Morrision's Macro Environment & Stakeholder Analysis

80645183515 The Business Environment (BA Module) Contents Page and Learning Outcomes ,[object Object],Scope: this report focuses on the macro-environmental issues which affect Morrison’s supermarkets as well as the retail sector as a whole. It looks at how Morrison’s has responded to the largest, at present, economical influence: the recession. It looks at how they have transformed potential threats into strengths and opportunities which is analysed through a PESTLE analysis of the retailer. The remainder of the report will cover aspects such as Consumer Confidence, Consumer Behaviour, Inflation, Unemployment and the Labour Markets, the Retail Price Index of Energy, Aggregate Demand and the Circular Flow of Income. Moreover, it also looks at the internal environment by focusing on the positions and functions of individuals and how they aid to the achievement of the companies objectives. It also identifies their stakeholders and look at how potential conflicts of interest might arise between them. Limitations: Some of the statistics compiled for this report only have the latest to 2008. This is because at the time of writing (17th November 2009), statistics haven’t been compiled for the whole of 2009 because the year hasn’t ended. For these statistics we can draw a line of best fit and predict, providing that no other fundamental influences interfere, where the next figures on the charts are going to be plotted for 2009. However, some statistics do include the early quarterly periods of 2009. Purpose: the purpose of this report is to look at the macro-economic influences that are relevant to Morrison’s by looking at the company as a system. In other words, how the retailer tailors their internal operations and strategies to become products themselves of the market environments in which they operate in. Findings: Since the merger with Safeway’s and the appointment of the new CEO Marc Bolland in 2004 and 2006 respectively, the company has undergone a major ‘facelift’ which has brought the company to centre stage to join the ‘well known’ major four retailers in the UK. There is evidence of this in the growing market share the retailer has gained in the grocery sector. They are able to provide quality and provenance of the food in which they offer, along with their sustainable core competence they have of the ‘Market Street’ Unique Selling Point innovation, where they are able to stock prepare food freshly in-store. They have been able to cut costs across the business as well: their backward vertical integration movement into manufacturing and owning their own supply chains, pack houses, distribution centres and transport fleets means they are able to eliminate costs associated with external suppliers as well as securing supply itself. In addition to this, they have been quick to recognise the potential impacts to the business associated with the recession, acknowledged those potential threats and turned them into opportunities and strengths through innovation and developing a business model as a system, which is fluid and dynamic to the market. They are also able to cut costs by reducing food wastage, being able to prepare their food in store and by being able to adapt quickly to changing customer trends by short lead-time on food (source to store) by their flexible business model, and by each fresh department preparing and merchandising only the most popular and freshest products by the hour, as supposed to a whole range on daily basis. The report also reveals that outputs of the business as a system can also be inputs into the same system and is an ongoing process, whereby if the outputs need to be changed; alterations need to be made to the inputs and the transformations of the system. Front Cover and Header Logo’s sourced from: Wm Morrison’s Supermarkets Plc, 2009. Wm. Morrison’s PLC Website. [Online] (Updated 2008) Available at: http://www.morrisons.co.uk/ [Accessed 5 November 2009] Notes to the Examiner: ,[object Object]

The word count excludes the following:

All references and bibliographies

All references to diagrams and tables (except all writing in the Porters Five Forces Diagram (Porter, 1980)

Labels and titles of tables and diagrams

The Learning Outcomes as Titles

All Harvard referencing in this assignment is from the formatting illustrated in the Anglia Ruskin University document. http://libweb.anglia.ac.uk/referencing/harvard/htm

I would like all ‘Inserts’, which have been placed within the main assignment to be included in the marking scheme if possible.Contents and Appendix Contents and AppendixPage 3WM Morrison’s Supermarkets PLCPage 4Section One: Describe the nature, scale, characteristics and objectives of the chosen organisationPage 4Visions and Value ObjectivesPage 4 Corporate and Social ResponsibilityPage 4Business ModelPage 5Values, Leadership, Talent, PerformancePage 5Financial ObjectivesPage 5Other Structural and Scale ComponentsPage 6Section One: Relate organisations, in terms of size, funding sources and independence, to the sector as a wholePage 6How does Morrison’s, as a system, interact with its environment:Political, Social, Technological, Legal and Environmental Influences (PEST)Page 6The Grocery Sector as a whole.Page 7Table 1.0: ‘The Grocery Sector as a whole’Page 7References and Bibliography Section One Page 8 Section Two: Principal stakeholders and their potential conflicts of interest.Page 8Customers, employees, communities, shareholders, charities, Trade Union (USDW)Page 9 Section Two: Reflect upon the position and functions of individual’s, including managers, within an organisation and identify their principal contributions to the achievement of the organisationPage 11Appendix 1.4: Table 1.1: ‘Visions and Values’Appendices & InsertsInsert 1.0: How does Morrison’s, as a system, interact with its environment?Insert 1.2 : Additional Objectives Summary Table’Table 1.2Insert 1.3 : Porters Five Forces Model (Porter, 1980) Figure 1.6Insert 1.4 : Organisational Structure, Operational Boards and Span of Control Figure 1.7Insert 1.5 : Consumer Confidence Figure 1.5Insert 1.5 : Consumer Shopping Trends Figure 1.5Insert 1.6 : The Morrison’s Business Model Figure 1.4Insert 1.7 : The 2009 Distribution Network Figure 1.4Insert 1.8 : The Grocery Sector as a whole’Table 1.0App 1.0 : Systems TheoryPage 13App 1.1 : Corporate and Social ResponsibilityPage 13App 1.2 : Equilibrium in the money supply market.Figure 1.2App 1.3 : Fuel price indices in the domestic sector in real terms Q4 2005 to Q4 2008 Figure 1.5App 1.4 : Fuel price indices in the domestic sector 1970 to 2008 Figure 1.5App 1.5 : The Business Context (Environmental) Model Figure 1.8App 1.6 : The HRM Function: a shared responsibilityFigure 1.9 WM Morrison’s Supermarkets PLC Wm Morrison’s Supermarket PLC is the fourth largest grocery retailer in the UK by market share. They focus on offering the freshest ingredients and food to their customers. This has always been a strong unique selling point for the company and has marketed this by the innovative Market Street, which is a separate isle housing a fresh butcher, fishmonger, delicatessen, cake shop, pie chop and Oven Fresh counters. This provides a core, solid focus on offering the freshest food and ingredients, which are prepared, stocked and sold in-store every day, by their skilled and trained food specialists. The idea has been implemented into their marketing mix to give their customers a ‘feel’ of being in a real market environment. Section One: Describe the nature, scale, characteristics and objectives of the chosen organisation. Business Model | CSR | Visions and Values Morrison’s have set out a Visions and Values guide, which illustrates what Morrison’s expects from their employees. In order to communicate this to their employees across the business, the company launched an interactive workshop in order to integrate these values into the day-to-day running of their stores. Furthermore, all new employees, during their induction period, now undertake these workshops to build upon and demonstrate understanding of the Visions and Values and to apply it to their work practices. Vision (1) ,[object Object],Values (1) ,[object Object]

