Morrisons Supermarket’s Entry in India

Introduction

International business can be referred as trade of products and services beyond the national boundary. Global business provides allows marketers to grab proper competitive advantage, make strong customer base in the foreign country and extend its market footprint in the international business platform. This report will discuss the international business operation of UK based supermarket chain Morrison supermarket which is going to operate its business in India. Through analyzing the opportunities and challenges that the Morrison supermarket can face this report will analyses the overall impact on global business process on marketers. This report will analyses the market opportunities for this selected company in India, by conducting external audit, and analyzing the market size, market growth and key growth factors in this country. Finally, this report will make the suitable recommendation which can assist marketers of Morrison supermarket to improve their overall operation in the India.

Section 1:

Current situation:

Current financial situation of Morrison supermarket:

WM Morrisons is one of the most famous supermarket chains in the UK, which has gained strong financial growth in the 2018-2019.

From the annual report of Morrisons during the year 2019-20, it is seen that, the financial highlights for this company is highly impressive with 8.6% increase in tb profit margin.

The report shows that the overall number of dividends has increased with 24.9%, which assist this company to grab high value competitive advantages in the domestic as well as in the international market.

Based on this report it is also seen that free cash flow in this company is £265m, which although is lower from the value of previous years (£350 m), the overall economic growth in each market segment in the company is highly impressive.

In addition to this the customer satisfaction in case of Morrisons is higher with 8% increase that the previous years which denotes that this company can garb he customer in India with providing its high quality and unique products.

Although the current financial situation of Morrisons is quite good in the UK, increasing development of smes and other potential malls in the UK pose sustainability of the financial growth for this company. From the annual report during 2018-19, I is seen that, the net debt during the year of 2018/19 has increased in very lower rate to £993m from £973m. On the other hand, Like for Like (LFL) customer transfer number for the year 2018/19 is also reduced to 0.7% from 2.9% in the previous years (groceries.morrisons.com, 2019)

Market growth:

Although the overall market growth for Morrisons in the UK market is better than the previous years, it is not as per the expectations of the marketers. The reason behind this is the most of the UK based market is captured by potential supermarket rivals such as Tesco plc, Morrisons, Sainsbury, Asda and Aldi.

From the annual report of 2018/19 it is seen that Morrisons have 10.4% of market share in the UK based supermarket chain, which is far lower than the potential supermarket chains in the UK such as Tesco plc with 27.8% market shares and Sainsbury with 15.8% market shares (groceries.morrisons.com, 2019).

From the above-mentioned graphical image, it is clear that the overall market growth of Morrisons has decreased from the previous years from 11% to 10.8%, which represent that marketers of this company is unable to maintain the sustainability of their market success in the UK market

In this context, India has shown sharp shift of customer preference towards supermarket culture as huge number of customers want one-stop shopping. This is another reason, Morrisons choses this country for operating its international business (groceries.morrisons.com, 2019).

External audit:

Importance of doing external audit for Morrisons:

External audit is crucial for any firm which is going to operate into foreign market. External audit is a part of strategic planning that is involved in analysing the impact of external environmental factors on a company in foreign market (Radzi et al. 2017)

Through using the external audit method, marketers of Morrisons will be able to evaluate the impact of external environment on its business operation and decision-making strategy while it will operate its business in India.

External or macro environmental factors in India that will pose important impact on the overall business operation of Morrisons are political, environmental, legal, social, technological, economic factors.

Data and research:

From the annual report of Morrisons of 2018/19, it is seen that, this supermarket although enjoys sharp sales growth in recent years, it has faced several challenges from its potential rivals in the UK market such as Tesco plc.

On the other hand, it has improved its marketing in several segments such as the profit margin has been increased with 8.6% and the overall dividends of the company is also increased with 24%.

In addition to this, Morrisons also has proved itself as one of the most potential supermarket company in the UK during the financial year 2019/18. From the annual report it is also clear that the customer satisfaction level in the UK market is has increased with 8%. From this analysis, it can be stated that, Morrisons can establish its potential market footprint in the Indian market by convincing the local customer by offering high quality and unique products and services.

