MBAGENERAL MANAGEMENT 2012/2013 IbragimovaFeruza Student Nr: 12843986 Tutors: Jane Priddis Jim McLoughlin International Strategy and MarketingMNM94 A strategic business and marketing review of a Morrison Plc LIVE CASE STUDY ASSIGNMENT 1 st submission/submission on referral/examination re-work/submission on extension (delete as appropriate Due date: 18th April 2013 Number of pages: Word count:
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MBAGENERAL MANAGEMENT 2012/2013
IbragimovaFeruza
Student Nr: 12843986
Tutors: Jane Priddis Jim McLoughlin
International Strategy and MarketingMNM94
A strategic business and marketing review of a Morrison Plc
LIVE CASE STUDY ASSIGNMENT
1st submission/submission on referral/examination re-work/submission on extension
o Online retailingo Price competitiono Competitive environment
Source: Created by author (2013)
4.4 Generic strategies
Porter’s generic strategies very important in order to evaluate company’sstrategy (Lynch,
2006). Porter (2004) claims that any business could undertake one of the three fundamental
strategies: cost leadership, differentiation, and focus. According to it company supposed to
choose one of these strategies to gain competitive advantage.
Low cost leadership in food retail sector obviously gained by LIDL and ALDIover the last 5
years, Tesco was trying to get in that position but Morrison was known for its differentiation
strategy by offering fresh food and in house prepared food and according survey prices was
higher than average(Promice,2013). But last two years company is competing pricewise as
well with its major rivals Tesco and Sainsbury’s and ASDA, and Morrison created an M
kitchen range and M savers basic brand of the company. Morrison wants to offer affordable
price in all ranges for customers.
As professor Porter mentioned on his works ‘there real dangers for the firm that engages each
generic strategy but fails to achieve any of them-it is stuck in the middle’(Lynch,2012 and
Porter, 2004). Morrison now in a situation stuck in the middle. Porter states that the firm
stuck in the middle is almost guaranteed low profitability (Porter, 1980).As the result profit
margin get down for year ending 2012.
6.0 Recommendations for Future Objectives
5.1 SMART Objectives
The SMART objective framework is used here to establish future objectives for Morrison.
The table below shows the SMART objectives.
Element Goal
Specific The specific objective of Morrison is to increase its market share and secure
leadership position by increasing its monthly sales turnover
Measureable Morrison would like to increase its current market share by 5%
Achievable Prior to devise any for increasing its market share, Morrison needs to evaluate
different market options to ensure viability of selected strategy
Realistic/relevant The selected market option will be suitable to all stakeholders and Morrison’s
capital and investment will be used to increase its market share up to 5% within
a particular time period
Time based The maximum time to achieve desired objectives is 12 months
5.2 Available Market Options
The Ansoff Matrix is the tool to understand the growth possibilities and risks associated with
them. The Ansoff matrix is also popular as product/market expansion grid. The matrix
provides four growth strategies including market development, market penetration, product
development, and diversification (Ansoff, 1957). Morrison can use the Ansoff matrix to
retain existing customers in the market where it operates and also can attract new customers.
But it depends which strategy is feasible for the superstore. The following diagram
demonstrates six market options available to WM Morrison.
Existing products New Products
Exi
stin
g M
arke
t
1. Expand organically
2. Expand by acquiring a competitor 3. Introduce an online shopping store
New
Mar
kets
4. Overseas expansion
5. Developing convenience store and target new customers
6. Develop non-food business
The first option that Morrison can consider is to penetrate the market by expanding
organically. This option is about making available more grocery and food items for
customers. For this purpose, the superstore could focus on building more store capacity in
two ways: (1) by making extensions to the existing stores to make them bigger; or (2)
Market Penetration Product Development
Market Development Diversification
building new stores throughout the UK especially where people need these stores, for
example at the edges of towns where no big stores are located.
The second strategic option in market penetration is to acquire a supermarket competitor such
as Iceland, ALDI, or LIDL. For this Morrison needs to do market research at extended level.
Also, the superstore will need to collaborate with banks and other stakeholders to generate
funding and then finally Morrison will be able to prepare a plan for acquisition.
In terms of product development strategic options, Morrison can introduce an online
shopping storesuch as TESCO.com or Ocado. The preliminary steps that Morrison needs to
take are: to develop a robust website, build a viable distribution network, and ensure proper
stock management. After that Morrison can adopt strong marketing campaign to advertise its
online store.
There are two strategic options available for Morrison in terms of market development. First
is the overseas expansion and second developing convenience store and target new
customers. To adopt overseas expansion option, Morrison needs to amend its business model.
The best options for overseas expansion are to expand to Europe, Asia, or America. But to
properly implement this strategy, Morrison needs to conduct extensive market research,
establish relationships with international agencies or joint ventures, and more importantly to
ensure supply chain management. On the other hand, Morrison can establish small
convenience stores in town centres or near motorway. For this the superstore may need to get
planning permissions (Guy, 2006).
Finally, diversification is the last option that Morrison can consider. For this, Morrison may
need to introduce new product in new markets. For instance, superstore may introduce
clothing, electronic items, or financial instruments. Implementing diversification strategy
could be hard for Morrison as it is highly risky and requires many crucial decisions and huge
investment (Mayo, 2010).
5.3 Evaluation of Market Options
The strategic options can be evaluated in terms of cost/benefits. The cost and benefits of each
strategic option can be evaluated on the basis of three key criteria such as Suitability,
Acceptability, and Feasibility described by Johnson et al. (2008). The table below shows the
evaluation of available six strategic options.