Bringing the best out of our people

This report will focus on identifying positions and functions of individuals and how they contribute to the achievement of these aims, in other words, to the success of the company further on.Corporate and Social Responsibility (CSR) They also have a further objective which contributes to the nature of the organisation: this is their Corporate and Social responsibility policy. Their CSR strategy is an extension to their one vision to be the Food Specialist for Everyone, which are to maintain sustainability and to protect the valuable resources which society depends upon today. As a result, Morrison’s have identified the three areas to which their CSR strategy is focused on. These are, ‘Business, Society, and Environment.’ WM Morrisons Supermarkets Annual and Financial Statements (2009). Business Taking care about our business Product Stewardship(2) Society ,[object Object]

Promoting Healthy, Balanced Lifestyles.Environment Managing CSR Preserving renewable sources ,[object Object]

Also see: Appendix 1.1Business Model The company’s Business Model enables them to be able to control their supply chain and being close to the sources of their fresh food. This in turn enables them to offer their customers the freshest food and competitive prices compared to the major three, and by using this model, they can deliver seasonal food into their stores quicker than their competitors and to react quickly to changing consumer trends where necessary. The diagram shows their business model in action in Fig 1.4a. The components are as follows: Own Supply Chain (Diagram) A differential advantage to Morrison’s over its competitors is that they own their own supply chain and manufacturing plants, achieved by vertical backward integration. By growing and packing their own food, they can wash, grade and pack their own produce, aided by their 12 distribution centres across the country, along with their own transport fleet, they can deliver the freshest ingredients, with lower lead times, to all stores. Figure 1.4b shows one of the ways in which we can determine the size and scale of the business is by the Companies Distribution Network. The map illustrated in Figure 1.4b includes all distribution centres, owned by the retailer, by location across the country, the regions they each service and the number of stores they service in each region. Manufacturing Sites Morrison’s own 13 manufacturing sites, 12 of which are located in the UK and1 in the Netherlands, these consist of: ,[object Object]

Six Fruit and Vegetable pack houses

One food preparation factoryUK arable and live stock farmers Morrison’s buyers work with the principals (the producers) in the supply chain directly. In purchasing the whole crop, this is fairer to the farmer, and in carefully selecting the best livestock, they can maintain quality, freshness and value. Transport Fleet Morrison’s own their own transport fleet, which consists of 680 tractor units and 2,000 trailers. Market Street The innovative Market Street consists of: ,[object Object]

800 Fishmongers, across the country.Values, Leadership, Talent, Performance Morison’s believe that in order to attract, motivate and develop skilled people, and in order to maintain the focus that Morrison’s continues to be the Food Specialist for Everyone, the Company have identified three key elements which they believe will continue to and strengthen their position in the grocer sector. This is based on the belief that their staff are the most important assets of their business model and to deliver their high standards of service to their customers. Their four areas of focus are: ,[object Object]

PerformanceFinancial Objectives (General).... Balance Sheet Strategy Objectives ,[object Object]

Planned investments funded through existing facilities

Maintain a strong investment grade balance sheet

Sustain funded pension schemes to IAS 19 basisFinancial Objectives ,[object Object]