PESTEL analysis Morrisons:

PESTEL analysis is important in evaluating the macro environmental factors in the foreign countries ((Radzi et al. 2017). The macro environmental factors are the political, economic, social, technological, environment, legal factors which pose important impact on decision making process of any business. Morrisons is gong to operate its business in India in which the macro environmental factors are completely different from that of the home country of Morrisons, the UK. The political system in India is instable and changing which poses negative impact on the decision aiming proper and overall operation of Morrisons. According to Ratten et al. (2017), the political stability of the foreign country is important for a business operating there in terms of getting proper governmental and financial support. Business environment in India has impact of multivariate political aspects, which can create issues for Morrisons to operate business peacefully here. Conflict among different political parties in India impact the foreign business. Therefore, If Morrisons is going operate its business in India it will face the political barriers which can enhance the financial and social burden for this company Economic factor is another important external factor which pose important to impact on the overall, business decision of a company. Well-developed taxation system in India will be supportive for Morrisons, which will assist the marketers of this company to operate the financial operation in system manner. As stated by Rydehell et al. (2019), economic factors is important for analyzing to understand it impact on the operation and business decision of the company operating in a foreign country. Along with the systematic taxation system, Morrisons can face some issues in operating its business India. For example, several taxes such as GST, income tax, sales tax and service tax in India will pose economic burden of Morrisons. Fluctuating Inflation rate also can create the economic burden and issues for Morrison marketers. On the other hand, there are some positive opportunities for Morrisons in India such as interest rate, GDP rate, repo rate and reverse repo rate in India is well-developed, which can assist the marketers to have proper financial assistance from the local banks, government and local marketers. Social factor is important to be analyzed while operating foreign business (Salyova And Taborecka-Petrovicova, 2017). In India there are several culture and traditional viewpoint which are completely different from the western countries such as the UK. This difference can pose important impact on the overall business operation and decision-making process of Morrisons. Here Morrisons needs to conduct Proper research on the multivariate culture of India in terms of understanding the customers’ buying behavior, pattern of market. Market environmental and the fashion trend. On the other hand, as the market preference in Indi moves towards the one-stop shopping it can create opportunities for Morrisons to get huge number of customers.

Technological factors are important factors which assist the foreign companies to operate their operation in the foreign market smoothly (Radzi et al. 2017).. Technology in India improves day-by-day with developing IT sectors and increasing number of internet users, which will create opportunities for Morrisons to operate online operation. Number of internet users in India increases in each year which is good sign for Morrisons marketers. Indian government focuses on implementation of new machines and instruments, which will, assist the Morrisons marketers to get highly modernized systems and pcs in terms of operating their business in faster way. Development of different IT sectors and software companies will provide technical support for Morrisons. Availability of strong internet connection in Indian market, such as 4G and 5G internet connection will assist the marketers and staffs of morrisons to operate their transaction, information process and online ordering process in faster manner. Environment in the foreign country is important factors to be analyzed to determine whether the climate condition and the weather is relevant for the business to operate over here (Barnier and Wright, 2017). In India is tropical country with changing climate, which will create issues for Morrisons marketers in operating their business in maintaining the similar strategy. In tic context, the marketers need to changes their strategies and decision based on the climate condition and environment of India. On the other hand, Indian government shift its focus on recycling and eco-friendly products which can create economic burden for Morrisons. Government regulation on making business eco-friendly and pollution free, will pose pressure ion the Morrisons marketers to develop such business plan and strategies that will enhance their business sustainability in India. Legal factors also pose important impact on the decision-making process of a business (Jona and Guxholli, 2018).. In India there are several regulations which will pose important impact on the decision-making process of Morrisons such as Companies Act 1956, The Factories Acts, 1948, Trade Marks Act, 1999, The Standards of Weights and Measures Act, 1956.

