Morrisons supermarket - financial report - page 2
Keywords: Morrisons,Finanial report,supermarket,performance of morrisons
By maya on 02/05/2008
Level: Master's degree (MA, MBA, MSc, MEng, MRes, MPhil etc)
Page Number: 2 of 14 pages: 1 2 3 4 5 6 7 8 9 10 11 12 13 14
with the implementation of new supply and distribution systems, as well as larger, more efficient stores. The move towards higher- profit non-food lines is also an important factor to consider.
1.2. Competitive Industry Environment Analysis
To explore the general environment of supermarket in, PESTEL and SWOT analysis are carried out (please refer Appendix 1 and Appendix 2).
To develop the competitive advantage of Morrison’s, a general examination of the forces influencing the company is required. Porter’s five forces Model (Table 2) is a good technique for this purpose.
Table 2
Porter’s 5 Forces Analysis
Customers
Possessing strong bargaining power – Due to undifferentiated products and low switching cost, customers are less loyal to any one supermarket than before and keep forcing retailers to cut price.
Requiring higher quality and service – Increasing concerned about health and environment, customers continually require higher quality and variety of quality of products and service.
Increasing demand for non food products – Demand for food is stable while non food products e.g. clothes, beddings and pharmacy products.
Spending more time in supermarkets – British shoppers spend 3% of their waking lives in supermarkets. Retailtainment is recurring and getting important for profitability.
Suppliers Great influence on food retailers – As food quality is crucial, all retailers will be impacted by the poor quality. Food poisoning of Sudan Red influenced the whole retailing industry through one food supplier
Heavily relying on big retailers – Due to Tesco, ASDA, Sainsbury and Morrison dominate food retailing industry, oligopoly structure is occurring. Farmers and other suppliers continue to suffer exploitation at the hands of them.
Looking for protection – On behalf of suppliers, Department of Trade and Industry (DTI) and Office of Fair Trading (OFT) and National Farmers Union (NFU) negotiate main retail chains to protect suppliers’ interest.
Competitors UK supermarket industry is one of the most competitive industries in Europe. Extensive competition resulted from:
Four main competitors – Tesco, ASDA, Sainsbury and Morrisons are the only chains which operate full scale and full nationally with 75% of total market share (www. answer.com).
Difficult to differentiate products or service – Supermarkets feel difficult to differentiate their food products especial for basics. Therefore competition for food sales is price based while customers’ loyalty is low.
Low diversification of competitors – There are no major regional supermarket chains left in UK. Although Waitrose and M&S target the up class, discounters focus on the lower class, there
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