WM Morrisons Supermarkets Annual and Financial Statements (2009).Other Structural and Scale Components:See: ‘Organisational Structure, Operational Boards and Span of Control (Fig 1.7)’& ‘The Morrison’s Business Model 1.4 (Fig 1.4a), and the 2009 Distribution Network (Fig 1.4b)’ Total Word Count: 841 Section One: Relate organisations in terms of size, funding sources and independence, to the sector as a whole. How does Morrison’s, as a system, interact with its environment:Political, Economical, Social, Technological, Legal and Environmental Influences (PESTLE) Political: A very large political factor which has been a key influence in determining the major retailers’ marketing strategies over the years is the increasing trend in people seeking out healthier foods as the nation becomes more health conscious. Furthermore, the government is now attempting to stem the rise in obesity in the UK with the ‘5-a-day’ initiative. The UK has the highest rate of obesity in Europe with 23 % of adults being classed as obese, and with obesity being linked to health problems there has been a surging demand for healthier foods. However, there has been evidence that low-income families do find it difficult to maintain a balanced diet and therefore, have a tendency to live unbalanced lifestyles, in part because these groups have a lack of money to buy ‘wholesome foods’ but also because to live a balanced diet is seen to have energy rich benefits but nutrient-poor aspects. (Jones & Comfort , 2006). Furthermore, certain pressure groups have stated that the labelling on health foods is misleading, saying that they provide no nutritional standards at all. Customers increasingly want to know their GDA’s and the contents of salt, sugar, fat, and carbohydrates. (Politics, Social and Cultural: Environmental: Needle. D: the Business Context (Environmental) Model) The good majority of people purchase their food through the large supermarkets and therefore provide the largest source of food to the public. Therefore, it has been said by many experts that it is the supermarkets have been mainly to blame for UK’s obesity and health problems by not addressing the problem head-on. One expert even said that it is in the supermarkets best interests to keep their customers in reasonable health because if a customer passes away, they supermarket has just lost a customer! With the combination of the rising amount of obesity in the UK and certain market segments finding it difficult to access the healthier foods, Morrison saw a void which they had filled of making health food accessible for everyone by charging reasonable prices. In their CSR strategy they say that they ‘take good care of their shoppers, colleagues and communities’ by offering good quality wholesome foods such as fresh fish, meat and vegetable products at very competitive price. This is a part of their vision to be the Food Specialist for Everyone. They also launched new labelling scheme in response to competitor’s actions, for new labelling on all their products, showing the GDA for men and women as a percentage of the total daily GDA as well as clear nutritional information of each product as well. This also includes their Eat Smart range in their reduced salt products in order to differentiate them from other products and therefore catering to this new niche market. Furthermore, their magazine now has recipes and tips on eating nutritious and healthy foods and therefore leading healthy lifestyles. They also launched a Lets Grow campaign which was tied in with the nationalcurriculum to teach schools about the benefits of eating healthy foods and having balanced lifestyles though offering vouchers to their customers, who could then pass them onto their local schools, who could in turn reedman them for garden tools. Morrison’s pride themselves at how heavily they are involved in their communities health and lifestyles by offering real wholesome foods and prices when are affordable for everyone and to offer these foods ‘every day, not just special days’ WM Morrisons Supermarkets Annual and Financial Statements (2009). Economical factors which had affected the Company in the past were, firstly, the price inflation of basic commodities back in 2008, which had an impact on the prices of some of the Companies basic ranges. For example, during the beginning of 2008, the price of wheat more than doubled as a result of the global wheat shortage, due to supply and demand, the commodity price rallied WM Morrisons Supermarkets Annual and Financial Statements (2009). (The Supply Graph: Figure 1.3) This resulted in customers paying out more for their weekly shopping baskets as the Company had to raise the prices of their wheat-based products in line with the higher underlying commodity price. This is demonstrated in the supply and demand diagram and how this affects price. (Role of the Economy: Environmental: Needle. D: the Business Context (Environmental) Model) Another economical factor that made the Company address it marketing strategy, was the decrease in disposable income people had (Figure 1.1), due to the rising energy prices occurring (Fuel price indices of the domestic sector in real terms Q4 2005 to Q4 2008 (Fig 1.5a),1970 to 2008 (Fig 1.5b). Charts 1.5a and 1.5b show a general upwards trend in the retail price for energy, which reflects the total expenditure on energy consumed), and a reduction in the availability in mortgage credit due to the reduction of demand for money which raises interest rates, and making it difficult for people and business to borrow and invest WM Morrisons Supermarkets Annual and Financial Statements (2009). (Fig 1.2). Moreover, increased unemployment and rising taxes caused the Company to react by launching over 21,000 price cuts as well as launching a rebranded ‘Value’ range which reflected on the declining consumer confidence and thus affected consumer behaviour (Consumer Confidence (Fig 1.5c) and Consumer Shopping Trends (Fig 1.5d)). The idea was to help their customers save money but at the same time, not compromise on the quality and health standards the products gave, which were the two factors their customers have always demanded. Both of these economical factors had an effect on the Customer input component into the system as these factors lead to the changes in consumer buying behaviours and lifestyles. Furthermore, it also affected the labour and raw material inputs as they had to rebrand and revamp their packaging to reflect the strong ‘Value’ range they were promoting. This is an example of outputs (information from customer marketing) turning into inputs for new products (How does Morrison’s PLC, as a system, interact with its environment? (Fig 1.0)) (Role of the Economy: Environmental: Needle. D: the Business Context (Environmental) Model) If there is a cut in domestic national household incomes due to rising unemployment, this will affect the spending on consumption of domestically produced goods (Cd).This may also result in an increase Transfer of Moneys in the form of benefits from the government, working tax credits or child benefits as jobless claims rise (claimant unemployment). These are known as negative taxes. Net Taxes (T) are the sum of total taxes minus negative taxes. There also may be a reduction in Net Savings (S) as well as a reduction in Net Taxes (T) if the government cuts tax rates through the use of Fiscal policies. These macro-economic changes, affecting consumer behaviour, will result in customers switching products and even retailers to find the best deals, and the inflation of grocery items in early 2009 occurring, due the weak pound, has lead to an increase in withdrawals from the inner flow, because domestically produced goods are now more expensive relative to imported goods (The Circular Flow of Income. (Fig 1.1)). Moving onto social factors, one factor, which is loosely tied in with economical factors, were their consumer trends and buying habits: going back to the rising costs of food, fuel and raw materials, more customers were switching from purchasing Premium and Organic product ranges, to their standard and ‘Value’ ranged products (Consumer Shopping Trends (Fig 1.5d)). Furthermore, because less and less people were eating out, the Company saw large sales increases in their ‘Cook at Home’ ranged products too. Another social factor which