External factors

External factors

1. Social

   • Families. friends, colleagues, and environment shape our behaviour, attitude and decisions.Business has to consider the Population ,demography and the cultural make up of a society to succeed .UK has an ageing population but not in decline and multi-cultural with many migrants from all parts of the world.According to Office for National Statistics February 2016,"UK population grew to an estimated 64.6 million. The increase is mainly as a result of presence of EU migrants" ( Appendix A) This is a favourable period for Morrisons store as the company's exclusive range of wine are imported from EU and other parts of the World and many of the EU citizens can reconnect themselves to their country of Origin. Morrisons has introduced world foods in the stores ."each store is unique to the location .There is a team in place to identify the cultural, ethnic and social need f each location"(morrisons anual report 2016 ) The ageing population is an opportunity to establish express shops ..

2. Economical

   • Economical factors in the Micro and Macro environment has a huge impact on food sector. Food is a normal good and a need . However Economic factors affect the demand and supply. Factors such as income, unemployment rate, inflation, low economic Growth .Global Recession can shape the behaviour of consumers .UK economy suffered a period of uncertainty immediately after the Referendum result.The interest rate was reduced from 2.5% to 0.25% (Bank of England 2016) Value of Pound Sterling went down which is positive for exports but negative for Morrisons that imports most of the exclusive brand of wine from abroad. The economy has picked up. According to National Statistics 'number of people in work has increased ,74.5 of people between the age of 16-64 are in work. Retail sales increased by 6.5% compared to August 2015 with main contribution from the food stores.(Office for National Statistics 2016 Appendix C. Consumers confidence has returned.(The daily telegraph business 2016)

3. political

   • Morrisons supermarket has to comply to Government Regulation on Health and safety, maintain good hygiene in the store , train staff on how and when to use the law of challenge 25 . If the staff should break any of these law Morrisons is liable to the offence and will be penalized . Licence for sell of alcohol will be withdrawned. Government plans to reduce the percentage of sugar in products by 20% " Prime Minister Theresa May has told the food industry they can only thrive in this sector by reducing the sugar content in their food by 20%." calorie cuts for pizza ,individual chocolate and muffins will be introduced next year"(The times 2016). These are big challenges that involve constant appraisal and professional redevelopment of staff and these add to the COP.Non Compliance would result to penalty,bad Publicity, bad image ,loss of customers loyalty ,demand and supply will go down market shares and profit margin wili be low.

4. Technology

   • Modern Technology has created changes in the running of Business. Companies such as Morrisons use modern Technology to improve Chain management, Data Storage , conference calls , customer review and on-line shopping, advertising products onweb sites.Modern technology is also used by consumers to shop on-line at any time ,anywhere to get quality goods at a reasonable price .On -line shopping is thriving .. consumers use internet forums to review shopping experiences . To meet up the needs of consumers Morrisons has on- line shopping site.Morrisons fresh and frozen products can now be purchased on -line from amazon (Guardian on -line 2016) . Discussion is on with Ocado to utilize Ocado's 'online and home delivery skills to sell Morrisons' products .'(Guardian 2016) 'Morrisons' online sale are becoming more important for the grocer with shoppers number rise by 45%'on last year'(UK Kantar 2016)

5. Customers

   • There is a o lot of competition in the food sector ' Negative customer perception would affects sales Morrisons will lose customers to rivals as there is no Switching cost and there are lots of substitute goods . To maintain customers loyalty Morrisons use the strategy of price cuts , offers and discounts . This strategy increases sales but the profit margin is low.. Customers demand quality , value and low price . To meet this demand Morrisons buys products directly from farmers and fishermen which reduces cost of production and aids quality control . (Morrisons 2016) .To maintain customers loyalty the company has introduced March and More cards , Customers collect points which is converted to value of money and can be spent in the store . This helps Morrisons to know the number of customers and when to use the Just in Time( JJT.)

6. Environmental

   • Environmental problem is a Global issue and according to UN Global Compact 2010 every business has to control the emission of nitrogen oxide and carbon footprint. Morrisons has in place policy of clean energy . In 2016 the company reduced carbon footprint from 21% compared to 26% in 2015 and waste unable to recycle was reduced to 2.0% compared to 2.2% in 2015. The company has to adhere to recycling rules . Morrisons bags are can be recycled . (Morrisons corporate 2016). This regulation adds to COP and will lead to heavy fine if the company breaks the rule. Bad harvest due to climatic conditions is a threat to Morrisons .Food products sold in store are bought directly from farmers .This process helps in Quality Control but if there is bad harvest there will be shortage in supply and small marginal profit.

7. Supplier

   • The source of products and good chain management is important in the success of business. Morrisons buys directly from farmers and fishermen. owns three manufacturing site .This reduces cost of production and the company can carry out good quality control. (Morrisons 2016), From Information gathered by working in the company there is no supplier loyalty , The company has recently changed suppler.

8. Legal

   • morrisons has to observe legal rules on restriction of alcohol to under 18, challenge 25 and restriction on advertisement of alcohol on TV programs with under 18 as Targett which is under the Guaidiance of Advertisement Standard Authority(ASA 2016) . Licence to sell Alcohol will be revoked if the Laws are broken.

9. MEDIA

   • Media plays important role in the performance of company. Positive by the media has a huge impact on the behaviour of cosumers

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