Context - External
Morrisons is a UK-based food retailer. It has three (3) key competitors, all based in the UK - ASDA, Tesco and Sainsburys. Currently, Tesco accounts for the majority of market share in this arena with estimated sales exceeding £64 million, followed by Sainsburys (sales: £25,632,000), ASDA (sales: £23,670,000), then Morrisons (sales: £17,680,000).[1]
As the UK’s number one food retailer, one of Tesco’s main strengths and strategic advantages is having more than 3,000 retail outlets throughout the country, thereby, maximizing its sales. The other three retailers do not have as many outlets as Tesco.
Recently, Morrisons financial position has not been looking very good. Share prices have been increasing and sales decreasing, …show more content…
Profit levels, although fairly constant, are relatively low and have continually been decreasing since 2012. In 2015, the business recorded an overall loss of £761 million. Asset turnover remained at normal levels and appeared to be quite stable from 2012 to 2013. As expected, ROCE has been falling as well due to the diminishing profits. ROCE is currently at a value of -11.0%, a massive 194.8% down from the value reported in 2013. This is an extremely poor result and should suggest to the management and shareholders of Morrisons that they need to take immediate action to prevent bankruptcy of the business, and subsequent shutdown. A good move for Morrisons would be to reduce some of their current liabilities in order to increase the ROCE. However at this stage, profits continue to fall and there may be a need for company management to investigate this issue as one of the main causes of poor financial performance.
Morrisons’ working capital figures are acceptable. The business has maintained satisfactory inventory levels, upheld payment schedules to suppliers, and received payments from customers at the agreed time frames. The area of working capital appears to be one of the strongest for …show more content…
The ability of the business’ profits to cover the amount of interest generated is on the decline. I would advise that Morrisons offer some sort of incentive to its customer in order to increase sales and generate more revenue; it could be in the form of competitive prices, expansion of services offered, improving customer service and developing the existing infrastructure. This would help in attracting more customers, boosting sales and ultimately, increasing profit levels for the company. In turn, most of the other affected areas would
Morrisons is a UK-based food retailer. It has three (3) key competitors, all based in the UK - ASDA, Tesco and Sainsburys. Currently, Tesco accounts for the majority of market share in this arena with estimated sales exceeding £64 million, followed by Sainsburys (sales: £25,632,000), ASDA (sales: £23,670,000), then Morrisons (sales: £17,680,000).[1]
As the UK’s number one food retailer, one of Tesco’s main strengths and strategic advantages is having more than 3,000 retail outlets throughout the country, thereby, maximizing its sales. The other three retailers do not have as many outlets as Tesco.
Recently, Morrisons financial position has not been looking very good. Share prices have been increasing and sales decreasing, …show more content…
Profit levels, although fairly constant, are relatively low and have continually been decreasing since 2012. In 2015, the business recorded an overall loss of £761 million. Asset turnover remained at normal levels and appeared to be quite stable from 2012 to 2013. As expected, ROCE has been falling as well due to the diminishing profits. ROCE is currently at a value of -11.0%, a massive 194.8% down from the value reported in 2013. This is an extremely poor result and should suggest to the management and shareholders of Morrisons that they need to take immediate action to prevent bankruptcy of the business, and subsequent shutdown. A good move for Morrisons would be to reduce some of their current liabilities in order to increase the ROCE. However at this stage, profits continue to fall and there may be a need for company management to investigate this issue as one of the main causes of poor financial performance.
Morrisons’ working capital figures are acceptable. The business has maintained satisfactory inventory levels, upheld payment schedules to suppliers, and received payments from customers at the agreed time frames. The area of working capital appears to be one of the strongest for …show more content…
The ability of the business’ profits to cover the amount of interest generated is on the decline. I would advise that Morrisons offer some sort of incentive to its customer in order to increase sales and generate more revenue; it could be in the form of competitive prices, expansion of services offered, improving customer service and developing the existing infrastructure. This would help in attracting more customers, boosting sales and ultimately, increasing profit levels for the company. In turn, most of the other affected areas would