The five forces analysis for Morrisons Essay Example | Topics and Well Written Essays - 750 words

The five forces analysis for Morrisons - Essay Example This research will begin with the description of bargaining power of buyers. Buyers have fairly strong bargaining power because they have a vast range of choices.   Prices are highly competitive so buyers can easily switch to other brands without any loss. The cost of switching is particularly low for products that are standardized and offer little differentiating features. Around 94% of the customers have a choice of at least three supermarkets at their disposal within a time frame of 15 minutes. Suppliers in this sector have fairly weak bargaining power due to strong brand presence of supermarkets. Suppliers fear the risk of losing their contracts with the large supermarkets, including Morrisons. Therefore, it is an easy task for such retailers to lock in suppliers at low costs. Furthermore, the industry is fragmented and retailers find themselves doing the role of middlemen and manage to rack up huge profits. Stores in convenience market may be substitutes; however, ever since t he retail stores have diversified into the convenience sector this threat is decreasing. There has been growing protest towards the use of hormonal or genetically modified products over the last few years. It is estimated that the market for organic foods in U.K is worth  £2 billion and is expected to grow in coming years. Hence, convenience stores as well as shops selling organic food may be potential substitutes but this risk is mitigated when large supermarkets buy these out. Morrisons, however, does not have any plan in expanding into this sector. Food experts such as butchers may also be substitutes; however, due to the ease of shopping and greater variety of grocery sector, this threat too is diminishing (Don Edwards & Associates Ltd., 2007). Overall, the threat of substitutes is fairly large for non-food offerings and fairly low for food offerings. 4. Competitive Rivalry Competition remains intense with the top 3 players including Asda, Tesco and Sainsbury’s. Me-too strategies have been widely adopted, such as that of Asda’s low price range strategy ( (Don Edwards & Associates Ltd., 2007). There is evidence of price wars between the top 4 players. Rivalry in the U.K supermarkets industry remains high although the industry itself is not growing. The U.K supermarkets industry is at the maturity stage of its lifecycle, growing at a rate far less than that of GDP and aggregate spending (Lancaster & Massingham, 2011). Fixed costs of this industry are high which can be potential barriers to entry of new firms (Lancaster & Massingham, 2011). Barriers to entry are potentially high with small retailers unable to compete. , unlike its three larger rivals Tesco, Asda and Sainsbury's, Morrison’s does not have an internet home shopping business (Zentes et al., 2007). This could put the company on the backburner as e-commerce is an ever-growing business as it gives greater convenience to customers along with a potential to tap international mar kets. Also it does not have a loyalty card scheme such as Club card which Tesco has uses to track consumer trends and offer lapsing customers discounts (Thompson & Martin, 2010). Loyalty cards keep the regular customers coming back in that they use it to trace customer’s demographic profile which can go a long way in targeting the right products in advertising. Furthermore, by offering discounts the company has the opportunity to induce repeat purchases from its customers. Furthermore, unlike Tesco, Asda and Sainsbury's, Morrison’s does not have a meaningful non-food offer (Thompson & Martin, 2010) . The company does not have enough diversification at present. Greater variety of products (non-food

International Investment In China Essay Example | Topics and Well Written Essays - 2500 words

International Investment In China - Essay Example However, associated with these opportunities are also risks confronting the businesses in the context of international investment. This essay primarily encompasses the direct investment concerns in the international business spectrum and also presents the case of Shell plc as an example of UK's direct investment in China. There has recently been an increasing trend on the part of the multinational corporations from the developed world to enter into trade and investment with emerging economies of the world. There happen to be several factors responsible to induce the foreign companies to invest in less developed or emerging markets. Samli and Kaynak (1984) refer to the concept of emerging markets as similar to less developed countries characterised primarily with agriculture based economy, high population growth levels, lower income levels, low literacy level, lack of substructure, and lack of capital etc. China is also one of the emerging economies of the Asian world, which is speedily climbing the ladders of economic progress and prosperity through a remarkable growth in various industrial and economic sectors. The recent rapid economic boom in China and open market policy has projected the country's image in the world as an attractive market for international investment (Sun and Chai, 1998). ... Chinese government and financial environment purposefully support and encourage multinational companies to enter the market so that it can affirm the consistent progress of the Chinese economy (Zhao, 2003). In the same vein, several UK companies having identified and analysed the opportunities in the Chinese market are making direct and indirect investment in the country that brings foreign reserves to the country as well as happens to be profitable for the these corporations. Huaning and Colin (2004) refer to the United Kingdom as the pre-eminent investor in China during the recent years among all the European Union countries. Case: Shell's Investment In China Shell happens to one of the major investor in Chinese market. In the year 2002, it entered the oil market of China with an investment of 255m (FT.com News, 2002). The company further expanded its business activities in the country and recently the company confided to a project concerning coal exploitation in a joint venture with a Chinese partner with a prospective investment of about 2.7b, probably the largest ever investment received by the country (FT.com, News, 2006). In this way, Shell plc invested in the Chinese market by way of direct investment. The increasing interest of Shell plc in the Chinese market is reflective of the investment attractiveness of the country with regard to its inexpensive labour, growing economy and surging demand. Determinants And Merits Of Investment By UK Companies In China Changhong and Weili (2002) propound that there happen to be two significant forms through which the multinational corporations invest in a developing country viz.