Strategic Analysis Of Morrison’s UK – Horse Meat Scandal
The Aim of the Report
The aim of the report is to discuss the strategic analysis of the leading retail company namely Morrison’s UK. Wm Morrison’s is the fourth largest chain of supermarket in UK and company’s headquarter in Bradford, West Yorkshire, England. The company founded in 1889 with begun its business with egg and butter stall in Rawson Market. Until 2016 the Morrison’s stores located in North and south of England after the takeover of Safeway. Currently, the company has 500 stores across England, Wales and Scotland. 2017. The Company sells the grocery and food products through its own superstores, retailers and departmental stores (Morrison’s Corporate, 2018).
In February 2013, the company faces a horse meat scandal in its one of its stores that reduces its market share and company’s goodwill and puts a question mark on the company’s product freshness. One of its company’s stores delivered the frozen and rotten horse meat to the customer. The main purpose of the report is to analyze that how a company adopts the relevant strategies to get a good leading position in the market after this incident.
To adopt various strategies and framework company maintains the trust of the customers by delivering fresh and quality products into doorstep and these strategies help to increase the profitability and shareholders’ value in performance management system. The materials and findings for this report are taken from the historical information and journals of the companies that provide a deep understanding to the reader and researcher. The main limitations were found in this report is related to the data and relevant sources are not easily available and there is a very less availability of time to include all the information in the report.
Strategic Analysis
Company’s Mission
The company is a leader in supermarkets and retail sector in grocery and food industry in the UK. The mission of the company is to deliver “Very Best for Less” to the customers. It indicates that the company’s mission is to deliver the best and superior quality products at low cost. The company will provide the best quality, services, convenience in its products through innovative marketing and sales approach with the help of equipment, technologies, components and materials and contribute to the brand new industries and products for a better world (FFU, 2017).
Company’s Vision
The vision of the Morrison is to become the “food specialist for everyone”. The company’s vision is to deliver the great food that has great value in their daily lives. To achieve this, the company will improve the process of distribution, packaging and storing so that they can provide valuable products to their customers (Iijmsbr, 2018).
Morrison’s goal is to focus on the three major areas such as Fresh, Value and Service. Fresh indicates the company’s vertical supply chain management that sells food which is freshly prepared in store.
The company adopted the differentiation and cost leadership strategy to perform well in the strong competitive retail market.
Morrison’s built its own manufacturing factories to save the manufacturing cost. The company directly supplies the product to its own manufacturing units or factories. The company has 15 distributions centers or points and use its own transportation or logistics by 24 hours to deliver the fastest and fresh food to its stores. The company employed 3200 employees that provide the 35 million of fresh packs of fruits and vegetables every week for sale in all the stores of the company. The company lower down its costs in production, overheads, design system that lowers down per unit of cost to produce the product which directly benefits to its customers (The Guardian, 2017).
Morrison’s UK: Background and Operations
The company work on low-profit margins and high volume of sales that increases the revenue and turnover of the company. Additionally, the company lowers its costs through extra investments in facilities, equipment and skills of employees. The company positioned itself that “I am your new cheaper Morrison’s” at 1200 products and items in the stores across the stores and online. This campaign started with the name of DLKW Lowe that aims to capture the maximum market share in the country. The main strategic goals of the company are to lower down the cost and deliver quality products to the customers.
Value Chain Analysis
The value chain analysis consists of different activities
The Primary Activities
The major activities of Morrison’s value chain analysis include inbound logistics, operations, outbound logistics, marketing and sales services
- Inbound Logistics
The company’s inbound logistics is strong due to its own manufacturing systems and in-house stores that reduce the supply chain management lead time reduced and it enhances the freshness of the products in-store and reduces the waste and cost of food. The company also focus on the First in First out (FIFO) methods and Last in Last out Method (LIFO) to improves the inventory management and cost and also reduces the human errors in the system. The company owns the modern fleet and transport methods to ensure fast and safe delivery of materials round the clock. There is also a good relationship with its suppliers throughout the country that ensures the timely delivery of materials at any cost and any time. Economies of scale due to huge operations of the company around 525 stores in the country and it are the major element of value creation for Morrison’s (BBC, 2018).
Operations
Morrison’s operations are categorized into different segments
- Retail Stores: this is the major business of the Morrison’s UK. The company has more than 80 million customers made through different Morrison’s shops in various strategic locations of the country. The scope of Morrison’sretail operations is wide and extensive. The company sell and operates its stores through the following channels (Hitt, Ireland & Hoskisson, 2012).
- Supermarkets:In the supermarket chain, the company sells its grocery and food products at a larger The availability and timings of the stores are flexible and varieties of the items are more in supermarkets and it presents the main areas of the city.
