Company Strategies Wm Morrison Supermarket Marketing Essay

Company Strategies Wm Morrison Super commercialize Marketing EssayBackground of Wm Morrison super securities industry PLCWm Morrison Supermarket Plc is the UKs 4th biggest retail super market founded in 1899. The go with distributes goods, owning and operating around 120 supermarkets and larger superstores. These ar mainly based in the north east of the UK, although the caller-out has been expanding into the south. The majority of its supermarkets also fetch petrol stations on their forecourts, offering discount fuel to customers. In attention deficit disorderition, the company offers an in store discount card, Morrison Miles, al down(p)ing customers to catch points on their groceries and claim discounts on fuel at these stations. The company has a number of subsidiaries, including Farmers Boy Limited, Holsa Limited, Neerock Limited, W. Todd (Potatoes) Limited, Farock Insurance Company Limited and Wm Morrison Produce Limited. The principal activities of its subsidiaries hold t he manufacture and distribution of fresh food products, insurance assists, poly accordinglye bag manufacturing, produce packaging, fresh kernel processing and market trading. It displays more than twenty chiliad assorted products in its stores, including an extensive own label range. Majority of the brands it sells are its own, amounting to 55%. With the acquisition of Safeway, Morrison is expected to prepare around 425 stores throughout the UK. Due to the differing spirit of Safeways estate, Morrison pull up stakes expand its store format to incorporate mid-sized and smaller stores, retaining the Safeway brand for convenience stores. Certain acquired stores will also be selected to gain the Market path format seen in the Morrison store. The company has an annual turnover of 14 billion, with more than 10 million customers, 15.6% of the UK market place market share and 124,000 employees. (DATA MONITOR 2004)Over belief of the companys dodgeWm Morrisons supermarket Plc has thre e distinct strategies which areValue- Keeping addresss low to ensure the prices are emulous. This is d one by offering to all its consumers with an exceptionally ruff price everywhere they are.Freshness- the company offers more freshly prepared food than any newborn(prenominal) retailer. This is achieved through vertical integration beca function it manages nearly every grimace of its craft functions internal, involving meat processing, fresh food, fresh fruit, vegetables and transport. The company does all the distribution of its products bought in its stores to customers. Fresh products are delivered into its warehouses under a controlled temperature and plants for packing local and overseas engraft for forward despatch to their stores nationwide. The company has its own purpose built fresh food plant (factory) called Farmers boy that produces pizzas, cooked meats, pies, packing cheese, sausages and bacon. It also has facilities of processing its meat before sending them to their stores. It manages its own transport fleet.Service- Ensuring the right product is always available, the system of great selling and service for customers adherence (http//www.morrisons.co.uk).In Michael Porters generic dodge terms the company uses a low cost dodge Porter (1980). But in Ansoff product matrix term the company uses pe webration strategy, i.e. existing products and markets with an improvement and streamlining of processes in order to compete. In terms of expansion strategy the company uses organic growth in that it sets up factories and farms to produces everything it sells. sound judgment of the company current strategyGrowth in excess of the marketMeasuring of success200720082009gross r planeue growth (exc-fuel)5.24.67.9Market growth rate4.03.55.6Sales growth in excess of the market1.21.12.3This is further represented on the graph belowUnderlying basic earnings per share (pence)200916.7200814.420078.3Total dividend (pence per share)20095.820084.820074.0 ele vate AnalysisMorrison has benefited substantially from the introduction of the Market Street format to its retail outlets. Its revenues wipe out recorded strong increases for a number of years. However, increased regulation of the grocery market and intensifying competition pose signifi adviset future threats.StrengthsSubstantial northern presence and expansion of manufacturing capabilitiesLong-standing management teamHigh service standardsWeaknesses habituation on UKUncertainty over long-term outcome ofMergerLower calibre Safeway estateLabour intensive Morrison modelOpportunitiesDiversificationSynergies from Safeway merger restroom store expansionThreatsCompetitive environmentRestaurant expansionPrice warsShare price actanceMORRISON Share Graphhttp//www.lse.co.uk/ShareChart.asp?sharechart=MRW2.0 NATIONALISATION AND GLOBALISATION OF Wm MORRISON SUPERMARKET PLCThe decision to nationalise retail supermarket like Wm Morrison supermarket Plc and further to the spherical markets is v ery significant since it is a means of expanding the companys operations, diversify its investments as a first of risk reduction strategy and increase in profitability. However, consideration has to be given with regard to the nature and the type of strategy (ies) to imbibe in these environments. It is for type necessary to consider what type of product (s) to produce and sell, and whether these products will be acceptable in these markets. The company needs to be familiar with the target environments and the countries it wants to enter. The conditions of the market mustiness be assessed to