK, the firm offers a variety of food merchandize ranging from fresh vegetables to packed fish and meat (Wm Morrison Supermarkets PLC, 2013). Morrison is currently the fourth largest grocery chain store in terms of sales revenue and annual turnover. In addition, the firm boasts of over five hundred stores across the UK including over twelve convenient set-ups. Besides, the firm’s major clientele consists of individual buyers, businesses as well as institutions that majorly purchase bulk fresh products (Wm Morrison Supermarkets PLC, 2013). Currently, the firm competes with major retail chains including Tesco, Sainsbury and Asda.
The main purpose of the report is to examine the current strategies of Morrison in an effort to provide excellent customer services. First, the report will identify sources of the firm’s competitive advantage originating from internal factors. Second, the report will identify future prospects of Morrison based on industry’s economic trends and the manner in which competitive forces influence operations of the firm. Finally, the report will provide clear future objectives of Morrison in form of recommendations depending on the current reality and future prospects.
Sources of Competitive Advantage
Focus on the Provision of Fresh Products and Dedication to Environmental Sustainability
The dedication of Morrison to provide fresh products to clientele is one of the critical actions that differentiate it from competitors. The firm has been dedicated to provide its clientele with quality fresh products, which are majorly sourced locally. In addition, Morrison has increased the awareness of its brand through the provision of fresh products and commitment to environmental sustainability (Wm Morrison Supermarkets PLC, 2013).
Well-developed Supply Chain
Morrison has well developed-supply chain, which ensures constant supply of products to the clientele. Highly trained and skilled personnel with increased qualifications in the supply chain management control the supply chain. The major role of the supply chain department is to add value to the final products delivered to customers.
Highly Trained Personnel
The highly trained and dedicated workforce remains critical in the provision of excellent services to clientele (The Times, 2014). Morrison emphasizes on the employment of skillful employees within major services delivery areas. For instance, the firm focuses on the employment of skillful bakers, grocers, butchers and fishmongers among other important skillful employees. Besides, the firm is proud of offering career development opportunities in various areas ranging from logistics to marketing and finance (Hill & Jones, 2012). Morrison’s dedication to career advancement through training and other internal strategies are geared towards enhancing the customer services delivery.
Reasons for Sources of Competitive Advantages being Sustainable to the Firm
Attaining Sustainable Competitive Advantage through Skillful and Trained Personnel
As indicated, high quality customer services is a significant capability through which the firm is differentiated from competitors (Aiginger, 2006). In Morrison, customer services delivery is attained through developing well-trained and motivated workforce that can work effectively in a highly competitive market. The firm’s long-term sustainability depends on skillful and dedicated workforce. Besides, the firm believes that its capabilities improve with the growth and development of the workforce (Wm Morrison Supermarkets PLC, 2013).
In addition, Morrison emphasizes on continuous training of personnel including in-store butchers, fishmongers and bakers to ensure quality of final (Wm Morrison Supermarkets PLC, 2013). Constant training of personnel in turn ensures greater degree of customer satisfaction, which creates a significant competitive advantage to the firm. Besides, Morrison believes that high quality services add value and improve the customers’ experience. In addition, personalized quality services make customers feel valued (The Times, 2014). Morrison achieves this through investments in training and developments of workforce on the best quality customers’ services delivery.
Attaining Sustainable Competitive Advantage through Well-developed Supply Chain
In order to ensure continuous supply of fresh products to the clientele, the firm greatly controls its supply chain. In other words, well-developed supply chain ensures constant supply of fresh produce to clients. Essentially, the supply chain originates from the local firms where fresh produce is sourced. Once the fresh produce has reached the firm, the supplies are processed within factories and finished fresh products are supplied to various stores around the country. In other words, fresh produce from the factories are delivered to warehouses and packing plants to be supplied within both UK and internationally (Wm Morrison Supermarkets PLC, 2013). The vertical integration of the supply chain ensures quality, convenience and satisfaction to clientele, which in effect increases the competitive advantage.