- Grocery Shops:In these shops, the company sells the limited number of groceries and food items according to the design, size and demand of the stores. It is located in the main residential areas and offices so that the customers can purchase its daily needs products easily. It is operated through a franchise model (Vogel & Güttel, 2013).
- Outbound Logistics
The outbound logistics of the company is based upon the cost-effectiveness and flexibility. The company offers several home delivery options to the customers through its online purchases from its company’s website. The company charges the GBP 1 subject to availability of slots. The company runs the Delivery Saver plan that offers unlimited free grocery delivery for one month and free next day “click and collect plan”. These offers are applicable for the customers who purchase minimum of GBP 40 and GBP 4 will charge on all grocer orders under GBP 40 (Hill, Jones & Schilling, 2014).
- Marketing and Sales
“Delivers fresh and best at little prices” is the main marketing communication message of the company. The main marketing and sales strategy of the company to provide fresh and quality products to its customers that create value for them. Currently, the aim of the company is to restore the stakeholders trust towards the brand its brand image. The company improves its brand image through mouth publicity and personal selling concept as the customers improved its brand image by experiencing the quality products at low cost.
The company also used the TV commercials and nonelectronic sources like magazines, newspapers and pamphlets. Morrison’s also sponsored the various events and activities at peak seasons that increase the visibility of the brand due to more audience participated in the events at peak seasons (Eden & Ackermann, 2013).
- Services
The Horse Meat Scandal and Its Impact
It is an important and last part of the activity that increases the value of the product and ensures the successful distribution, feedback and customer response. Once the products are purchased by the customers the feedback and services regarding the product are an important aspect of the company to enhance its value. The company adopted the low-cost strategy and differentiation strategy by launch its Fresh Food Academy and Fresh Value products (Hitt & Duane Ireland, 2017).
Support Activities
Morrison Support activities refer to the company’s procurement, human resource management, technology and infrastructure
- Procurement
Procurement is related to the purchase of products and materials from its suppliers and reduces the cost of distribution and logistics. The company has a good relationship with its suppliers and they always committed to deliver the quality service to the company. Moreover, the company uses the electronic point of system and SAP ERP to make the operations efficient and smooth.
- Human Resource Management
In the retail market, the competition is high and the employee turnover is also high due to the sake of good incentives, facilities and promotions offered by the other retail players in the market. The company employed the skilled and experienced executives’ at every level of management so that they can lead and handle the team effectively at al functional levels of management. The company launched the training and development program namely Fresh Food Academy for employees to enhance their skills (Ginter, Duncan & Swayne, 2018). Moreover, company introduces the employee forum policies where they can raise their issues and concerns with a particular department. The company also provides competitive pay structures, benefits and perks to talented employees.
- Technology
The company used the Electronic Point of Sale (EPOS) system and Drive planning system to ensure the supply in time and more efficient. The company also used the electronic Payroll System, HR activities System and websites that provide the overall information about the products, services and offers that clearly inform the overall management and its customers (Wheelen, et al., 2017).
- Infrastructure
Morrison’s used the vertical supply chain business model with the help of its experienced and skilled management. The company’s sound financial structure and good relationship with its suppliers help to get the primary support activities. The core competencies of the company are vertical market integration, unique promotions through sponsorship and CSR activities that enhance the visibility of the company in the market. The company promote its products through different campaigns like Sun Media Promotions, Collector card Scheme and Let’s Grow Campaign helps to attract and retain its customers that enhance its revenues and sales in the industry (Ward, 2012).
Porter Five Forces Analysis
The threat of New Entrants (Weak)
In the retail Industry it very difficult for the new player to enter into the market due to tough competition, huge resources and set up, strong market research and good capital structure is required for the company to beat the leading players in the market. Morrison’s is already a leading player in the UK retail market and it is very difficult to give the completion the brand retail player. The company already have strong supply chain management, in-house distribution and manufacturing systems and innovative products and services at low cost makes the dominant position in the market and threat for new entrant for Morrison’s very low (Keupp, et al., 2012).
Strategic Analysis of Morrison’s UK
Bargaining Power of Suppliers (Moderate)
The company has a strong relationship with its suppliers and the company’s own distribution and manufacturing systems increased the bargaining power of suppliers. The company builds its efficient supply chain with multiple suppliers. The company’s business mostly depends upon the suppliers so that they can provide the best services and rates to their suppliers to ensure continuous services. The company purchases some of the raw materials from the third party manufacturers at the time of peak seasons and high demands.
Buyer Bargaining Power (Strong)
Customers remain strong in the retail industry as they have the many alternatives to get the same products and quality at low prices from its competitors. In this scenario, the company has the pressure to sell the products at a low cost to the customers to maintain its profitability. The companies continuously provide the new offers and discounts to its customers and streamlined the process to retain its customers. In this manner, it increases the bargaining power of customers and pressure on the company.