ensure that Wm Morrison can win a share of both national and the foreign markets. Issues such as the economic conditions, political situations, complaisant issues and the levels of technology in these markets will have to be ascertained by the use of PEST (PESTEL) analysis, the combative nature of the markets which five forces model analysis can be take oned to assess the levels of competi tion existed in these markets (Porter 1980), as well as Tariffs, duties and compliance with rules and laws are other vital issues to be considered also. Wm Morrison will have to conduct its own organisational audit with the use of SWOT analysis to assess it intensity levels, weaknesses, opportunities and threats so that strategies could be developed geared (towards) that.The development of a required organisational processes and allocating of appropriate resources to national and global effort normally requires creating an independent departments (for export) within the organization. Though, this may be expensive when overheads and other liabilities are considered. It may conduct a considerable number of years to develop a sizeable market share. As a consequence corporation in a form of strategic alliance with other retail supermarkets could reduce dramatically the timing to establish in these foreign markets3.0 COMPETITIVE ADVANTAGEThe concept and interest of competitive favor s tarted legion(predicate) years ago but never became popular until the 60s of the twentieth century that the concept spread out when Edmund Learned Kenneth Andrews mentioned SWOT analysis denoting strength as a competitive gain (Schendel, 1994). Competitive expediency as an organizational competence and ability to perform in one or many ways that other competitors find it difficult to imitate now and in the future (Kotler, 199753 Kotler, 2000). Nevertheless, for the Wm Morrison supermarket to compete in these target markets, it has to develop a strategy that will be unique and difficult to be imitated by other players in both the national and the global markets.Porter (1985) recognized competitive advantage as a strategic goal that is a dependent variable and the rationale behind this is that the good performance is relate to achieving a competitive advantage (Read Difillipi, 199090). Others see competitive advantage as an ability to produce products or offer services opposite to what competitors do, by utilizing the strengths that organizations possess so as to add value in a way that competitors find it difficult to imitate (Pitts Lei, 196868). It can be assumed that competitive advantage is a relative quality that organizations claim to possess through which they can exceed their rivals performance, and achieve long lasting benefits as perceived by clients. It is believed that the framework presented by Michael Porter is one of the most well-known tools that are used in theoretical as well as empirical research, since it pays an emphasis on all the activities carried out by an organization with respect to its external environment.Competitive business organization strategyCompetition in Global environment which was written and later on edited by Michael Porter Porter (1986) is a means to study and an attempt to systematizing global business development. Porter analyzes a firms global strategic options by concentrating on two concepts allocation and c oordination. By allocation he meant globally distributing and allocation of the value chain activities. On the other coordination refers to the coordination amongst the distributed bases.He explained global strategy as a strategy to achieve a global competitive advantage through concentrated allocation or coordination of distributed activities, or both (Porter 1986, p. 35) and indicated that for puritanical understand of competitive advantage concept of a global strategy or the cause of globalization of a firm, Mw Morrison should identify the circumstances for achieving cost reducing or differentiation by globally focusing on the operations or coordinating the distributed activities. He emphasised that such situations are (1) immediacy to markets (2) economies of get over and experience effect (3) effective consolidation and coordination of activities and (4) comparative advantage of each country.Global competitive strategy gives a company with the estimations to generate an off ensive and / or defensive position in the global markets whereby yielding greater returns on its investments. According to Porter a company must adopt a competitive strategy to win advantage competitively over its rivalries. Competitive advantage is something that gives a business an edge over its competitors in the products/ services it provides (offers). Companies have unearthed different approaches to this end, and the most significance of the strategy for a particular company is eventually a unique design reflecting its special situation.Competitive National business strategyAnsoff matrix for strategyNewMarket2. Market Development4. Market Diversification flowing Market1. MarketPenetration3. Product DevelopmentCurrent ProductNew ProductAnsoffs Marketing ModelAdopted from Ansoff (1957)According to Ansoff (1957), Wm Morrison supermarket may decide choosing one of the four product-market growth strategies which are shown on the plat above. They consist of market penetration, market development, product development (diversication). But Ansoff however suggests that the safest of these growth strategic options is to adopt a market penetration strategy. With this strategy Wm Morrison could gain more usage from its existing consumers