Attaining Sustainable Competitive Advantage through Provision of Fresh Products and Dedication to Environmental Sustainability
The firm is dedicated to provide fresh food to clients. Besides, the firm process fresh supplies from the local farms and clients are free to make orders directly from the stores. Besides, the dedication and emphasis on the provision of fresh products to clientele is critical in ensuring quality and value critical in satisfying the needs of clientele. Moreover, the fresh products considered by clientele as of superior quality are critical in satisfying the needs of customers. In addition, Morrison supports local communities and farmers in areas concerned with the protection of environment. The relationship that the firm establishes with local communities is critical in building long-term and sustained growth (Wernerfelt, 2004).
Morrison Economic Realities
The slump in economic growth of UK and hard trading conditions remain the greatest challenge facing normal operations of Morrison. The inflation rates have stood averagely high with aggravated effects on food prices. Due to economic pressure, clients are becoming increasingly perceptive on what to shop, where they are supposed to shop, when and how they are supposed to shop. Essentially, the consumers are now trading down and utilising vouchers to buy only what is needed (Wm Morrison Supermarkets PLC, 2013). In addition, the consumers are increasingly using online sources to check prices of items and shop around for greater deals.
Despite the continued economic pressure, the firm has prospects for future growth. Morrison has continuously recorded growth in the past three years (Wm Morrison Supermarkets PLC, 2013). The firm has sustained its growth due to continuous dedication towards providing exceptional blends of value, freshness and quality to customers. The strategies that have been put in place by the firm help the firm to increase benefits despite economic huddles faced by the firm and the industry. In addition, strategic initiatives by the firm have increased its efficiency and ability to secure new growth opportunities to deliver enhanced long-term value to the customers (Wm Morrison Supermarkets PLC, 2013).
The Competitive Five Forces that Affect Morrison
The Customers Bargaining Power
Morrison has recognized the power of clientele in normal trading circumstances. Ideally, customers have greater bargaining power when they are scarce and capable of buying greater quantity of the firm’s products (Dunning, 2003). In addition, the bargaining power increases when consumers can easily substitute the products with other firms’ products and when many firms offer similar products. Morrison understands that its products can easily be substituted with similar products offered by competing firms weakening its market share. Besides, the firm’s clientele are the end users and have the capability of buying in bulk thereby dictating the purchasing terms (Davies & Ellis, 2010).
In addition, many retail firms are competing to expand their market share. As such, Morrison’s market control weakens. In essence, customers can choose to buy from Morrison or other groceries. Under such scenarios, the buyers’ power is quite high since they have a wide array of choices (Hoskisson et al., 2009).
Bargaining Power of Suppliers
In the groceries and retail industry, suppliers can easily change and offer supplies to another retailing firm. Furthermore, it is often costly for Morrison to switch between supplying companies. These characteristics make the bargaining power of suppliers rather high (Ambrosini, 2007). Essentially, Morrison understands the power of suppliers and has greater control of its supply chain, which provides increased competitive advantage (Cardeal, 2012).
Recommendations Customers Services Objectives
Depending on the current trading and economic situation, the firm should focus on three major objectives
- To develop and build online groceries stores
- To increase the convenient stores in areas where they are not present
- To continuously increase the value provision to the customers
Recommendations Customers Services Strategies
The firm should focus on building and developing online sales. The UK online grocery markets have increased potential for growth. Studies indicate that online grocery market grew by over 15.8% in the last one year amid extreme economic challenges and decreased consumer demands. In addition, online market accounts for over 4% of the total market share. Besides, the expectations are that online grocery retail will have double growth in the next five years. As such, Morrison should take advantage of the growth opportunities in online groceries market and focus on aggressive development of online shops that offer increased buying opportunities for its clients.
Besides, Morrison should continuously develop convenience stores in areas where it has no presence. The demand for groceries and other consumer products are increasing with easy access to convenience stores. The development of increased channels will ensure improved customer convenience and an augmented market share.
Most importantly, Morrison should focus on increasing the value of its products. Quality products remain critical in the attraction and retention of customers. The firm’s strategies should revolve around ensuring quality that differentiates the products from competitors.
Recommendations Customers Services Feedback
Once the strategies have been implemented, it is critical to get the customers’ feedback. Feedback is critical in the performance evaluation of the strategies. However, in this case, feedback will be measured through exit surveys in major stores of the firm as well as gathering the customers’ recommendations and observations.