Criteria Strategic Option Score Total
Option 1: Organic growth
SuitabilityIt is compatible with the existing strategy of Morrison as well as the superstore has already experienced expansion in the past
5/5
15AcceptabilityMorrison has low risk in adopting this strategy because it is the expansion of its core business. 5/5
FeasibilityIt is probably the easiest option as compared to other available option. Also, the superstore can easily arrange capital for investment from stakeholders
5/5
Option 2: Growth by acquisition
Suitability
This strategy is suitable as Morrison experienced acquisition in the past. In addition, it is quite logical to expand market at this time of recession using horizontal integration
5/5
12Acceptability
Medium to high risk due to stakeholder consideration in terms of expected synergies. But on the other hand, it would be a difficult experience
4/5
FeasibilityThe acquisition will require an integration strategy with significant capital and investment 3/5
Option 3: Establishing an online store
Suitability
This strategy represents a cultural shift. The strategy of online store is suitable in terms of its support for corporate growth objective. However, it ignores the store’s current strengths in the grocery business.
3/5
11Acceptability
Medium risk due to increasing online shopping trend. But stakeholders have lack of interest in this business 4/5
FeasibilityOnline business is easy to design and launch and it requires additional delivery work and supply chain management
4/5
Option 4: Overseas expansion
Suitability
Overseas expansion option is suitable in terms of its compatibility with Morrison’s growth objective. But in contrast, the superstore might face gaps in new market for British products
3/5
9Acceptability
High to medium risk as evidenced in TESCO case. Similarly, overseas expansion will be a new experience for Morrison as well
3/5
FeasibilityAlthough, Morrison will face financial support from overseas firms but extensive remote work and joint ventures could limit the scope of overseas expansion
3/5
Option 5: Convenience Store
Suitability
The convenience store option is not suitable for Morrison especially at this time when convenience market is already occupied. In addition, Morrison has no past experience for convenience stores. Also, if Morrison will adopt the model, it needs big changes in its ‘Fresh Mantra’ model
1/5
7
AcceptabilityMedium risk due to slow return on investment. Also, this strategy represents a cultural shift 3/5
FeasibilityAvailability of capital for expansion. Also feasible in terms of acquiring existing convenience stores 3/5
Option 6: Non-food business
Suitability
Introducing non-food items requires extended retail skills. In fact, Morrison already has some non-food items. But non-food business is not compatible with Morrison’s vision statement
4/5 11
AcceptabilityLow to medium risk but unknown returns. Entering non-food business is acceptable to stakeholders and directors in terms of profit maximisation
4/5
FeasibilityIt basically will require staff training and more storage space. It is also required for Morrison to build strong relationships with suppliers
3/5
In the above table, it can be seen that organic growth and acquisition strategies scored high
marks and therefore they are the appropriate strategic options that Morrison can adopt to
grow in the future.
5.4Marketing strategy
5.4.1 Market segments
The segmentation matrix can be used to identify the market segments of Morrison. By
keeping in mind the organic growth and acquisition market options, the following
segmentation criteria are defined to recognise market segments. The customers are segmented
on the basis of their preference to value of money, convenience, freshness, and service for
buying food items.
Segmentation criteria Variables Description
Geographic UK All over the UK
Value of money Price Cheap food items
Convenience Location Town and popular places
Freshness Quality Best and fresh food items
Service Product availability
5.4.2 Targeting Segments
For targeting the segmented customers Morrison can employ one of three targeting strategies.
For instance, differentiated, undifferentiated, or concentrated (Kotler, 2003). At this time
when Morrison is looking to increase its market share, undifferentiated strategy is suitable for
the superstore. The reason is that using undifferentiated strategy, Morrison can convey a
same message to everyone. The superstore is not looking to target niche group, therefore the
concentration and differentiation strategies are not suitable (Stone and Desmond, 2007). In
addition, setting up joint promotional campaigns and exploiting emerging trends can also
help Morrison to target consumers (Proctor, 2000).
5.4.3 Positioning Strategy
The segmented customers will be positioned by implementing appropriate advertisement
strategies. The popular brand name of Morrison is a key differentiator that will help it to
positioning the market. Morrison can adopt the following tactics for as a positioning strategy:
offer hot deals on seasonal food items, high advertisement of a newly opened store in the
local area, and providing excellent service to customers in stores.
For the positioning strategy, it is essential to develop an effective communication plan (Jakki,
2011). The following table shows how Morrison can target its customers using appropriate
communication elements.
Elements Communication objective
Positioning customersThe customers can be communicated through advertisement using print
media, television, radio, and ads on other suitable communication channel
Competitive advantageThe competitors will be competed on the basis of segmentation criteria
defined in the table in section 5.4.1.
5.4.4 Forecast
The following is the forecast of sales, profit margin, and net profit for the period of three
years after implementing the marketing strategy.
Year 1 Year 2 Year 30%
2%
4%
6%
8%
10%
12%
6.0 Summary &Conclusion
WM Morrison secures a strong position in the UK food retail sector. Its business model and
mission objectives are clear and transparent for the stakeholders. Although the superstore has
a sound financial position in the market but the market share compared to other superstores
i.e. TESCO, ASDA, and Sainsbury is not ‘good’. The environmental analyses of Morrison
reveal some key issues such as lack of using latest technology i.e. online retailing, no
convenience stores, UK dependency, or tight rivalry on the basis of food prices. After
evaluating different market options, it is found that ‘organic growth’ or ‘growth by
acquisition’ could be appropriate market options for Morrison. The segmentation criteria for
targeting customers in the UK market are defined on the basis of four parameters: price,
location, quality, and product availability. Morrison can target segmented market by
communicating its key strengths to the customers. In this way, the market share could be
increased up to 5% after three years.
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