Morrison’s addressed was catering to the Muslim community in the UK by introducing Halal, which a Muslim, meat-based product. The rapid growth of the Muslim population in the UK made businesses want to invest in these new markets and industries by providing products and services tailored to Muslim beliefs and cultures. The Muslim population makes up only 5% of the UK population but they eat 20% of the meat sourced from the UK (Ahamed, 2008, p.656). In 2003, Morrison’s took advantage of this and launched a promotional campaign called ‘Hello to Halal’ however; this was met with some hostility from the Muslim communities, saying they favoured their local butchers over buying from the major supermarkets. Some responses to this trend were that they were more comfortable buying meat from their own people, from their own communities, who spoke their own language (Ahamed, 2008). The Muslim Council warned that the price of Halal sold in the supermarkets would rise after achieving saturation point and would wipe out the small business nearby (Ahamed, 2008, p.656). Furthermore, the Muslim Council also warned that 90% of the meat sourced to Halal was illegally traded, whose animals were not slaughtered to the requirements of the Muslim faith. As a result, there was much controversy. This is an example of a social factor which also concerns the Customer input into the business (the system) (Ahamed, 2008, p.656) (Politics, Social and Cultural: Environmental, Business Activities and Structural Level: Needle. D: the Business Context (Environmental) Model) In 2008, Morrison’s launched a ‘Lets Grow’ campaign to help school children learn about fresh produce. This tied into the National Curriculum and the Governments ‘Growing Schools’ initiative. It was aimed to teach children to live healthier lifestyles. Vouchers were given to all shoppers for every £10.00 they spent in store, whom they could give to their local primary schools, who could then redeem the vouchers for new gardening equipment. 18,000 schools enrolled on the programme (Wm Morrisons Supermarkets PLC (2009)). (Politics, Social and Cultural: Environmental, Business Activities and Structural Level: Needle. D: the Business Context (Environmental) Model) Legal/regulatory factors which have affected the Company are that Morrison’s operate under a strict set of regulations such as Health and Safety, Food Hygiene, Handling of Hazardous Materials and Chemicals, Data Protection and rules of the Stock Exchange. These regulations concern the microenvironment and so affect the ‘transformation’ component of the system (Wm Morrisons Supermarkets PLC (2009)) During the acquisition of Safeway’s in 2004, the Competition Commission had to ensure that, due to the great demand from Companies wanting to buy Safeway’s, (such as Tesco’s, Marks and Spencer and Asda/Wal-Mart) competition amongst the retailers would be fair. They did this by examining the scenarios’ which would result of each company buying Safeway’s. Due to the large coverage of all the other retailers in the UK and with Morrison’s at the time only existing in North Yorkshire, the Competition Commission decided that if Morrison bought Safeway’s, they would gain significantly more geographical exposure and would be in line with the exposure the other major retailers had already (Poole, et al., 2003) With environmental factors, Morrison’s have identified three key components to achieve their overall Corporate and Social Responsibility objectives; these are Society, Environment and Business. Regarding ways in which to help the environment, Morrison’s gave away free reusable carrier bags to urge customers to stop using their old carrie bags with the aim to reducing their waste. They’ve also reduced their Carbon Footprint by sourcing and generating renewable energy. Society objectives are to provide products to preserve the health, well-being and the lifestyles of their customers and by taking care as they go about their daily business. (Wm Morrisons Supermarkets PLC Annual and Financia; Statements (2009)). (Politics, Social and Cultural: Environmental: Needle. D: the Business Context (Environmental) Model) Technological factors include business interruption IT recovery procedures by investing in a remote IT Disaster Recovery site, should any data be lost in any of the stores whilst operating. Furthermore the company also invested in a whole new transport fleet that produced lower carbon emissions, achieved better fuel efficiency and produced less noise pollution. They have also revamped their own in-house manufacturing and packaging technologies. The introduction to the Chip and Pin system required the Company to invest and to integrate new technology and IT systems to achieve this. Moreover, Morrison’s have now also rolled out self-scanning systems and queue management technologies as well. The technological factors affect all three components of the system. (Wm Morrisons Supermarkets PLC Annual and Financia; Statements (2009)). (Technology: Environmental: Needle. D: the Business Context (Environmental) Model) Also see: The Business Context (Environmental) Model (Fig 1.8), How does Morrison’s PLC, as a system, interact with its environment? (Fig 1.0), and Appendix 1.0 The Grocery Sector by Market Share, Independence, Funding Source and Statistical Overview Morrison’s Market Share by Region over 3 years (Fig 1.6), shows the companies growing market share by region. (Morrisons Supermarkets PLC (2009)). It also depicts that the market share as a whole has grown over three years. This is because customers in the south are becoming familiar with the retailer as they have gained significantly more geographical exposure since the merger with Safeway’s. (Morrisons Supermarkets PLC (2009)). The grocery sector as a whole showed a year-on-year (YoY) growth of 5.9% for the 12 weeks ending July 12th 2009. Morrison’s has delivered the fastest year on year growth on 9.5% rise in sales and their market share rising by 0.4%pts to 11.6% (See Table 1.1: The Grocery Sector by Market Share, Funding Source and Size).TNS Global (2009) Comparing this to competitors’ growth, both Asda/Walmart and Sainsbury’s have achieved sales growth of 8.1% and 7.7% respectively (0.3%pts and 0.3%pts Market Share) and Tesco’s growth sales was 5.7% over the same period ((0.1%pts) decline in Market Share). Due to their acquisition of The Co-Operative Group and store divestments necessitated by the Competition Commission, Somerfield experience a negative sales growth accelerating to (19.1%) ((0.9%pts) decline in market share*) (TNS Global (2009)). See: Morrison’s Market Share by Region over 3 years (Fig 1.6) &Table 1.1: The Grocery Sector by Market Share, Funding Source and Size Section Two: Principal stakeholders and their potential conflicts of interest. Customers | Employees | Shareholders | Communities | Suppliers and Producers | Trade Unions Consumers The customers whom are loyal to the Company are the lifeblood of their business. Their customers are increasingly demanding to know where their food comes from (product stewardship as part of their Corporate and Social Responsibility, and because customers are increasingly health conscious as a society (Jones & Comfort, 2006, p.838) and so they look for foods that offer quality as well as providing health standards as well. As a result they expect adequate information provided to them (i.e. nutritional information and guideline daily allowances) and further aid where necessary should they have a query on a particular product. Furthermore, they also demand a high standard of value for money; they expect a reliable service and helpful staff and to shop in an environment where they feel safe, comfortable and an environment which is hygienic and for their staff to be fully trained in hygiene standards as well as food preparation and product knowledge. They also demand more locally sourced produce and products that are manufactured or sourced from Fair Working Conditions and products that are certified as Fair Trade Products. Focusing on these two key elements, they expect their retailer to address these moral and ethical codes of conduct. Wm Morrisons Supermarkets PLC (2009) They expect long-term satisfaction with the service they receive-the key elements that contribute to this need are for there to be an adequate supply of products available