Strategic Management Analysis Of Morrison Supermarkets For Successful Entry Into The Chinese Market

External Environment and Industry Competition Analysis in Chinese Market

Strategic management of a company encompasses generating and implementation of vital goals and conducts carried out by the top management of an organization relied on the consideration of the competencies of the evaluation of the external and internal surroundings within which the company has its business operation (Annualreports.com 2017). Strategic management process can be explained as the way in which companies decides in implementing few strategies that can facilitate the company in gaining competitive advantages. Morrison Supermarkets is observed to be involved in retail market operation. The company offers goods including world foods, free from and nutmeg clothing. The company has its business operation all over United Kingdom along with having 500 stores and online home delivery facilities. Morrison Supermarket Company has its business operation in over several regional distribution areas and a national centre servicing within supermarkets (Annualreports.com. 2017).

The objective of this paper is to conduct strategic management analysis of Morrison Supermarkets Company and recommend suitable international strategy for successfully entering the Chinese market. Moreover, external business environment and industry competition analysis for the company will be conducted. Resources and competencies of Morrison in order to attain competitive advantages within Chinese market will be evaluated. SWOT and “market entry mode” analysis for Morrison Company will be carried out for suitable strategic analysis of the company.

In order to analyse the external business environment that impacts the competitive actions and responses Morrison Company takes for outperforming the competitors and gaining more than average returns, PESTLE and Porters five forces analysis has been carried out (Barney and Hesterly 2015).

Figure 1: PESTEL Analysis of Morrison

(Source: Hesterly 2015)

• Political- Alterations in the government tends to have indirect impacts on the policies of taxation that can result in severe competition that decreases the margin of profit for the company. The emergence of new government has attained numerous advantages for the customers, which have lead to lower spending within the supermarkets that in turn have affected sales of Morrison.
• Economical- Morrison Company has attained their own local suppliers those supply fresh goods that in turn offers overall control over the quality and uniqueness of their offerings (Camillo et al. 2014). Moreover, another superior advantage is the company’s business operation. This facilitates the company in keeping cheaper prices for their customers. It has been observed that it will be most promptly offered in contrast to certain other retail markets. As a result, it offers the company with enhanced economies of scale to maintain extremely low cost.
• Socio-cultural- Morrison has adopted an innovative technique to identify job profile of Colleague’s through offering them with “National Qualified Certificate”. It is one of the primary strategies to change their lifestyles. By means of “Lets Grow” campaign Morrison offering free gardening equipment to the local schools that facilitates in sustaining values and social balance within society (Chowdhury et al. 2014).
• Technological- After take-over carried out from seaway Morrison went through the up gradation of the technology in order to decrease increased expenditure that is extremely required for expansion of the company. Morrison is planning to launch its new product segment with advanced technology that encompass automated product ordering process and freshly integrated until system in order to offer superior and prompt consumer service.
• Environmental- By increasing the sales of the extended life reusable baggage instead of providing free non-degradable synthetic baggage, the company could enhance profits coupled with extremely required global warming support (Eden and Ackermann 2013).
• Legal- Morrison Company has their individual policy for saving the energy saving it facilitates the government along with great control over population. Morrison is positioned as a public limited organization that deals with a legal business basis through aligning with the “Joint Stock Companies Act, 1862”.

Figure 2: Porters Analysis of Morrison

(Source: Eden and Ackermann 2013)