Porter’s Five forces for Morrisons supermarket:

Bargaining power of Indian customers of Morrisons is higher, because they can get various alternative supermarket chains in which they can invest their money to get eh substitute items (Jona and Guxholli, 2018). Many alternatives of supermarket in India such as Big Bazaar, Reliance fresh, Vishal Mega mart are the potential supermarket chains which can pose the strong competition to Morrison’s. Customers in India have the high bargaining power because they get wide ranges if grocery products in the other Indian supermarket chains which meet their basic needs. Threats of new entrant in high in India as it is preferable country for investment by many potential investors. Therefore, Morrisons has huge risk of getting competition by new entrants in India. Therefore, marketers of Morrisons need to make effective strategies in terms of dealing with these risks. Bargaining power of suppliers is high in India because they also get several options for delivery of their supply which can creates threats for the Morrisons markets. In this context, marketers of Morrisons needs to maintain strong and healthy relation with the local suppliers I India to get the opportunities. Threats of substitute product is low in India as Morrisons has unique and wide range products which are not yet sold by other supermarket chains in India. Competitive rivalries I high in India for Morrisons as this company will face potential competition by the strong marketers such as Big Bazaar, Reliance fresh, Vishal Mega mart and Bazar Kolkata.

Porter’s diamond model For Morrisons in India:

Firms strategy:

Morrisons will Eliminate barriers such as political, cultural, social and economic barriers by conducting effective strategies that will be productive for this company in Indian market. According to Katz et al. (2016). Firm’s strategy is important for the company which is going to operate its business in foreign market. It will market its product and service based on the economic status and income level of Indian customers, in which the marketers need to set justified price for each item which will be relevant with the income level of Indian customers. Morrisons marketers will also focus on attracting FDI by representing their brand image and CSR strategies to the international investors.

Factor condition:

Morrisons will conduct proper market research on Indian market in terms of understating the exact customer buying behaviour and current market trend. Marketers of Morrisons will improve its staff’s adaptability with new market in India. Morrisons will also create proper training for staffs for improving their professional standard.

Related industries:

It is important for a company which is going to operate its function in the foreign business to determine the potential of the related industries that country. Morrisons can merge with Sponsor products of potential Indian food brand such as Amul. Morrisons will also encourage the foreign investors in Indian market. Establish free trade zones in Indian market.

Demand condition:

Morrisons will focus on promoting its product quality and uniqueness to generate customer demand. Marketers of Morrisons will create streamlined and innovative regulatory standard for attracting clusters

Strong management culture:

Based on the above-mentioned analysis it an be stated that, Morrison marketers needs to developed strong management structure in its workplace, in terms of dealing with the market challenges in the Indian market that it will face while operating in this market.

In this aspect Morrisons can use democratic leadership strategy, in which management team will discuss each official decision regarding operation in Indian market.

Market size:

Based on the overall analysis in the external environment in the India, it can be stated that Morrisons can grab potential market in this country.

Market size in the Indian supermarket increases in every year due to the governmental support towards supporting foreign entities and sharp shift of customer preference towards the one-stop marketing.

Based on this approach it can be stated that Morrison will have opportunities to grab enormous market size in the India which is based on the management structure, proper marketing strategy and product vas well as service quality of Morrisons.

Threats and opportunities from findings:

Threats:

From the overall external analysis following threats are find out which can faced by Morrisons:

Political instability in India which will impact on the decision making and operation of Morrison

Multivariate political structure will create issues for morrisons marketers for taking right decision and strategies for their operation in the Indian market

Indian government focuses more on the eco-friendly products and recycling packaging, which will enhance the overall manufacturing cost for Morrisons.

Fluctuating inflation rate, interest rates and tax rate will pose financial crisis for Morrisons

Opportunities:

Indian government is highly supporting towards foreign entities that operates its business in this country due to enhancing employment and financial standard of this country. This will be one of the great opportunities for Morrisons.

Another opportunity that Morison will get in Indian market is the preference of customers towards supermarket trend to get one-stop shopping facilities.

