Management Accounting: Executive summary, PESTEL Analysis (Coursework Sample)

Table of Contents TOC \o "1-3" \h \z \u Executive summary PAGEREF _Toc479597120 \h 2Task 1 PAGEREF _Toc479597121 \h 3PESTEL analysis PAGEREF _Toc479597122 \h 3Political factors PAGEREF _Toc479597123 \h 3Economic factors PAGEREF _Toc479597124 \h 3Social factors PAGEREF _Toc479597125 \h 3Environmental factors PAGEREF _Toc479597126 \h 4Technological factors PAGEREF _Toc479597127 \h 4Legal factors PAGEREF _Toc479597128 \h 4Porter’s five forces PAGEREF _Toc479597129 \h 5Bargaining power of the customers PAGEREF _Toc479597130 \h 5Bargaining power of suppliers PAGEREF _Toc479597131 \h 5Threat of new entrants PAGEREF _Toc479597132 \h 5Threat of substitutions PAGEREF _Toc479597133 \h 5Competitive rivalry PAGEREF _Toc479597134 \h 6Task 2 PAGEREF _Toc479597135 \h 7Task -3 PAGEREF _Toc479597136 \h 8Task 4 PAGEREF _Toc479597137 \h 9Opportunities PAGEREF _Toc479597138 \h 9Threats PAGEREF _Toc479597139 \h 10Strengths PAGEREF _Toc479597140 \h 10Weakness PAGEREF _Toc479597141 \h 10References PAGEREF _Toc479597142 \h 12
Executive summary
Morrisons is one of the biggest organic food retail chains in the world with revenue of over £ 54 billion pounds in 2009 and uses over 470,000 people. It has about 4,331 shops in 14 nations worldwide. The business functions mainly happening in the U.S, Europe and Asia. It is headquartered situated in Hertfordshire, United Kingdom (Peterson 2013). Morrisons is the fourth largest supermarkets in the United Kingdom and was found by William Morrison in 1899. Their business is mainly food and grocery, specifically they source and process most of the fresh food that they sell through the own manufacturing service.
Morrison's mission statement is to provide all their customers with the very best value for money on their weekly shopping, wherever they live. The vision of Morrison is to be the 'Food Specialist for everyone'. As a food specialist it differentiates itself from the major competitors by having its own packing and manufacturing facilities (Lane 2004).
Considering the China’s external environment there are lot of positive factors that will help the Morrisons to develop the business successfully in China. Those factors can be categorized as resources availability, positive political factors, economic conditions etc. As the Strengths of the organization can be categorized as skills employees, better brand image, CSR activities, better customer service etc. To achieve mission and objectives of the company the strengths should be utilized while minimizing the weakness in China.
Task 1
As Morrisons going to expand their business in to China, organization has to evaluate the external environmental conditions of the country. How the external environment (political, economic and social) conditions will impact on the Morrisons business development and how those external factors can be utilized by the organization while minimizing external threats to gain the competitive advantage. To analyze the competitive environment and the external environment organization can use the PESTEL and Porter’s five forces analysis
PESTEL analysis
Organization can use the PESTEL analysis to find out external environment how impact on the business development.
Political factors
China regulatory environment is very favorable to Morrisons to invest in that country compared to other countries. According to the government rules and regulations the organization can determine whether government encourage foreign investment or not. China government encourages the foreign investments because the government rules are not very turf, government provides subsides to the investors, low interest rate loans, organizations can easily make joint venture and other business related agreements with the domestic organizations without big issue ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Dumon", "given" : "Marvin", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "Investopedia", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "page" : "4-7", "title" : "Top 6 factors that drive investment in China", "type" : "article-journal", "volume" : "401" }, "uris" : [ "/documents/?uuid=ca930974-bb4c-42ca-a771-2c4dac370ca0" ] } ], "mendeley" : { "formattedCitation" : "(Dumon 2015)", "plainTextFormattedCitation" : "(Dumon 2015)", "previouslyFormattedCitation" : "(Dumon 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "https://github.com/citation-style-language/schema/raw/master/csl-citation.json" }(Dumon 2015). The above mentioned procedures positively influence Morrisons to invest in China.