• The bargaining powers of suppliers- Power of the suppliers are low for Morrison Company. It is gathered that suppliers are extremely effective in supplying products in a timely manner and the availability of substitutes are less in the market. Bargaining power for Suppliers is observed to be low as the major supermarkets have high buying power (Fazeli and Taherikia 2016). For this reason, the company has been capable to decrease the costs through forcing suppliers to provide discounts as the suppliers profit margin is decreased.
• The bargaining power of buyers- Bargaining power of the buyers are medium for Morrison Company. The buyers competing within the sector through decreasing prices, bargaining for superior quality and varied services along with serving as competitors against one another all within the industry at the expense of the sector profitability.
• The threat of new entrants- Threat of new entrants is medium for Morrison Company. It is gathered that the vital barrier serves as the difficulty in attaining planning permission in order to open a new supermarket through restricting customer choice (Ghapanchi, Wohlin and Aurum 2014). Four large supermarkets already attains big share within the net entrants within the markets and face extremely high competition along with consumer expectation rising these days. Government policy might be at risk for the new entrants.
• Threat of substitutes- Threat of substitutes for Morrison Company is high. It is gathered that substitutes does not totally replace company’s existent products along with introducing new technology or decreasing the manufacturing costs of the identical product (Grant 2016). This threat is high for the reason against Morrison several convenience stores, forecourts offering products to the purchasers. Presence of the close substitutes makes the consumers increasingly price sensitive that can easily switch to other supermarket or the online shopping.
• Level of competitive rivalry- Competitive rivalry for Morrison Company is deemed very high and this is for the reason that high rivalry among the grocery retail shops might take place when the competitors of similar size and one among the competitor attain increased shares the others. Aspects like pricing structure, growth in the market, cost of switching, diversity and exit obstacles, determine competition within the industry. If the market grows slowly and organization needs being dominant within market, it needs to compete with its business rivals that increase market share and competitive advantage (Hill, Jones and Schilling 2014).

Figure 3: Resources and Competencies

(Source: Hill and Schilling 2014)

Through evaluating the model above, it can be indicated that Morrison has all the necessary resources and capabilities in order to be the market leader within the UK market and the China marketplace. Such resources and capabilities facilitates in gaining competitive advantage within the Chinese market. The discussed internal capabilities can facilitate the company in attaining the leader position within the retail industry all through the world (Hill and Schilling 2014).

• High qualification of the resources of Morrison Company facilitates the company in competing with its business rivals within the highly competitive sector.
• The company also generates superior competencies as their standards to offer the consumers with superior services and products.
• Moreover, such distinctive resources along with competencies are associated to make superior value of Morrison along with offering advantages to provide the company with great value (Hinterhuber 2013).
• The competencies and the resources of the retail supermarket offer great advantages to the company from certain other supermarket by means of consumer perspective.

The competence prompts execution levels from process or action, which is far better in contrast to its competitors. Thus, with the help of benchmarking, the norms of execution could be better understood and the things those constitute effective or ineffective execution. This is extremely crucial for Morrison Company to take a crucial step at a normal level. Core competences might be included somewhere down in Morrison at the level of operation in the schedules of work. In the research work of Prahlad and Hamel, it has been recommended that organizations might develop key skill regions after some time, which is necessary and basic to ensure long-term growth (Leonidou et al. 2013). In case of Morrison, the territories of mastery are destined for basic development, focal regions of the entity, in which the most esteem has been incorporated in conveyance and administration. For example, disclosure in the Morrison has been the heart of administration and in 2003, there has been 36% ascend in the quantity of accounts related to retail administration. Each week the organisation opens administration accounts of nearly 50,000 and such account openings help the organisation to sustain long-term growth for construction of genuine scale. The administration associated with money has likewise been propelled universally in for instance UK and China.

Resources and Competencies in Gaining Competitive Advantages in Chinese Market

The core competency framework suggests that there are certain factors that facilitate Morrison in attaining competitive advantage within the Chinese market. These resources are explained under:

• The company offers likely access to a wide range of markets that facilitates the company in generating new goods and services. For instance, Morrison has maintained an effective leadership within the UK retail industry. Morrison is recognised as a company that offers highly customised and effective services relied on effective consumer relationship management (Leonidou et al. 2013).
• Morrison makes a considerable consideration to the perceived consumer advantages of the outcome and offers great consumer advantage. This company offered effective loyalty card that increased consumer satisfaction.
• The products and services offered by Morrison are quite difficult to imitate and serves as major core competency for the company in attaining competitive advantages in China. The company’s resources also include its distinct approach to the service concept maintaining efficient corporate reputation and introducing fresh superior quality products (Li and Liu 2014).

The mission statement of Morrison Supermarkets Company is “The Company always delivers the very best for less” (Yaprak et al. 2015).