Monopoly power:

Monopoly power in business is refers as the one seller or marketer in the market (Milani, 2019)

However, in India, as this market already have several existing supermarket brands such as Big Bazaar, reliance Fresh, Vishal Mega Mart and Spencer, marketers of Morrisons can not make dominance in the market to garb majority of customers bas.

Local responsiveness:

From the analysis it is seen that, India favours supermarket culture in which customer can get different products and services in one store (Pati et al. 2018). Local responsiveness for morrisons in Indian market is expected positive based on the above-mentioned analysis

Benchmarking:

For benchmarking the business in Indian market, Morrisons is going to focus on the following points:

Focus on the key business aspects, such as firm’s strategy, management structure and operational process

Focus of conducting relevant decision-making strategy

Setting proper competitive advantage in Indian market to grab strong brand reputation

Compare its strategic objective with existing supermarkets in India to analyse internal strength and weakness

Market penetration:

In order to operate in Indian market, Morrisons will have the following market penetration strategy

Setting justified price which will be relevant to the financial condition and income level of Indian customers

Find out new customers in India who are interested in supermarket trend

Focus on promotional of brand image and product quality and uniqueness

Offers discounts facilities and free products to customer in India to convince the, to switch their preference to Morrisons over the other supermarkets

EFE-IFE:

External factor evaluation:

Morrisons will have opportunities for new trade agreement in India

Number of internet users in India increases in each year which is good sign for Morrisons marketers

Indian customers move their market preference towards one-stop shopping like supermarket which will be supportive for Morrisons

Well-developed taxation system in India will be supportive for Morrisons

Internal Factor Evaluation:

Strength:

Morrisons is famous food brand in the UK

Morrisons sales high quality products that will assist marketers to grab more customers in India

Indian customers shift their market preference towards one-stop shopping like supermarket trend which create positive opportunities for Morrisons

Weakness:

Rising competition in the Indian supermarket field

Morrisons is going to deal with ever increasing market competition in India by potential rivals such as Big Bazaar, Vishal Mega Mart and Reliance fresh.

FDI:

Scope for FDI in India is strong as the government focuses on grabbing foreign investment for improving overall economic growth of this country. Therefore, Morrisons will have chances of grabbing consistent flow of foreign investment while operating is India

1.3 Internal impact:

Impact on Indian market on Morrisons can be understood through the following points:

Marketers of this company is going to face issues in arranging professional standard of its staffs based on the market trend of customer buying behavior in the Indian market.

As India is the prime target of many potential supermarket chain such as Tesco and Mark & Spencer, the marketers of Morrisons need to attract its investors and FDI to maintain consistent flow of financial resources.

The staffs and marketers of Iceland can face cultural barriers as the Indian culture is completely different from that of the UK.

Section 2:

Key opportunities:

Indian market is crucial for gaining huge return on investment in international market (Katz et al. 2016).

Globalisation will allow the marketers Morrisons to invest in grocery field in the Indian market, which not only enables them to gain proper economic growth but also strengthen their chance of getting huge financial return on each investment.

Key strategies:

Strategies used for internationalization:

Internationalization is referred to as the process that allows firms to enter into the Indian market (Salyova et al. 2017). Morrisons can focus on the following international business strategy that will assist marketers to extend their business in India.

International trade:

International trade is associated with the transaction of products and services from the home country to the foreign market (Shaaban and Magsi, 2019).

In this context, Morrisons is going to set strategies for operating trade in India which will improve their international brand reputation as well as organizational image.

In term operating business in India, this brand needs to make effective strategies which will not only assists the marketers to enhance the annual profit of this organization but also provides opportunities for this brand to enhance its corporate image.

Foreign direct investments:

This type of internationalization allows firm to control the ownership of a business in foreign market (Kukovec et al. 2018).

Through investing in business in Indian market, marketers of Morrisons can have the opportunities to enter into an unknown market which allows them to take business risk and competitive advantage. Morrisons can use FDI in term of extending its business into the Indian marketplace which not only assists them to enhance the market size but also uplift the brand image in the international marketplace.

Licensing:

Morrisons can use this international pattern which will assist its owner to open its branches in India and sells its product freely in the local market.