and moreover seeks to attract refreshing ones in their existing market.On the other hand, Ansoff indicated that the slightly riskier option will be to take the market-development strategy of attracting new kinds of consumers for the present produce of the business from either new channels of distribution, or new geographic areas.Wm Morrison as an alternate may a strategy of product development, by developing completely new products, diverse versions of existing products or quality at different levels of current products to be interchange in its existing markets.The final strategic option in Ansoff terms Wm Morrison can be and is also the riskiest strategy overall is the strategy of diversication. With this Wm Morrison supermarket will have to develop completely new produce for new markets. This is very costly because the company has to abandon what it is producing and selling presently.In the writings of Hangstefer (1999) in order for Wm Morrison to shape growth drive, its managers should persuade innovation in their core strategy. And this should focus on factors such as the re-dening of markets or the development of products and services. Even though Hangstefers view is partially consistent with that of Ansoff. According to Hangstefer Wm Morrison should embark on the most basic product-market growth options by indicating that a more innovative approach would be for the business to employ a growth strategy involving a number of combinations of variables. Hangstefer cited Manchester United PLC as an example, which is the holding company of the Manchester United Football Club. It has pursued growth opportunities related to their core business, as well as through new businesses, for instance Manchester United Merchandising and Manchester United Catering.Boston consulting group (BCG ) growth share matrixThe BCG matrix is a technique use for growth, particularly for multi-divisional or multiproduct companies such as Wm Morrison supermarket. The organisations divisions and or products compromise the firms business portfolio. The portfolios root can be crucial to the development and achievement of the firm. The matrix looks at two variables, which are market growth rate and relative market share. The ground substance evaluates a firms position regarding its products range. This will help Wm Morrison to consider its products and/ or services in order to make decisions concerning products and services that need to be kept or removed and additional investments it has to make in furtherance to participating fully nationally. Shown on the horizontal (y) axis is the market growth rate while on the vertical (x) axis is the Relative market share (Henderson, 1979).The BC Groups Growth Strategic ma trixStarsDisaster sequence immediate payment consumerCash neutral achiever sequenceInvestProblem Children(Question marks)Large negative cash flow?AnalyseCash CowsLarge positive cash flow drawDogsCash consumerModest cash flowDivestRelative Market ShareAdapted from Hedley (1977), p12Wm Morrison may have to classify its products range according to the quarter-circle in order to decide the way forward.Question Marks (High growth/ Low relative market share)These are Wm Morrison produce which grow quickly and as a consequence lead to high cash consumption, however they dont generate enough cash since they have little market shares. The effect is huge net cash spending. A question mark may have the possibility to grow in market share and turn into a star, and finally a cash cow as soon as the market growth slows. It may turn out to be a dog when the market growth declines, if it doesnt develop to be a market leader. The company may need to analyse cautiously to decide if they merit the inv estments it requires to growing market share. These are the strategies to adopt for question marksMarket penetrationMarket developmentProduct developmentThese are all extensive strategies /or divestmentSTARSThese will be Wm Morrison products that are seen as market leaders in high growth industries. However, it will have to spend to sustain development and to protect the leadership situation. Stars are normally only slightly lucrative but as they attain older position in their life cycle and development slows, proceeds grow to be more attractive. The stars offer the foundation for lasting growth and productivity.The strategic options for stars may involve integration, forward, backward and horizontal, Product development, Joint venture, Market penetration and Market development.Cash Cows (Relatively high market share/ but Low growth rate)Cash Cows are the more lucrative produce in the portfolio that must be milked. The condition is often been boosted by economies of scale which coul d be at that place with market leaders. Cash Cows might be used to finance the operations in the other 3 quadrants. It is enviable to sustain the strong stands as much as practically. Product development concentric, diversification if the position weakens as a result of loss of market share or market contraction then options would comprise reduction of expenditure (or even divestment)DogsDogs comprise a low market share and a low growth rate and neither provides nor consumes a huge sum of cash. Dogs are however, cash traps since the cash locked up in the business that has little potential. Such products are candidates for divestiture.Options areReduction of expenditure (if it is thought that it could be revitalised)LiquidationDivestment (if someone can buy)It should however be storied that productive products could well go from question mark through to star, to Cash Cow and at last