physically on the shelving. Moreover, customers are demanding products which meet their changing demands and, trends, these can be changes in spending power (income elasticity of demand), buying patterns (cross-price elasticity of demand) and buyer behaviour and expect the retailer to implement strategies and ideas to ways in which to meet these changing demands and trends. They can be cultural, geographic, social and demographic needs. The community and environment The communities and environments which surround stores, manufacturing plants, distribution centres and any other physical property and land owned and unitised for Morrison’s day-to-day operations have an overall expectation to ensure that Morrison’s do not misuse the scarce resources which those communities rely upon, and to ensure that their environments are not altered or impacted upon as a result of the methods in which Morrison’s carry out their normal operations. These can be factors such as noise and air pollution and waste disposal measures, the appearance of new buildings contrasted to the overall character and ‘feel’ of the surrounding communities, and policies concerned with transportation and vehicle routing management. For example, heavy vehicles being routed through narrow high streets or small village roads can cause potential conflict between those communities and the employees of Morrison’s, as well as causing physical erosion and damage to the land. The members and residents of local communities also expect to have their views and opinions aired and taken into consideration into any planning applications for proposals on erecting any new plant or property owned by Morrison’s in those communities. (Mullins, 2008) Employees Employees, and this extends to managers, directors, supervisors and contractors within the site, expect equal and fair treatment, job security, fair pay, good working conditions and adequate allocations of resources (i.e. staff) to carry out their jobs effectively. Moreover, they also expect recognition and feeling a part of a team. They expect fair HRM policies and management, the provision of health and leisure functions, adequate training and development, and to be provided with fair and equal opportunities in employee engagement practices, such as participation and consultation regarding relevant issues and concerns within their working environments. Potential Conflicts of Interest: potential conflicts of interest arise here could be between the managers and the workers, who are both seen as employees and therefore, stakeholders to the business. Sources of conflict could exist in ways such as differences in perceptions of certain values, as an individual’s views becoming reality, judgemental values can become conflict. Another example is the limitation of resources: workers on the shop floor may want more staff in their departments because they are short-staffed, however, the organisation are aiming to cut back on costs as they are not making sales to justify recruiting more staff. If the organisation is ill-performing financially, resulting in even more cutbacks and in turn resulting even more in limiting those recourses, then more conflict may result (Mullins, 2008). Suppliers and Producers Suppliers and producers (wholesalers and farmers respectively) expect fair trading standards, fair and equal methods in which to aid the continuation to the vitality of farming implemented by Morrison’s (arable and livestock farming) and expect to be paid fair wages in line with industry standards. The Bargaining Power of Suppliers (See Porters Five Forces (Porter 1980)) Branded suppliers have some power over their customers as they have more leeway over which retailers to they wish to supply to (Fillis, et al., 2005,. However, suppliers of retail-branded products, which are the key differentiators of the competition associated what that retailer, need to have that supplier-retailer communication to ensure retailer specifications are met. This puts more power on the retailer, and they use that power to keep a tight grip on prices which may result in the suppliers losing out (Fillis, et al.,2005, p. 728). However, suppliers must remain competitive if there a large amount of suppliers on the market and a key advantage to the suppliers are that their large customers can easily and cheaply switch to a particular supplier if they are seen favourable to another one (Sloman, 2008). However, manufacturers are competing for shelf space at the retail end with the own branded labels, however with retailer being able to imitate branded products, this can dampen down product innovation and development at the supplier end (Clarke, et al., 1994). Supplier/Product NameSectorBos Brothers Fruit and Vegetables BVProduce WholesalerFamers Boy LtdManufacturer and Distributer of Fresh FoodNeeroch LtdFresh meat processorWm. Morrison’s Produce LidProduce PackerRathbone Kear LtdBaker Trade Union The trade union, USDAW (Union for Shop, Distributive and Allied Workers) is the union representative body used by Morrison’s. The trade union negotiates strategies and practices with the Company on aspects such as pay, working conditions, staff treatment and HRM policies, support for parents and carers, and to ensure that all employees they represent receive fair treatment in respect of all these elements and to generally improve the quality of the lives of those employees (Sloman, 2009). USDAW expect Morrison’s to carry out relevant practices, to changes and to implements and to continue to operate to new strategies and practices which have been negotiated between Morrison’s and USDAW, providing they do not have a detrimental impact on the Companies operating objectives and practices. Trade UnionUSDAW (Union for Shop, Distributive and Allied Workers) Shareholders Shareholders to the business expect a good return on their investment to Morrison’s. Focusing on this expectation into further detail, for the Company to reward such expected returns in dividend payments to their owners is to perform financially to the standard to which they can reward their owners with a high return. The key measures that determine this and to which shareholders expect to see are increased earnings-per-share (EPS) figures over the previous quarters and year-on-year (YOY), as well as increased sales growth and profit margin figures over the financial year. Moreover, they also expect to see Morrison’s fully utilising their shareholder equity by investments in aiming to meet the companies operating objectives, increasing profitability and thus, fulfilling the shareholders expectations of receiving a good return on investment (ROI). Potential conflicts of interest: conflicts of interests could arise between shareholders of the business and the communities; this would especially be the case if plans for a new supermarket were to be built in particular location and these proposals put forward to that community were met with some hostility there would be conflict. The Shareholders would want the supermarket to be built to contribute to the company’s income and therefore, an increased dividend return of investment, however, the local communities would not want the supermarket to be built due to various resulting factors such as noise pollution and land erosion (Mullins, 2007). Shareholder% of Holding (%)Ameriprise Financial Plc6.6Sir KD Morrison6.5AR Wilson5.9Legal an General Group Plc5.2Brandes Investment Partners LP5.0Walter Scott and Partners Ltd4.1Susan and Nigel Pritchard4.0Zurich Financial Services3.1 Charity Bodies and other Groups The charities with which the retailer has worked with expect Morrison’s to partake, by making use of their fundraising strategies and their ‘Raise a Smile’ campaign, in raising the charities profile, and to make regular contributions to these charities in order to fund all causes concerned with improving the quality of living for everybody in society. Morrison’s Supermarkets PLC (2009) CharitesCancer ResearchGenerations for Generations (partnership with Help and Aged and Child line)Children in Need Investment Bankers Investment bankers are expecting to receive returns on their investments in the retailer to meet their financial objectives. They do this by either lending credit, purchasing shares in the Company or offering additional services to meet the demands of Morrison’s. In