Morrisons Pest Analysis

Morrisons was the last one out of Big Four to enter to online commerce. This is one of the reasons for the grocer’s trailing behind Asda, Tesco and Sainsbury’s. Before acquisition of Safeway, Morrisons was concentrated in Northern part of UK, and the deal helped it to establish presence in Southern part of UK, though it could not overwhelm its competitors. Morrisons operates lesser convenience stores than its rivals since originally it was mainly focused on large supermarkets with less attention to small stores. Nevertheless, recently it opened a number of convenience stores around UK to reinforce competition with the top grocers. However, it turned out to be unsuccessful, and Morrisons decided to sell its 140 convenience stores (Hiscott,
As it was mentioned before, Morrisons’ convenience store sales were not satisfactory, therefore its management decided to pull out by decreasing their numbers. If this situation will continue, the big rivals will gain more market share, which will be difficult for Morrisons to catch up. Apart from that, strong competition from heavy discounters as Lidl and Aldi wins over Morrisons’ customers by causing fall of its market share.

PEST Analysis In order to see macro-environment of supermarket industry of UK, PEST analysis is presented below. PEST analysis discusses about external factors that effect on industry and its players. It is essential to know cause-and-effect of political, economic, social, and technological factors since choice of strategic direction will be shaped by intensity of their influences (Gupta, 2013). Thus, the business has to take measures in case if these factors change. Political. UK laws set rules on conditions of competition in supermarket industry. Basically, Competition and Markets Authority is responsible for monitoring a healthy competition of industry players (UK Government,
Organic growth entails large capital investments in capacity developments, and therefore it can bear some risks of overinvesting to projects which may not pay off later. Acquisition of competing players would be beneficial as this was the case with takeover of Safeway, which eventually helped Morrisons to become the fourth out of Big Four grocers of UK. Morrisons could consider acquisition of grocers who trail behind Big Four grocers, namely Iceland, Co-operative, Lidl etc. Takeover will allow Morrisons to exercise greater power in competing with Asda, Tesco, and Sainsbury’s. However, chances of failing are high, therefore the grocer should carefully choose among these strategic decisions. The least risky options would be acquisitions of small manufacturing companies specialized in packaging, processing of food and non-food products which are not considered yet by the grocer, but are relevant to its core business. For instance, Morrisons could acquire farms specialized in cultivating some sorts of cereals which are in scarcity in UK. These acquisitions could be also made in EU countries when the grocer’s suppliers will start to weaken its bargaining