Strategies For WM Morrison Supermarket's Expansion Into The Chinese Market

Corporate Strategy of WM Morrison Supermarket

Questions:

1.Critically examine the relationship and the need for compatibility between corporate strategic and functional management policies?

2.Analyse the internal and external influcence on corporate objectives and strategy?

3.Demonstrate the need for flexibility in strategic management and the practical limits of quantifying corporate strategy?

The WM Morrison Supermarket Plc. Is a United Kingdom based retailer that was established in 1899  with its headquarters in Bradford. The retailer is the 4^th largest supermarket in the united Kingdom after it took over Safeway  in 2004. WM Morrison is known for offering one of the best qualities of grocery and other food products. The company has also been known to offer one of the best customer care services through well trained staff so that they can attract more customers to work in the Morrison shop.  Some strategies that they have used are the hot services which were introduced to colleagues in all the stores. Staff are also well motivated which ensures that they work together as a team in order to achieve their goals (morrisions, 2017). The main objective for this essay is to analyze the strategies that the company can use as they plan to expand their services to the Chinese market.  This will be done by conduct the company’s environmental analysis to find out what they need to if they have to penetrate the new markets.

The current corporate strategy for Morrison looks at driving the top line through strengthening the brand image, offering high quality products and creating a leading range. The company does this by offering their customers the best fresh food in the united Kingdom. They also provide their customers with added value and best experience when it comes to a shopping environment (morrisions, 2017). This is important as it ensures there is always customer loyalty in what they do. Morrison has also been able to build up new stores around the United Kingdom and other parts of the world which ensures easy access for their customers (Alvesson & Willmott, 2014). 

The other best strategies that they company uses is to increase efficiency which has been well realized through introducing a new solution for the five manufacturing produce for the companies sites. These solutions have been good when it comes to efficiency in the company. another strategy was also realized through increased network efficiency which was done well by reducing the cost and ensuring smooth action throughout the retailer supply chains. The other strategy of the company was realized through capturing growth. This is important for the company as it has enabled it create new thing through leveraging vertical integration and fresh (morrisions, 2017). In addition, value credentials have been able to develop a very compelling and distinctive fresh food experience through offering their customers with nice food at a very affordable prices throughout different seasons.

In order to understand the company’s external environment well, the Porter’s five force model has been used. This model enables a situation outlook of the current marketing environment for the company through identifying and analyzing forces which affect the retail industry (Bhagat & Bolton, 2008).

Strategies to Increase Efficiency at WM Morrison Supermarket

The 4^th biggest retailer plans to expand its markets to China, it is bound to face a lot of rivalry from the already established companies in the industry. it is also important to note that the retail and supermarket industry has a lot of rivalry meaning that the other top 3 supermarkets in the world will already have occupied the Chinese markets and the globe. These include Tesco, Asda and Sainsbury’s and Co-op. In particular, Tesco remains to be the market leader in the industry with over 27.9% of market share, this is followed by Sainsbury which owns more than 16.5% and Asda that holds a share of 15.7% in the markets (kantarworldpanel, 2017).

In its 4^th position, the company has a market share of about 10.6%. Tesco and Asda and Sainsbury also have about 60 % of the market share which is credited to its size. The two supermarkets are also multinationals  that have business around the globe. This makes the threat of rivalry at all times high.  As depicted in the table below:

Above: Market Position for Morrison Source: (kantarworldpanel, 2017)

when looking at the threat of new entrants in the Chinese market, there is also a global competition that continue to penetrate the Chinese market. Companies like Walmart and Ocado have already tried their luck with china. Other companies like the German owned Lidl is also reported to have open a chain in china, which means that the threat will continue to rise. In addition, there are also internal competitors in china that the company will have to deal with. Cooperatives for example have a plan of expanding their businesses through opening their own chain of supermarkets  so as to gain more market share and increase their competition level (Dibb, et al., 2006). This shows that the threat of entrants will be an issue for Morrison’s expansion to china.

This looks at the aspect of customers. With regard to Morrison’s, customers in china will continue to have a big say in its expansion. This is because they will always compare prices of other local supermarkets chains and that of Morrison. This means that they will be easy to switch from one supermarket to the other, in relation to prices in offer. Morrison’s need to thus understand that all customers will look at value for their money. One of the best ways that the company can win here is to come up with a price strategy of keeping the cost of their products low as they enter the market. This will satisfy customers and ensure that more of their products contain great offers, special offers like buy one get one free (Akpoyomare, et al., 2012). They can also introduce new products at half prices  and reduce to clear stock. This is important as it will create customer loyalty to their products.

This is also another issue when entering a new environment. As it is with the current market trends, franchised and individual groceries continue to be challengers. This includes budgens and londis which is a convenience for local buyers. However, it is important to note that they company’s own brand products need to be able to substitute other local brands in the Chinese markets (Askarian, et al., 2010). This is the only way that will be able to penetrate. One of the ways they can do this is to also use a pricing strategy while ensuring quality which is better that those found in the local markets. As it has done in China, the company is able to excel at this by replacing locally produced food with their own through increasing taste, amount of food per price tag and ensuring more offer for almost all products that are liked by customers in china (Campbell, 2015). As it is with most food products, it can be said that currently the substitute level is medium for the company.

Environmental Analysis using Porter's Five Force Model

this is also a major force during market expansion for any industry. as the moment the company has its own manufacturing farms and factories (Bhagat & Bolton, 2008). This is helpful as it reduces the power of suppliers while in the united kingdom. The situation will however be very different as it enter the Chinese market. The company will need to find new business relationship with local manufacturers and farmers (HRMag, 2008). They can do this by creating partnership with local farmer to ensure that there is constant supply of their products and raw materials for manufacturing or packaging own products.

