Table of Contents
1.0 Executive summary 2
2.0 Introduction 2
3.0 The methods by which Morrisons has grown in size and the reasons 2
3.01 Enterprise expansion method 3
3.02 The method of customer-oriented 3
3.03 The reasons Morrisons might have had for choosing the methods 3
4.0 Business environment analysis 3
4.01 Economic factor 4
4.02 Political factor and Legal factor 4
4.03 Socio-cultural factor 5
4.04 Technological factor 6
4.05 Environment factor 6
5.0 Conclusion 7
5.0 Reference list 7
1.0 Executive summary
The purpose of this report is to analyze all kinds of environment which can influence the operation of business. Nowadays, not only internal environment but also external environment of enterprise play important role in the development of an enterprise, especially, for a multinational company. Because business environment influence on enterprise is dynamic and rapidly changing, analysis of business becomes more and more different. In this report, we mainly we use PESTLE research methods to explore the business environment of William Morrison Supermarket.
William Morrison Supermarket is one of the largest chain store in Britain whose headquarter was located in Bradford, in England and it is usually called William Morrison Supermarket for short. In 1899, William Morrison, an egg and butter merchant created William Morrison Supermarket and it initially dealt with eggs and butter. In 1952, his son, Ken Morrison began to run the company and in 1958, William Morrison Supermarket became the first self-service store in Bradford and can price on its own goods. In 1991, the first supermarket of William Morrison Supermarket which was called Victoria was opened in Bradford( Fox, Vorley, 2004). Nowadays, William Morrison Supermarket is the fourth largest food retailer in UK and our business mainly is to provide customers with food, grocery and other goods. In addition, William Morrison Supermarket has more than stores already in British and still considers continuing its exciting expansion plan.
3.0 The methods by which Morrisons has grown in size and the reasons
We mainly discuss the methods by which William Morrison Supermarket has grown in size from the following two aspects: the one is the expansion method by merging or opening supermarket in foreign countries; the other is the method of customer-oriented.
3.01 Enterprise expansion method
Before 2004, William Morrison Supermarket only focused the market in north England. In 2004, William Morrison Supermarket opened a store in Scotland which is the first branch in a foreign country. After 2004, William Morrison Supermarket subsequently has acquired many enterprises which mainly were in other countries besides the UK. In William Morrison Supermarket acquired Safeway and became the fourth largest chain in the UK. In 2005, William Morrison Supermarket took over completes the takeover of three factories from Rathbones. From the above, we can know that merging or opening supermarket in foreign countries is a method which makes William Morrison Supermarket having grown in size (Klapper, Love, 2004).
3.02 The method of customer-oriented
Another method by which William Morrison Supermarket has grown in size is the principle of customer-focused. To make a difference, William Morrison Supermarket provides a distinctive offer for its customers including fresh goods; makes great food and offers good service: does well in customer relationship management.
3.03 The reasons Morrisons might have had for choosing the methods
Because William Morrison Supermarket is a supermarket, of course, it has its own operating characteristics and operating model. Therefore, William Morrison Supermarket will also choose the method for development and growing. In short, the method of merging or opening supermarket in foreign countries is the need of market expanding. In addition, if a company wants to succeed, it must carry out the principle of customer-focused.
4.0 Business environment analysis
In general, we also use PESTLE analysis method to explore the political-legal, economic, socio-cultural, environmental and technological (PESTLE) factors which are shaping the external environment in which William Morrison Supermarket is operating ( Poon, 2000; Carlin, Schaffer, 2012)
4.01 Economic factor
The macro economy has a profound impact upon enterprise’s business activity and enterprise faces the huge challenge with the change of the economic environment. However, how economy affects the enterprise and through what economic factors to influence the enterprise? Main economic factors include interest rates, inflation, unemployment, economic growth and other factors (Durnev, Kim 2005). Besides, economic reform has huge important to regulatory reforms (Eifert, 2007) and enterprise’s behavior.
William Morrison Supermarket is a British company, so Britain’s economy situation has important influence on its development and growing. For the moment, fiscal deficit is a big problem which the British government has to face. In addition, the British economy also faces other difficulties. First is the crisis of confidence from the top to the bottom, British consumers are reducing consumption and investment, which makes the economy lack of energy. And if the economy continues to recover, domestic demand and corporate investment must pick up. European debt crisis also affect British economy. The British national bureau of statistics’ data shows that the national per capita income has fallen by 13% since 2008. Hard economic times coupled with inflation, is the main cause of per capita income falls, which also lead to depressed consumption.
As a Supermarket, William Morrison Supermarket is under the influence of British macro economy, such as depressed consumption, inflation, European debt crisis and other factors, which can directly influence the operating and growing of William Morrison Supermarket (Yu, Ramakrishnan, Ramanathan, 2012),.
4.02 Political factor and Legal factor
Political stability and sound development are the solid foundation of a country’s development and prosperity, it can provide stability environment for the development of economic and social aspects. In general, we mainly take following political factors into consideration: political conflict, political uncertainty, arbitrary changes in policy and policy creep. Political conflict mainly includes war and sovereignty disputes. Political uncertainty mainly includes minority governments and coalition governments.