return, the companies Investment Bankers expect to develop long lasting relations with Morrison’s in order to raise their profile to potential business customers and also for the retailer to maintain a good credit rating by prompt payments in dividends or credit repayments. Investment BankerNM Rothschild and Sons Ltd Directors and Managers (the Principal-Agent relationship) Managers are employed by the directors of the company to perform a role within the Company to achieve their operational goals. However, conflict could arise between these two parties where the directors will want to achieve maximum financial growth to award their shareholders, whereas the managers will want to achieve growth to a certain level (profit satisfiers) as well as their own interests. Another issue is that managers may have specialist expertise in their own fields which the directors many not necessarily have (asymmetric information). This could mean that the managers could use this to their advantage because this ‘barrier’ could make it difficult for the directors to judge whose interests the managers are operating in, this is known as the principal-agent problem. Conflicts of interest could arise if the directors do not implement methods in which to measure how the agents (managers) are acting in the interests of the owners of Morrison’s (Sloman, 2008). s Section Two: Reflect upon the positions and functions of individuals, including managers, within an organisation and identify their principal contributions to the achievement of the organisations objectives.Personnel/HR | Store Managers | Duty Managers (ADM’s –Assistant Deputy Managers) | Department Managers (DMs) | General Assistants (GA’s) | Executive Directors | Non-Executive Directors | Committee Boards This section is focused on looking at the position of individuals within Morrison’s and to depict how their positions and job descriptions help the retailer achieve its aims. How this question can be answered is by, firstly looking at the retailers organisational objectives, and then looking at how their employees are managed to ensure that those objectives are achieved. The retailers overall operational objective, which was stated in Section One was to be the ‘Food Specialist for Everyone’ and that they have derived a ‘Values’ criteria on which their overall operation is based on. These values take on a very Human Relations approach style in that these values are designed for fluent communication between parties and involving their employees in the decision making process in how to improve the business framework, therefore blurring the distinction between the role of the manager and the role of the employee within a store. These Visions and Values include: Table 1.2: ‘Visions and Values’ VisionFood Specialist for EveryoneValue ‘Can Do’Getting Things DoneValue ‘Fresh Thinking’Always Looking for New and Better Ways of Doing ThingsValue‘One Team’Working Well TogetherValue‘Great Selling and Service’We Love to Sell and ServeValue‘Bringing out the Vest in Our People’Constantly Learning and Looking to Improve on Where we Are.Value‘Great Shop keeping’Setting a High Standard in all Areas of the Business Morrisons Supermarkets (2009) Also See: Table 1.3: ‘Additional Objectives Summary Table’ Position: Human ResourceObjective(s) / Concerns: Visions and Values | Labour Markets | Law and PEST Influences(Also See: The HRM Function: a shared responsibility (Fig 1.9))Function: Training and Development & People Management Functions and Positions One function of Human Resource management is to train and develop the people within the organisations, as well as motivate them to do well through high standards of job performance (Mullins, 2007). Therefore, HRM are responsible for communicating and training new employee is the ‘Visions and Values’ concept and to encourage then to apply those factors into their day-to-day working practices through interactive workshops. A long-term strategic objective in the form of the Companies Optimisation Plan, which was implemented to achieve industry standard financial performance and one key belief which the company has that their staff are the most important assets in their business. Wm Morrisons Supermarkets PLC (2009). As result, in accordance with government and national curriculum standards, Morrison’s now train their staff to NVQ Vocational standards in Food Preparation and Hygiene (The Grocer, (2009)). Another influence which the HRM function within the organisation is the increased need for flexibility in working patterns to suit the individual and to achieve the work/life balance. This is because, with the increasing amount of women in the workforce who may change working patterns and careers when they go on maternity leave, as a result HR has need to be honourable to this trend in offering part-time, full-time, fixed and fully-flexed employment contracts to employees which may be changed to suite the need of the individual at a later date (Sloman, 2008) Contribution to Objectives The retailers aim to be the ‘Food Specialists for everyone’ and so how the HR management contribute to this aim is trough them training and developing their staff by communicating to their employees the ‘Visions and Values’ mission statement. This is achieved through workshops and training seminars. A further aim is to develop their staff. Through focusing on four areas: leadership, talent, value and performance they aim to develop and attract skilled people. ‘Bringing out the best in our people’ focuses on enhancing opportunities for everyone to develop management and leadership careers within the organisations, again, through training and development in areas such as food hygiene to National Diploma and through management courses such as Management Development Programmes (MDP’s) and Management Development Initiatives (MDI’s). Because the company sees their employees as the most crucial contribution to the success of their business these practices add value to the achievement of this objective. Position: Department ManagerObjective(s)/ Concerns: Visions and Values | Food Quality | Selling and Serving(Also see: The HRM Function: a shared responsibility (Fig 1.9))Function: Training and Development, People Management, Boosting sales and setting sales targets Functions and Positions The Department Manager is responsible for the day-to-day operational running of their departments and are employed to manage the workers on the shop-floor and to contribute to the success of the department to the success of the store as a whole, this in turn, contributes to the financial success of all stores within the religion and all the stores in total. Department Managers are also responsible for the training and development of the staff who work under them, but training involved here is specialised to their departments. This is an extension to their Visions and Values’ strategy and to develop and motivate the best people within the business. Furthermore, they are also concerned with ensuring food quality and adhering to legal trading requirements within their departments, which is microenvironment factors affecting internal business operations. Contribution to Objectives As stated in section one, the first financial objective which is concerned with their balance sheet is to achieve sales growth which is higher than that of the industry as a whole and to reward their shareholders with earning that meet their expectations. Department Managers motivate their staff sell as much product as possible through individual training plans in selling, customer service and food preparation, all of which add value to the end product the customers purchases and is satisfied with at the same time. This contributes to the financial success of the company, who can therefore, awards shareholders with an Earnings-per-Share (EPS) figure which will encourage shareholders to buy more shares and raise the share price higher. Morrison’s, as well as every other share-issuing company, will want this to happen because this is an additional funding source which can be used to finance growth to infrastructure, either internal or external expansion. Position: Store Managers and Deputy ManagersObjective(s)/ Concerns: Visions and Values Function: Ensuring all lower management and staff adhere to company policies and procedures. ,[object Object]