The threat of Substitutes (High)
The threat of substitute is high n the market as there are many big players in the market like Tesco, Sainsbury, ASDA, Lidl, Alda and Netto provides the same products and service at competitive prices and offers good discounts on bulk purchasing and different verities of products. It also provides different services to buy customers such as online and offline channels (Lasserre, 2017). The company retains their customers due to fresh products at low prices. But still, the pressure to increase its customer base is high on the company.
Rivalry among existing competitors (High)
The competition in the retail sector is very high and many leading players provide the exceptional services to their customers at any cost. The companies also promote its products and services in a different manner to gain the maximum market share. The company needs to increase its market size and differentiation to compete in this industry and building a sustainable differentiation so that the company competes better in the long run (Renz, 2016).
Management System
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Financial Goals |
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Strategic objectives |
Parameters |
Future Goals |
Action Plan/Implementation method |
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Increase its competitiveness in the market by improving its sales in the remote areas as well |
Increase sales in the remote market to 5% |
January 2019 |
The company review its sales plans and tie up with local suppliers and small shopkeepers to sell its quality products to its customers and deliver value for them. |
|
To increase the cost savings |
Decrease costs by 3% |
February 2019 |
To improve the in-house distribution facilities and find local solutions to sell products that benefit each store’s community. The company opens the mini-stores at petrol stations and nearby traffic areas so that it reaches every customers mind. |
|
To generate good revenue |
Increase revenues to 10% |
Sep 2019 |
The company diversify its presence in the local and remote areas and reduces the transportation and logistics cost by stock its materials in stores and sell fresh quality products at low prices helps to attain the objectives of the company. |
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Customer Centric Goals |
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Strategic objectives |
Parameters |
Future Goals |
Action Plan/Implementation method |
|
To attract more customers in every area |
To build 30% new customers |
March 2019 |
The company will partner with local merchants and shopkeepers and stock its materials to mini stores for sale at low prices in remote areas to build new customers |
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Increase the satisfaction level of customers |
To increase by 80% |
January 2019 |
The company effectively monitors the feedbacks of the customers like delivery problems, fresh products are not available at all stores and stock availability issues for bulk orders. The company set up the team who only handles the customers’ feedback in a week and manages the resources in a company. |
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Growth Prospectus |
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Strategic objectives |
Parameters |
Future Goals |
Action Plan/Implementation method |
|
Provide training to all staff on software and gadgets |
Staff gets 100% training on all devices and gadgets |
July 2019 |
The company aims to provides one-stop shop and give them more on their expectations so the company install the robotics and AI on high-value stores so that customers can easily address the queries and provide mobile charging facilities and gaming zone at the time of long Queue |
|
Give appropriate training to front staff and cash counter employees |
Ensure 100% training to their cash counter employees and front office staff |
January 2019 |
The company provides training and certification to the front office employees regarding good customer service skills |
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On the job training and certifications for the experienced employees in a year |
The company provides on the job training and certifications to 40% experienced employees in a year to upgrade their skills |
January 2019 |
The company provides the educational offers to and executive courses online at less cost so that maximum employees can enroll in the training and increase their knowledge in core areas. |
|
The company sends the executives for Global retail annual convention seminars |
Every year company sponsor one senior leader to participate in annual convention |
December 2019 |
Every year company sends their executives for Global Retail Annual Convention to gather the knowledge and strategies adopted by the leading retail organizations in the world and implement important knowledge in the process of management. |
It has been identified from the planning and designing of the company’s goals and objectives, the company recognize the three important Key performance indicators that need to be strategically prioritized due to below reasons.
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KPIs |
Reasons |
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Increase the satisfaction level of customers by 80% |
The customer is the main area of focus of any business so it is important for the company to satisfy their customers at maximum level at any cost otherwise the company cannot penetrate or survive in the competitive industry. |
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Staff are 100% trained and qualified in their domain areas |
The company ensures that their front office staff is highly trained and qualified so that they can address any issue of the customers in an efficient manner. In the retail industry front office, role is important due to direct interaction of customers with them so they are fully trained and sophisticated. |
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To generate good revenue by 10% |
The main objective of the company is to increase the revenue of the company through lowers the cost of operations and deliver exceptional service to its customers. It is important for any business to generate good revenue for further expansion in the market |
Alignment of Strategy
Conclusion
As per the analysis of the Porter Five Force Framework model, it is identified that competition in the retail market is fierce so the company needs to expand its services and enters into the product differentiation market that helps to sustain in the long run. The company should invest in the R&D activities and employees skills so that they can provide the exceptional services to its customers as compared to its rivals. It is also depicted that buyers bargaining power is high so that the company should invest in the latest technology such as Artificial intelligence and robotics technology that provides the efficient and quick services to their customers during peak hours.
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