For William Morrison Supermarket, Britain’s political environment is relatively stable and didn’t take place some important political events. Firstly, the change of competent department in food industry influences the behavior of William Morrison Supermarket, which mainly engaged in food and other goods. Secondly, with the emergence and deterioration of the European debt crisis, Moody’s investors service, one of the big three rating agencies, down the British government debt ratings from Aaa to Aa1 On February 22, 2013. In addition, Moody’s investors service believed that government debt levels remain high and continue to increase, which will cause the government’s ability falling to cope with financial impact, and this situation is unlikely to change in 2016 years ago.
Finally, the British government refused to oligopoly and in March 2006, the British government bureau of fair trade did fair competition investigation, including Tesco, sainsbury and asda and Morrison.
4.03 Socio-cultural factor
Different social and cultural environment has important influence on the operation of a multinational company. An enterprise wants to operate well, it must consider following factors: demographics, lifestyle expectations, Changes in the composition of society, education and training. Demographics mainly include population, population density, ageing, life expectancy and infant mortality, size of households and consumer expenditures. Lifestyle expectations refer to luxuries become necessities. Changes in the composition of society refer multicultural, multi-faith, multiracial and multi-ethnicity. Education and training include literacy rates, vocational training, management training and other factors.
For William Morrison Supermarket, knowing well about social and cultural factors in eating habits in the UK is very important. Over the years, the British has been following trends in health and eating more fresh vegetables, fruits, fish and less meat has become the health beliefs of most people. So William Morrison Supermarket must following this belief and do they best to provide fresh and health foods and other goods for the British people. However, recent horse meat storm, which refers to beef products with horse meat not only involves health problems, professional level of food processing, retail and government regulators, but also seemly changed the British spending habits.
4.04 Technological factor
Technology factors include：basic technical progress will enable the enterprise make more effective analysis to the market and customers; the emergence of new technology will increase society’s demand of products and services; technical progress can create competitive advantages; technical progress can lead the existing product be obsolescence, or greatly shorten the product life cycle.
Because William Morrison Supermarket is a supermarket, product production process, the new sales channels such as technical progress will improve the performance. In terms of technology, because of the progress of information technology and electronic banking, shopping online is a main way of selling products. In addition, enterprise’s supply chain and customer relationship management which can communicate with supplier or customer about product price, quantity, quality and other things through internet are more and more popular and brings about huge convenience.
4.05 Environment factor
In terms to the environment of William Morrison Supermarket, nowadays, William Morrison Supermarket is the fourth largest food retailer in UK and our business mainly is to provide customers with food, grocery and other goods. The overall environment of William Morrison Supermarket is good. However, the British government refused to oligopoly and in March 2006, the British government bureau of fair trade did fair competition investigation, including Tesco, sainsbury and asda and Morrison. Because retail market in domestic large and medium-sized cities is saturated, and they are not allowed to enter new town and other places to develop local market in British, giant chains like William Morrison Supermarket faced with fierce market competition and have to choose to expand overseas.
In short, business environment has greatly influence on the growing and development of a company and enterprise should pay attention to analyze and evaluate it (Kennerley, Neely, 2003),. In this article, we through analyzing the methods by which it has grown in size and the reasons William Morrison Supermarket might have had for choosing the methods, mainly explore the business environment using PESTLE analysis method.
5.0 Reference list
William Morrison Supermarket, (2011), Annual report 2011.
Tom Fox, Bill Vorley. (2004), “Stakeholder accountability in the UK supermarket sector”, International Institute for Environment and Development, November.
Wendy Carlin, Mark Schaffer. (2012), “The Business Environment in the Transition”, CESifo Working Paper, No. 3934.
Durnev, A., H. Kim. (2005), “To Steal or Not to Steal: Firm Attributes, Legal Environment, and Valuation”, Journal of Finance, pp. 1461–93.
Klapper, L., I. Love, (2004). “Corporate Governance, Investor Protection and Performance in Emerging Markets”, Journal of Corporate Finance, pp. 703–728.
Eifert, B.P. (2007), “The economic response to regulatory reforms, 2003-2006”, University of California, Berkeley, Dept. of Economics, mimeo, September.
Wantao Yu, Ramakrishnan Ramanathan. (2012), “Effects of business environment on international retail operations: case study evidence from China”, International Journal of Retail & Distribution Management, pp. 218-234.
Peter T. Ward, Rebecca Duray, G. Keong Leong, Chee-Chuong Sum. (1995), “Business environment, operations strategy, and performance: An empirical study of Singapore manufacturers”, Journal of Operations Management, pp. 99-115.
Mike Kennerley, Andy Neely. (2003), “Measuring performance in a changing business environment”, International Journal of Operations & Production Management, pp. 213 – 229.
Poon S. (2000), “Business environment and internet commerce benefit— a small business perspective”, European Journal of Information Systems, pp. 72-81.