Store managers and deputy managers ensure that everyone working within the store adhere to company policies and procedures and work with individuals on a one-to-one basis regarding issues or concerns one party may have. They are responsible for all departments within the store and they will work to ensure store performance meets the criteria set by the directors and/or head office and develops innovative ways in which to improve in-store efficiency as part of their Visions and Values role in ‘Always Looking for New and Better Ways of Doing Things: Fresh Thinking’. In addition, they are responsible to communicating to employees and managers all news and bulletins which are of importance, such as new procedures and objectives which all staff have to work to in order to achieve that objective.Contribution to Objectives ,[object Object]

Further functions and positions of individuals and how they contribute to objectives.Position: Remuneration Committees(Also See: Organisational Structure, Operational Boards and Span of Control (Fig 1.7))Function: encourage long-term shareholder value and maintain a strong performance culture Position: Board of Directors(Also See: Organisational Structure, Operational Boards and Span of Control (Fig 1.7))Function: Various Objectives See: Organisational Structure, Operational Boards and Span of Control (Fig 1.7) ,[object Object],Learning Outcomes Conclusion ,[object Object]

Section 1: Relate organisations, in terms of size, funding sources and independence; to the sector as a whole (Total 750 Word Max.)

Section 2: Identify the principal stakeholders of a business unit and their expectations. Reflect upon the possible conflicts of interest between stakeholders (Section 2)