Franchising:

Franchising is the business arrangement in which the owner of a company provides legal right to another company to use its logo, trade, trademark and brand name (Katz et al. 2016). Morrisons can use this method of internationalization for opening its branches by using the logo, business operation pattern, trademark and brand name of parent company to operate its branches in India.

Joint venture and strategic partnership:

Joint venture and strategic partnership are important in operating an international business which allows firms to merge with other potential organization in the Indian market to grab the competitive position and brand awareness (Kukovec et al. 2018).

For example, Morrisons can merge with Amul, the major food brand in India, in terms of attaining a large number of customers.

Competitive advantage Theory:

One of the most important impacts of global trade is it enhances the competitive advantage for any business (Jona and Guxholli, 2018).

In case of Morrisons, marketers can use competitive advantage theory to have opportunities to prove their brand values and uniqueness in the international market by posing potential completion to the rivals.

Absolute advantage theory:

The marketers of Morrisons can use Absolute advantage theory, which will assist them to focus on improving the quality and justifying the price of products to get absolute advantage in the India over the other one.

Product life cycle:

Morrisons will enhance product life cycle, which will assist customers in India to use each product for long time. This process will assist this firm to grab huge customer base in India.

Recommendation:

Morrisons is recommended to use the following strategies for successfully operating international business operation.

Ansoff Matrix:

Market penetration:

Morrisons focus on developing existing product quality in the existing market through using following strategy: The marketers of Morrisons will enhance product range. They will also Conduct research and development process on existing product quality. The marketers are intended to operate their stores near the crowded place to get huge customer gatherings.

Market development strategy:

Morrisons will sell its existing product into Indian market by using strong promotional strategies. Morrisons can use merger strategy to garb the advantage of the local marketers’ staffs and customers in Indian market. Morrisons will target the malls nearby railway station, bus stop and metro station.

Product development:

Morrisons will sell new products in the existing market through conducting marketing campaign and promotional events. According to (0, for product development, marketers needs to focus on represent the quality and uniqueness of their product and services. Ibn this context marketers of Morrisons will come up with new stalls. Morrisons can also offer extra discount and free offers to the customer in India in order o brad their attention.

Diversification strategy:

Morrisons will develop proper diversification strategy such as Horizontal Diversification Strategy, Concentric Diversification Strategy and Conglomerate Diversification Strategy. Through maintaining proper diversification strategy company can improve its customer base in the new market (Alengo, et al. 2019). Morrisons will focus on product and service diversification to grab customer attention.

Porter’s Generic strategy of Morrisons:

Here the marketers of Morrisons will set proper cost leadership strategy which will assist the marketers to list their items with proper market price that will assist the marketers to grab customer attention in new market. According to (), in case of the international business the company needs to set justified price of each item sin the foreign country in such a manner that will assist the local people to easily afford the items. Cost focus is important for any company which is going to operate its international footprint into the foreign market. Morrisons will set strategies for reducing the cost of their marketing and promotion which will automatically reduce the market price of each item. In case of setting proper differentiation strategy, Morrisons will chose the age group and the income level of local people in India. According to market differentiation is important for the marketers to grab the customer attention. In this context, marketers of Morrisons will chose the middle to high income level people as their target customer with age group 15-45, as they can afford the items of this company. This differentiation can only be fruitful if Morrisons can make strong promotion of their products in front of the customers.

Issues in differentiation:

Indian customer may not accept the product type of food type of Morrisons as its product is based on UK market approach. Most of the people in India are of middle age and older people, who may not switch their preference from the brand of their home country to UK based brand like Morrisons

Growth options:

Market development strategy set by Morrisons will be merger, as it will assist this company to have advantage of local marketers, suppliers and dealers. Issues faced by marketers of Morrisons in India are poor growth of economic standard of this company due to high level of market competition. Morrisons can also go for joint venture as it will enhance its market opportunities in local market. Such as Morrisons can merge with Amul, the major food brand in India.

Conclusion:

Morrisons has made this SMART objective to make successful operation in Indian market

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