Morrisons supermarket - financial report - page 4
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: 4 of 14 pages: 1 2 3 4 5 6 7 8 9 10 11 12 13 14
in Figure 1.
Figure 1
2. COMPANY DESCRIPTION
Since its humble beginnings in 1899, Morrisons has risen to becoming the fourth largest supermarket chain in the UK currently possessing approximately 13% of the UK grocery market.
Morrisons who are now one of the ‘big 4’ leading UK supermarkets, offer an array of diverse products ranging from groceries and fresh foods to medicines and health and beauty. Morrisons current strategy is based on doing the basics efficiently, selling products at low prices, and doing so only from large stores. The group manages most of its commercial operation in house, including processing, production, packaging, distribution and transport, thus making giving it significant control over its operations and making it a powerful player in the market.
Its well documented and controversial £3bn acquisition of rival grocer Safeway in March 2004 saw Morrisons market share rise from the region of 6% in 2004, to the current figure close to 11% in 2005, thus making it a major shareholder in the UK grocery market. Since acquiring Safeway’s in March 2004, the Morrison group has been undergoing a costly conversion programme of Safeway stores into Morrisons outlets. In addition the Morrison group has undergone the forced divestment of many of its stores in order to comply with anti-monopoly competition policy as dictated by the Office of Fair Trading (OFT).
As a result of the conversion and divestment (due to anti monopoly), the number of Morrison stores in the UK has fallen from 550 in 2004, to the region of 360 as of November 2005. At the time of writing this report, the 20 month conversion programme of the acquired Safeway stores by Morrisons is near an end, meaning an end to the large costs involved in divestment and conversion, and consequently altering its strategic position.
When assessing Morrisons current strategic position, we do so from three different perspectives. First, from a market-based perspective, we see that Morrisons is now a key market share holder (≈13%), thus giving it significant market power (see Porters five-forces analysis). From a resource-based perspective, having almost completed the conversion and divestment, Morrisons can now use its strategic capabilities solely towards gaining competitive advantage in the industry. And finally, from the stakeholder perspective, Morrisons now have the task of reverting, what has been a falling share price over the passing periods, into a rising share price thus satisfying shareholders. In short, Morrisons find itself currently in
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