The vision statement of Morrison Supermarkets Company is to turn out to be “food specialist for its consumers”. Moreover, the company has three visions to position itself as one of the renowned supermarket in UK. Such Visions are explained under:

• Being a food specialist as the company really understands food and realises its source. The company makes as well as backs it within their factories. Morrison Supermarkets makes all its goods within its stores along with employing craft skills in all the stores (Morden 2016).
• Offering goods for everyone is another vision of Morrison Company as it focuses on providing great food that is also for everyday use and not just for some special days.
• Offering great value and such vision is supported by the company’s brand values along with certain strategic objectives.

Mission and Vision Statement for New Strategic Business Unit in China

For Morrison Supermarket Company’s new strategic business unit in China, the current “vision ad mission” statements of the company have been reframed.

Mission statement of Morrison Company for its new business in China is:

• Mission of the new business unit of the company will be to offer all its consumers with best value for money on their weekly purchase. Moreover, effective quality management is one of the major mission statements for attaining great success in Chinese market (Richard, Kirby and Chadwick 2013).

Vision statement of Morrison Company for its new business in China is:

• Vision is to serve its Chinese consumers in a better manner through developing popular and useful services. The company intends to offer consumers with more than they expect on a shopping trip. The company will consider refreshing the offerings of its store and through developing pick-up points; those are compatible with the renowned online retailers (Rothaermel 2015).

SWOT Analysis of Morrison

Strengths ·         An effective distribution network and supply chain ·         Diversified product portfolio ·         Positioned among one of the largest supermarkets in UK ·         Has around 450 stores within UK with employees more than 1,30,000	Weaknesses ·         Restricted geographical reach in comparison to other retail brands ·         Deals with product recall
Opportunities ·         Increasing demand for private labels ·         Global expansion ·         Expanding market for organic goods	Threats ·         Rising market share of the competitors ·         Increase in the manpower expenses ·         Increase in government policy changes and taxes

Table 1: SWOT Analysis

(Source: Richard, Kirby and Chadwick 2013)

• Capturing growth: Develop several products through levering the company’s vertical integration and value credentials in order to prepare a highly distinctive and compelling experience of fresh food through providing the consumers with superior quality food at affordable amount at a location that is convenient for the Chinese Consumers (Sharp 2014).
• Increasing efficiency: Morrison Supermarkets will introduce new strategies for developing its five manufacturing sites in order to increase its business efficiency. Enhancing network efficiency is to be attained by Morrison in Chinese market through decreasing expenses all through the supply chain.
• Driving the Top line- Morrison must consider strengthening its brand image in Chinese market and generate leading range. This company also considers providing superior value along with developing new stores that can facilitate consumers in attaining superior access (Rothaermel 2015).

Market entry strategy for Morrison Supermarkets to enter Chinese market is through strategic alliances and joint ventures. The concept of strategic alliance and combined ventures formation is considered together with strategic alliance. Joint venture can serve to be most effective market entry strategy for the reason that the company can have enough equity stakes for having a great hold on management functions (Rothaermel 2015). For this reason, the new business of Morrison Supermarkets in Chinese Market as the equity share posed by the company can be varied.

Conclusion

The objective of this paper was to conduct strategic management analysis of Morrison Supermarkets Company and recommend suitable international strategy for successfully entering the Chinese market. Moreover, external business environment and industry competition analysis for the company was conducted. In order to analyse the external business environment that impacts the competitive actions and responses Morrison Company takes for outperforming the competitors and gaining more than average returns, PESTLE and Porters five forces analysis was been carried out.

From the paper, it was gathered that Morrison has all the necessary resources and capabilities in order to be the market leader within the UK market and the China marketplace. Certain resources and capabilities facilitates in gaining competitive advantage within the Chinese market. Effective business strategies of Morrison Supermarkets will introduce new strategies for developing its five manufacturing sites in order to increase its business efficiency. Enhancing network efficiency is to be attained by Morrison in Chinese market through decreasing expenses all through the supply chain. Moreover, it has been gathered that Joint venture can serve to be most effective market entry strategy for the reason that the company can have enough equity stake for having a great hold on management functions.

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