Economic factors
Political and economic condition favorable for the business development in China. China government is very stable this stability impliedly influence their economic conditions hence China’s inflation rate is low compared to other countries and the exchange rate is very stable without the frequent changes ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Dumon", "given" : "Marvin", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "Investopedia", "id" : "ITEM-1", "issued" : { "date-parts" : [ [ "2015" ] ] }, "page" : "4-7", "title" : "Top 6 factors that drive investment in China", "type" : "article-journal", "volume" : "401" }, "uris" : [ "/documents/?uuid=ca930974-bb4c-42ca-a771-2c4dac370ca0" ] } ], "mendeley" : { "formattedCitation" : "(Dumon 2015)", "plainTextFormattedCitation" : "(Dumon 2015)", "previouslyFormattedCitation" : "(Dumon 2015)" }, "properties" : { "noteIndex" : 0 }, "schema" : "https://github.com/citation-style-language/schema/raw/master/csl-citation.json" }(Dumon 2015). When the Morrisons invest in the China the turnover will be in the yen so having stable value for the currency will enable the organization to forecast their profit and expenses.
Social factors
China social cultural and economic conditions are totally different from the UK so promoting UK company’s products are somewhat hard, adopting to the Chinese conditions will take some time company may have to face the losses also but in the long run it will be alright.
Environmental factors
Most of Chinese multinational firms are electronic related firms (APPLE) or the fast food related companies (coca cola and Macdonald) this companies will negatively impact on the environment of the country as well as the country people health but as Morrisons produce organic foods for the country (long term benefited to the country) the government and the people of the China will encourage the Morisons to invest in China.
Technological factors
China people’s IT skills are very high compared to the other counties so the organization can utilize this feature as an opportunity ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Zhang", "given" : "Juwei", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "Institute of Population and Labor Economics Chinese Academy of Social Sciences", "id" : "ITEM-1", "issue" : "5", "issued" : { "date-parts" : [ [ "2004" ] ] }, "page" : "1-25", "title" : "China \u2019 s Skill Assessment System", "type" : "article-journal" }, "uris" : [ "/documents/?uuid=f3523915-0ad2-4a3d-a038-efe92cd9ba21" ] } ], "mendeley" : { "formattedCitation" : "(Zhang 2004)", "plainTextFormattedCitation" : "(Zhang 2004)", "previouslyFormattedCitation" : "(Zhang 2004)" }, "properties" : { "noteIndex" : 0 }, "schema" : "https://github.com/citation-style-language/schema/raw/master/csl-citation.json" }(Zhang 2004). They can easily start e commerce system for the organization in China without a higher initial cost. Then they can promote their goods via the internet this will reduce the marketing as well as will cover the large amount customers in one time. Other than this customer can view the product quality and features via the E commerce system after that they can order the product via the ecommerce this will reduce transport cost for the customers and increase the customer convenience, eventually this attract more customers and organization can maintain this feature as competitive advantage and able to achieve their mission and vision.
Legal factors
China’s rules regulation related to the foreign direct investments are very low country encourages the foreign investment. As an organic food production organization they can easily develop their business without any big issue.
Porter’s five forces
To analyze the competitiveness of the business environment in China can use the Porter’s five to analyze the environment
Bargaining power of the customers
Nowadays people so much considering their health condition specially they consider about the food consumption behavior. People in China, their well aware about the foods and their outcomes. As the organization producing the natural organic foods organization can easily promote their products by convening about the health benefits of the particular foods. So the bargaining power of the customers can easily overcome.
Bargaining power of suppliers
Morrisons maintains on of the leading and effective supply chain management for their farming products. Organization successfully vertically integrating with the farmers to get their products. This will enable them to understand the real situation of the farming ADDIN CSL_CITATION { "citationItems" : [ { "id" : "ITEM-1", "itemData" : { "author" : [ { "dropping-particle" : "", "family" : "Morrisans", "given" : "", "non-dropping-particle" : "", "parse-names" : false, "suffix" : "" } ], "container-title" : "Morrisons Farming supply chain Management", "id" : "ITEM-1", "issued" : { "date-parts" :...