Morrisons Plc annual report and financial statement (2011) stated that Morrisons is one of the fourth largest food retailers by sales with an annual turnover in excess of £16 billion and account for 12.8% in the grocery industry (See appendix 1). However, the UK supermarket industry is intense competition so it required more new and effective tools to compete with rivals (Urbonavičius and Ivanauskas, 2005). Hence, for retaining and developing, Morrisons is not only needed to have excellent strategic operation management but also diversified itself in to the new market. This essay will analyze Morrisons’s operations management, its value chain and other aspects relate to quality which leads Morrisons difference from other …show more content…
According to BBC News (May 17, 2011), the UK consumer prices index (CPI) annual rate of inflation rose to 4.5% in April which is the highest level since October 2008 ( See Figure 2). The standard rate of VAT was increased from 17.5% up to 20% from 4th January 2011(HM revenue and customs, 2011). In addition, the weakness of the pound against the dollar and the euro, unemployment, the banking crisis, increase pressure on household budget those are cutting the spending power of consumers (BBC News, Inflation, 2011). Price competitiveness will be more challenging for grocery retailers. According to Mintel 2010, the most important factor lead the consumer decides to choose a store is convenience or low prices. Thus cost is the most important to Morrisons instead of other performance objectives at the moment.
Performing activities create cost and a company can outperform competitors only if it performs differently activities or similarly in different ways (Porter, 1996). When determining the way to achieve maximizes sale volume, Stinnett (2005) was recommended there is much important by understanding customer behavior how and why they purchased products or services to offer the right product, at the right time, in the right place, for the right price in the right quantity. Thus cost will be efficiency control.
Value chain is the tool for