Section 2: Reflect upon the position and functions of individual, including managers, within an organisation and identify their principal contributions to the achievement of the organisation (Section 2) Since the merger with Safeway’s and the appointment of the new CEO Marc Bolland in 2004 and 2006 respectively, the company has undergone a major ‘facelift’ which has brought the company to centre stage to join the ‘well known’ major four retailers in the UK. There is evidence of this in the growing market share the retailer has in the grocery sector. They are able to provide quality and provenance of the food in which they offer and a sustainable core competence they have is the Market Street Unique Selling Point innovation, where they are able to prepare food freshly in-store. With the increasing need for flexible working in the UK Morrison’s have recognised this and now issue both full-time and part-time working contracts, s well as fixed contract and ‘fully flex’ which means that employees holding those contracts are assumed by the company that they can work anytime and can change their hours where necessary, where as fixed-term contract are for those who have other commitments outside the business, such as carers or parents. They have been able to cut costs across the business as well: their backward vertical integration movement into manufacturing and owning their own supply chains, pack houses, distribution centres and transport fleets means they are able to eliminate costs associated with external suppliers as well as securing supply itself. In addition to this, they have been quick to recognise the potential impacts to the business associated with the recession and have and acknowledged those potential threats and turned them into opportunities and strengths through innovation and developing a business model as a system, which is fluid and dynamic to the market. They are also able to cut costs by reducing food wastage, being able to prepare their food in store and by being able to adapt quickly to changing customer trends by short lead-time on food (source to store) by their flexible business model, and by each fresh department preparing and merchandising only the most popular and freshest products by the hour, as supposed to a whole range on daily basis. The outputs of the business as a system can also be inputs into the same system and is an ongoing process, whereby if the outputs need to be changed; alterations need to be made to the inputs and the transformations of the system. Appendix 1.0 How does Morrison’s, as a system, interact with its environment: The System Approach (Fig 1.0) The systems approach diagram illustrated in Appendix 1.0 reflects how the retailer’s activities and eventual production outputs and objectives are shaped by their environmental influences. The illustration depicts that the PESTLE environment influences affect the Labour, Customer and Raw Material inputs as well as the transformation process components and the eventual outputs of the system, and that the whole system is shaped to fit those environments. For instance, social influences such a customer trends and changing buying behaviours will concern the Customer input into the system. Furthermore, technological factors such as new technologies could impact on the manufacturing and packaging technologies in the ‘Manufacturing and Packaging’ transformation component of the system. Influences affecting the outputs of the system could be the legal implications associated with the Data Protection Act on the ‘Market/Consumer Profiles/Data’ output component of the system. Not only are the inputs into the system provided by environmental influences such as PEST, but they can also be inputs and outputs from other systems as well. Inputs could be provided by outputs from other systems and outputs from the system illustrated in figure 1.0 could be inputs into other systems. If these systems change in any way, this could impact, positively or negatively on the system. The bold broken line shows the feedback channels. These feedback channels allow the organisation to constantly monitor the quality of the outputs and enable them to change inputs in order to improve the quality of those outputs (in this case profitability and growth). For instance, the ‘Customers’ input refers to the customers who are physically going into the store, the internal process would be the market research, weather through customer observation or face-to-face interviews. The output would be the obtaining of accurate information about their customers (their needs, trends and buying behaviours). This may lead to altering their products and services to meet the new customer expectations. This information could be passed along the feedback channel and could affect the inputs of altering labour demand or introducing new raw materials to meet the new production demands, both of which could be affected by new environment influences (regional labour demand or legislation for packaging materials). From this statement, we can see that outputs from the system can also affect the inputs from the same system, as well as external systems also. The systems approach is known as an interaction-influence model because to be effective, businesses need to adapt to its environment, similar to an animal in the wild where only the fittest survive and that the activities and products and services they sell should also be products of their environments in which they operate in. 1.1 CSR Management and Stakeholder Engagement In ensuring that their CSR programme remains current and achievable, the Company consults stakeholders on a regular basis through Stakeholder Engagement practices; this is achieved by the focus on implementing strategies relevant to the generated feedback they receive as well as their taking into account the views and issues of importance to their stakeholders in order to minimize stakeholder conflicts of interests. The numbers of innovative ideas and strategies which have been implemented into their overall Corporate and Social Responsibility programme have been the following: Let’s Grow. The companies ‘Lets Grow’ campaign was aimed at teaching school children about fresh produce and was designed to teach pupils of the benefits of living healthy and balanced lifestyles as a result or eating more healthily. To cater for this void, Morrison’s offered vouchers to customers for every £10 they spent in store. Customers could then take them to their local primary schools (providing the school participated in the scheme), whom could then redeem the voucher(s) for gardening equipment and encouraging them to grow fresh fruit and vegetables. Over 18,000 schools participated in the schema with very successful results. Local and Seasonal Sourcing One objective of the Company is to provide and offer the best, freshest food and ingredients at the best value. The Company also found that the over half of their customers wanted the opportunity to purchase more locally sourced produce in their stores. As the Company own their own supply chain, Morrison’s now grow their own produce in the East of England and are packed in degradable or combustible packaging. A penny per pack bought in store goes towards the Growing Trust. This money then goes towards selected causes in the East of England and forms another component of their CSR strategy. 100% British Morrison’s were the first supermarket retailer dedicated to selling 100% British fresh meat throughout the entire year and, as a commitment to British farmers, they ensure that all their convenience good ranges were sourced locally with the aim to develop closer links with the producers of those goods. Through developing produce groups for meat and fresh milk, they were able to share knowledge across their supply chain, acknowledging their objective of possessing their deep understanding of food, enhancing quality and freshness of their range and hence being the food specialists for everyone, and helping to ensure the continuing vitality of British farming. Charities and Functions As well as food retailing, Morrison’s also supports a number of charities and functions throughout the year, and have become involved in supporting their local communities, such as Remembrance Day collections as well as focusing on supporting and donating to national events like the BBC’s Children in Need. This strategy forms a component on their Corporate and Social Responsibility programme strengthens their PR marketing. Other CSR Achievements.... Carbon reduction target of 36% met one year early Haulage emissions target of 8% met one year early Waste to landfill reduced by 2,886 tonnes Fresh Food Academy skills training launched which is recognised by national qualifications. CSR Objectives.... Developing methods in which to contribute to reducing food waste Involve more schools into their ‘Let’s Grow’ campaign and educating more pupils about fresh produce Balancing the reduction in packaging with preventing food waste Seeking new methods in which to reduce landfill waste in the longer term Implementing solutions for reducing their carbon footprint References. Mullins, L.,2007. Management and Organisational Behaviour. 8th ed. Harlow: Pearson Education Ltd. Sloman, J., 2008. Economics and Business Environment. 2nd ed. Harlow: Pearson Education Limited Wm Morrison’s Supermarkets Plc, 2009, Annual and Financial Statements 2009. [Online] Available at http://www.morrisons.co.uk/ [Accessed 16th September 2009] Wm Morrison’s Supermarkets Plc, 2009, Corporate and Social Responsibly Report 2009. [Online] Available at http://www.morrisons.co.uk/ [Accessed 16th September 2009] R. Poole, G.P. Clarke, D. Clarke., 2003. International Journal of Retail and Distribution Management. The Battle for Safeway’s., [Online]. 31 (5), pp 280-289. Available at: http://www.emraldinsight.com/0959-0552.htm. [Accessed 16 September 2009] Ahmed, A., 2008.British Food Journal. The Marketing of Halal Meat in the United Kingdo;. Supermarkets versus Local Shops, [Online]., 110 (7), pp. 655-670. Available at: http://www.emraldinsight/com/0007-070X.htm/ [Accessed: 16 September 2009] TNS Global, 2009, Morrison’s Leads the Pack. [Online] (Updated 21st July 2009) Available at: http://www.tnsgoobal.com/ [Accessed 4 November 2009] Department for Energy and Climate Change., 2009. Quarterly Energy Prices March 2009. [Online] London: Department for Energy and Climate Change. Available at: http://www.decc.gov.uk/en/content/cms/statistics/publications/prices/prices.aspx [Accessed 14 November 2009] Needle, D., 2006. Business Context. 4th ed. London: Thompson Learning Wm.Morrison's Supermarkets Plc, 2009.West Sussex and Sittingbourne Investor Visit. [Online] Wm Morrison Supermarkets PLC. Available at: http://www.morrisons.co.uk/Documents/Sittingbourne%20Presentation.pdf [Accessed 10 November 2009] Wm.Morrison’s Supermarkets Plc, 2009. Half-year Quarterly Financial Report 2009/10. [Online] Wm. Morrison’s Supermarkets Plc. Available at: http://www.morisons.co.uk/ [Accessed 17 November 2009] The Grocer., 2009. Ocado prepares cuts at depot to replicate store counter service, [Online] 14 Nov. Available at: http://www.thegrocer.co.uk/ [Accessed 14 November 2009] BBC News, 2008. Pinch helps discount supermarkets. BBC News, [internet] 20 November. Available at: http://www.bbc.co.uk.news/ [Accessed 22 September 2009 Clarke. I, Bennison. D, Guy. C., 1994. International Journal of Retail and Distribution Management. The Dynamics of UK Grocery Retailing at the Local Scale, [Online]. 22 (6), pp 11-20. Available at: http://www.emraleinsignt.com/ [Accessed 16 September 2009] Key Note., 2007. Market Assessment 2007. Supermarket own Labels, [Online] (Issue Number and Date Unknown). Available at: http://www.keynote.co.uk/ [Accessed 24 November 2009] Jones. P & Comfort.D .,2006. Healthy Eating and the UK’s major food retailers: a case study into corporate and social responsibility. [Online]. 108 (10). Available at: http:// www.emraldinsight.com/0007-070x.htm/ [Accessed 26 November 2009] Beverly. A, Fillis.W, & Fillis.I.,2005. International Journal of Retail and Distribution. An exploratory study of SME local courcing and supplier development in the grocery retail sector, [Online]. 33 (10), pp 716-733. Available at: http://www.emraldinsight.com/0959-0552.htm/ [Accessed 16 September 2009] Bibliography Mullins, L.,2007. Management and Organisational Behaviour. 8th ed. Harlow: Pearson Education Ltd. Sloman, J., 2008. Economics and Business Environment. 2nd ed. Harlow: Pearson Education Limited

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