The product life cycle
Morrison products are presumably in growth stage of the life cycle in which the target clients have full knowledge of their existence. Moreover, the firm is constantly realising increase in sales. In addition, the firm’s products are continuously penetrating through the market niche. Besides, the firm is still expanding in terms of distribution channels. In other words, the firm is still working on promotional and distribution strategies to ensure that products reach target clients.
Five-forces
The Customers Bargaining Power
Customers have greater bargaining power when they are scarce and capable of buying greater quantity of the firm’s products (Dunning, 2003). In addition, the bargaining power of buyers increases when they can easily substitute the product with another firm’s product. In the groceries and retail industry, the customers’ power is high.
Bargaining Power of Suppliers
As indicated, suppliers’ influence increases when their deliveries are scarce. In addition, the suppliers power increases when they can easily switch to another competing firm or vertically merge to form a contending firm (Cardeal, 2012). In the groceries and retail industry, suppliers can easily change and offer supplies to another retailing firm hence the suppliers power is high.
Threats of New Market Entrants
The ever-increasing competition compels firms to incur additional expenses in sustaining trademark devotion as well as marketing products. Most importantly, the presence of outstanding delivery chains, localities and trademark as well as other capabilities provide the advantage of warding off potential competitors. Conversely, given the indifferent nature of customers in the industry regarding brand differentiation, there are low entrance hurdles.
Competitive Rivalry in the Industry
The industry in which Morrison operates is highly competitive. However, due to various capabilities, establishment of operations in the industry is uncomplicated. In other words, the firm utilizes its excellent customer service capabilities to increase its competitive edge over other firms (Hill & Jones, 2012). In addition, the increased competition in trade reduces the share of market controlled by Morrison as well as prices of products.
Threat of Substitute Products
Players in the retail chain industry offer diverse similar products. In essence, the consumers are offered with a variety of products and firms to choose from. In addition, competing firms offer convenience and low prices thereby augmenting substitute threats. Moreover, online shopping alternative is on the increase. Essentially, the sprawling of various alternatives presents the firm with frantic operations.
SWOT Analysis
Strengths
As indicated the firm’s strengths are on its capabilities. Over the years, the firm has built its distinctive capabilities that offer increased competitive advantage over other firms. The capabilities include highly skilled and trained personnel, quality fresh products and excellent customer services.
Weaknesses
The competing firms can easily adopt the strategies employed by Morrison to develop its distinctive capabilities. In other words, strategically, the firm is not strong enough to cope with new challenges emerging in the market.
Opportunities
Morrison can utilize its capabilities to exploit various opportunities available in the market. In fact, the growth in online groceries retail market offers a novel opportunity for the firm to exploit. In addition, convenient stores provide increased opportunities for the firm.
Threats
Apart from intense competition, the firm is facing the threat of decreased consumer demand due to persistent slump in the economy. Besides, there has been constant threat of substitute products offered by competing firm.
PESTEL Analysis
Political
Like any other industry or business, Morrison requires politically stable environment in order to achieve its goals. The firm’s major operations are within UK, which enjoys political stability and the government supports growth of businesses.
Economical
As indicated, the incessant economic slump has negative effects on consumption (Bowman, 2009). The disposable income has reduced considerably and few businesses are transacted. As a result, consumers spending have considerably reduced, which largely affect businesses.
Social
Morrison continuously aligns its products with the target market needs including age and culture. The emphasis on the provision of fresh produce sourced locally has been associated with keeping up with traditional menus and considered by most clients as of superior quality. Besides, the firm’s prices are equal to the quality of the products provided to the customers.
Technological
Technology is integral for the success of the firm’s operations. In fact, Morrison will depend on the current technological advances to develop its online shops and take the advantage of growing online markets. Currently, the technological environments have positive influence on firms operations
Legal Environmental
Legal factors are critical for establishment and operations of the firm (Hill & Jones, 2012). Morrison must comply with legal requirements of the country in which it operates. In other words, Morrison can only open its businesses in situations where the legal framework supports its business operations. UK legal procedures support the development and growth of businesses.
References
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Wm Morrison Supermarkets PLC (2013). Annual report and financial statements 2012/13. Web.