In strategic analysis a SWOT analysis is a tool for analyzing some of the main issues  that come out of a business environment and the abilities of the company to attain the basic picture regarding its own strategic position.  As Morrison plans to expand to china, the following thus will be its SWOT analysis (Strengths, Weakness, Opportunities, Threats) (Armstrong & Kotler, 2012).

One of the strengths that the company will enjoy with its expansion is that it is very different from other supermarkets expanding in china. This is because it bases its business on production of only fresh food.  In the united kingdom, the company has its own fresh food production and distribution center which have also been lauded for being fast when it comes to delivery. The other strength that the company can take to china is that its main strategic focus over the years has been of customers. This has been well depicted with the introduction of HOT to all member of staff. This stands for Hello, Offer, Thank you (morrisions, 2017).  The main inspiration behind such a service was to enable the company build a close relationship with its customer.

If the same is adopted in china, the company will be able to achieve high quality, loyalty and increase of customer service in a warn, natural friendly and personal service. This will also enable customers feel that they are very important for the company, it will make them feel that they are the new members of the Morrison’s family (Baker, 2016). As it is already witnessed in the united kingdom, due to their customer focus strategy, the visiting numbers of  customers has always been steady and increasing. Their price strategy is also another strength, this is done through making offers, selling goods at low process that others and giving free gifts for high paying customers.

For a long time, the major weakness for Morrison’s has been failure to provide an online shopping system. Given that it is the 4^th biggest supermarket in the united kingdom, this was a big lag. As it can be observed over the world, other retailers like Ocado  have highly benefited from online retailing system, it will thus take some time before the company is able to penetrate in this lines. One of the ways it can do this is to embrace new technologies with regard to its overall supply chains (Baskerville, 2003).  In addition, as it is found in the United Kingdom, most  of the retailer branches have been built on super stores, also , most of their store are located in remote areas. It will be important that they ensure new stores in china are situated in places that are strategically convenient to target customers. The company has also for a long time not known for non-food products like clothes and electronics (Askarian, et al., 2010). This means that buyers will have to move to different shops to access what they are looking for. This will be a great pointer to ensure that the new stores in china are all time convenient for their customers since they prefer places that have almost everything under one roof (Alvesson & Willmott, 2014).

Challenges Faced By WM Morrison Supermarket in Entering the Chinese Market

The main opportunity that Morrison has during expansion to china is to focus on non-food products though providing variety of their products. This is one of the major opportunities that ensure the development of clothes and clothes. It will also enable the company to expand more and introduce new products to their consumers. In 2011, Morrison’s opened their firs local convenience store in IIKley, Yorkshire. The M Local has also been focusing highly on fresh food which are sold at very competitive prices. According to statistics these products are about 4-11% cheaper than other products sold at multinationals like Tesco and Sainsbury’s local. This strategy can also be applied in china as a great expansion opportunity , they should be able to build up smaller local stores and enable an increase of its market share (Akpoyomare, et al., 2012).

One of the main threats of expansion is the global concern for environmental protection. Given that the company manufactures and produces its own food items, there is bound to be issues with having environmental friendly expansion. Most of their packaged products will generate extra landfilling waste in china (Carter & Easton, 2011). It will also increase the number of rival retailer that will use this issue to drive them out of china. In this regard, they need to make partnerships with local manufactures of packaging bags, production and farmers so that the issue is shared among the locals.

A company’s competency will always look  at the collective learning of the business and ways in which they are able to coordinate different strategies and integrate various technologies and skills to ensure expansion. Some of the main competencies for a company will have to do with its objectives, mission and vision as this is what makes it unique and enable it gain competitive advantage and development in future (Baker, 2016).

For the company to excel in the market, it will need to come up with a decentralized mission and vision for china. This will involve introducing new strategies that will be customer focused among other reward schemes. They need to conduct a market research that will enable them know and understand the customer need of the Chinese people which could be different from that of the united kingdom. They need to observe the preference of these customers so that they can foresee their shopping habit and place their stock above that of their competitors.

Also its mission and vision should be one that focuses on promoting its business in china only and not as a multinational. One of the ways they can do this is through offering vouchers for customers who spend to a certain amount of money, here they will be given a money off discount on the full grocery shop (Bhagat & Bolton, 2008). In addition, they will need to come up with convenience stores that will be strategically placed all around china. They also need to ensure that their mission and vision supports they online shopping experience as this will ensure the middle aged and working generation also embraces their expansion.

Conclusion

In conclusion, Morrison’s expansion to china is a possible breakthrough. This is because the company provide high quality of food at a very friendly price. The company also offers the best standard to their customers service through ensuring that their employees are well trained. The other expansion factor is that the company is able to understand customers shopping habit, they are able to meet customers’ expectations  and increase loyalty. Through a proper cost leadership strategy Morrison continue to enable the growth of cost advantage through growth of efficiency and low cost products.  Lastly, the company has been slow when it comes to the opening of international stores. Other multinationals like Ocado and Tesco have already taken ground with is an advantage over Morrison. It is however important to note that Morrison needs to realize that expansion is the only way they can stay relevant to the national and international markets. In addition, they should embrace new technologies through online shopping, offers for new products providing gifts as this will increase their market share. Morrison’s expansion in the Chinese market is a great step for Morrison it will enable the retailer rise in the industry and create more opportunities for becoming a market leader in the supermarket business.

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