Wm Morrison Case

With reference to organisations or industries that you know, to what extent do you think that recent changes in the UK economy will have inevitably damaged the long-term profits of businesses that operate in this country? (40 marks)

The General Election would affect Tesco as if Labour gets in charge Corporation tax, VAT and minimum wage would probably increase. This would cause Tesco to be in a negative

In 2012 the government decided to raise the minimum wage and change the vat rules this had a massive effect on marks and spencer’s as a company. The government raised the minimum wage to £6.18 an hour, This had a bad effect on marks and spencer because all the people at marks and spencer that were on the smaller minimum wage £6.08 (off which It was estimated that nearly half of their work force were on) this lead to an

The local community does not really affect Morrisons as a whole just the areas stores. If there is only Morrisons in the local community with a lack of main competitors such as ASDA, Tesco and Salisbury’s, then it is very likely that Morrisons will be successful because the little businesses in the area pose little threat.

Online commerce was introduced to consumers in the mid-1990’s, and in the years since, it has grown exponentially. It started out virtually nonexistent and has become a multi-billion dollar industry. Nearly every retail sector has entered online commerce; clothing, electronics, home, health and grooming items, even food and groceries are starting to gain traction online. Online commerce sites rival traditional brick and mortar stores such as Walmart and Target, as well as other big-box stores. As online retailers such as Amazon continue to expand, many brick and mortar stores have been making their way online, indicative of an increasing movement towards online commerce. With more than 80% of the online population having made an online

This will affect Tesco growth because the loans will affect their income, cash flow and business image. Tesco will pay more and profit will drop.

The experts warned that clients may like to hunt for deep discounts. From a financial perspective, when we compare the revenues between the first semester of 2011 and the first semester of 2012, we see that they are dropping by a significant 21% for the benefit of competitors. The operating margin is hurt considerably as well, which means that the pricing strategy and the repositioning of the brand is not working for the moment and customers are not behaving as Ron Johnson expected, and very probably the situation would persist unless the management acknowledge that adjustments are required to make the strategy and its implementation a driver of growth on the top

The Internet has changed the way we do virtually everything, including the way we shop. However, shopping is not the only thing that has changed. In the last decade we have changed the way, we apply for loans, study, and even plan a vacation. Doing any of these things would have been impossible a few decades ago. At present, online banking, paying bills, ordering new services, and shopping online have become part of our daily lives. Traditional brick-and-mortar stores have been around much longer than online stores, but we cannot deny that online shopping is giving the traditional stores competition. Many consumers still choose to shop at regular brick-and-mortar stores because they like to see and

The company’s ability to know what it is that their customers want in this industry is one of its strengths. They were constantly trying to improve on their customer experience and wanting to get feedback from their customers. For instance, making the payment process less awkward for the host and the renter. Instead of having

According to the managing director Lawrence Mallinson, who supply Tesco, Morrisons, Sainsbury’s, Asda and Waitrose, indicated although doing business with big supermarket chains can be profitable, they still control the distribution at a modest level (30%) to avoid getting price pressures from the retail giants (Independent, 2010). In contrary, specialist food retailers have smaller business scale, therefore it is more difficult for them to bargain with the suppliers due to their order is small amount compare with the order from larger chains.

2.3 THREAT OF SUBSTITUTES Substitutes do not entirely replace existing products but may introduce new technology or reduce the costs of producing the same product (Porter, 1980). Substitutes may limit the profits in an industry by keeping their prices down (Porter, 1980). The threat of substitution is quite high in this industry because consumers are able to substitute to other major retailers, convenience stores, niche product outlets, restaurants, bakeries, butchers and farmers (Coriolis Research, 2004). Supermarkets like Tesco and ASDA have a range of products and services that have close substitutes, effecting price elasticity of demand because the market is sensitive to price (IBISWorld). The demand for a particular brand or retailer will increase or decrease concurrent to the movement of price in comparison to its competition (IBISWorld). The UK supermarkets are always trying to increase the quality of products and services resulting in a constant need to differentiate products and services from competition to make them less price sensitive.

To the clients of this analysis, especially shareholders, they should hold their shares and not sell them, but must not extend their risk by buying more. For lenders, the loans already given should be enough and must put measures in place to make sure it’s been repaid even if it delays but no further loans must be given to Tesco, at least for now to limit any insolvency risk. The lenders may review the loan terms and the covenants.

Unfortunately, none of this hard work coincided with any new orders. After the big sale from Nick Mathus, I kept flooding my territory with more proposals, but not one came back with a ‘yes’ attached. For weeks, while I reveled in getting to know more about my customers than ever before, the prospect of reaching my quota did not change much at all. Even with the Mathus order, the dream of saving my job was still so very far away.

However back then the ratios of the two companies were comparable but their gap turned massive as Tesco hit an extreme low in 2015 with a negative ratio of 0.092993385 where Tesco generated an operating loss twice as large as the operating profit it made in 2014. One of the main circumstances leading to this loss-making Tesco is the £263m accounting scandal that hit the supermarket last year (Neville, 2015). As a result many costs have hit Tesco’s profits turning it into a loss such as restructuring costs including redundancy and compensation costs related to changes in store colleague working arrangements in the UK, Europe and Asia, redundancy costs relating to Head Office restructures across the Group, and the redundancy cost of store closures in the UK. £266m has been recognized in costs of sales and £150m within administrative expenses. (Tesco, 2015)

On several levels, the Internet and related advances in technology have significantly affected financial services broadly, and insurance markets more specifically. When combined with