to Dog. Fewer flourishing products which never gain market position may move directly from question mark to Dog (Hofer Schendel, 1978)Competitive Global business strategyWm Morrison supermarket can enter into the global markets by adopting Porters generic strategy which he indicated that a firm may decide to pursue either low cost strategy or differentiation strategy. Porter indicated that companies cannot pursue the two strategies at the same time but rather one at a time.Cost Leadership dodge focuses on attaining low costs relative to its rivals. Reducing costs result to lowering prices, that can raise demand for products and /or services, but if the product or services cannot be produced at a lower cost then it will rather reduce profit margins. For Wm Morrison supermarket 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, equipme nts and employees skill.On the contrary, Differentiation Strategy concentrates on creating exceptionality products such that the firms products and services are obviously distinguished from that of its competitors. In other words, the focus is on creativity and innovation that have long been recognized as crucial for bringing the needed change to obtain the competitive advantage (Dean, 1998). The Porters competitive advantage has given rise to Schuler and Jackson (1987) come out with three competitive advantage strategies that Wm Morrison can adopt to achieve competitive advantage by embarking on Quality enhancement, Cost reduction and innovation.Apart from Porters pronouncement of how to enter global markets, there are other means by which Mw Morrison can enter global market for instance, green field, acquisitions, joint ventures, franchising, licensing, etc.When establishing acquisitions, joint ventures, franchising, licensing, etc. it is very grave to locate a reliable partner. Any of these strategies may require a due diligence exercise in the global markets in order to perform checks and balances to ascertain how satisfactory the foreign partners may cater for the needs of both the firm and its customers.5.0 STRATGY IMPLEMENTATIONMcKinsey, (1980, p. 31) developed 7s model which Mw Morrison supermarket could adopt to implement its strategies. This model will assist the company to assess its strategies, structure, systems, skills, style, staff, synergy (shared values) and where necessary improvement or changes can be made. The current strategy of low cost, freshness and customer service (value), with its systems, structure, skills, shares values, style and staff seem to be working effectively looking at the levels of the company performance from the strategic analysis done above. However, it is assumed that the new and proposed strategies will function appropriately with other elements.StrategySkills Synergy styleSystems structureStaffAdopted from Structur e Is Not Organization (1980) The Art of Nipponese Management (1981) In Search of Excellence (1982).5.1 Challenges of strategy implementationWm Morrisons strategy of competition presently is the use Porters generic strategy based on low cost and market penetration which is Ansoff idea, however extending this same strategy to the national markets may attract other competitors to imitate it especially if they see the idea to be effective thereby they losing their market share. On the contrary, the adoption of differentiation strategy may cause additional costs which will lead to the increment of the organisations total costs which they may not have that much to invest.The implementation of green field, acquisition, joint venture, licensing, franchising, etc., will no doubt change the current business practices. In terms of 7s model, there will be so many difficulties with both markets entries, for instance staff may resist the idea of internationalisation and globalisation with the fear of losing either their jobs, position, modification of working conditions. When it comes to skills, the company may have to institute a program to ensure the employees have the require skills to meet the new strategies. The systems will have to be improved to meet the new demands and the structure will be altered.6.0 CONCLUSIONS AND RECOMMENDATIONSIn Johnson, Scholes and Whittington terms of feasibility, acceptability and sustainability, the strategy of low cost seem more workable in the national markets but it may not be sustainable since it can easily be imitated by other competitors. It is not clear at this whether it will be acceptable by the employees and the shareholders Johnson et al (1988). The other options will be to adopt differentiation strategy that could be sustainable since it is difficult to copy but this option may not be acceptable given the additional costs it has to incur. Another option is the Ansoff (1991) matrix, to pursue new market strategy by using the existing products range to enter the new markets. Since this may be less risky than especially the new market strategy with the development of entirely new products for new markets.Acquisition strategy involving purchasing and controlling and existing market seem more feasible for the global entry since it is less risky, more receptive to the local customer, involving the use of local expertise, less costive compare to green field strategy of having to set up new factories to produce. Franchising could also be use as another option, however the franchisee may gain portions of the companys profit and may even set up their own at some point resulting to a total loss of the business to the franchisee. Licensing may pose less threats to also use may be than even franchising.