Ken Fisher | The Organization In Its Environment

Executive Summary

The paper examines the impact of environmental forces upon Wm Morrison's business. This is attempted by employing scenario planning techniques.
In the first part of the report structural characteristics are presented which define the current situational circumstances of the company; the UK's macro economical description and an industry analysis are revealing the tapestry of the context which the company operates. The analysis under the PEST framework, which classifies in a comprehensive manner the impact forces, uplifts and highlights issues which are vital in importance for the survival and growth of Morrisons.
The process concludes with the employment of a technique which attributes impact probabilities to the spectrum of forces identified before. The ones with the highest impact score are summarized bellow:

The increasing consumer's awareness on health eating

Various stakeholders increasing awareness on issues of Corporate Social Responsibility (CSR)

Population growth and its changing structure
Pressure groups, unions, charities campaigners which contribute to the redefinition of the political agenda
Food innovation; new technologies prompting the development of new products

Increasing automation and the importance of information technology and its effect on industry performance.

Changes in consumer behaviour

The scenarios constructed are effectively intertwining the environmental forces with a dose of futuristic speculation, which derive from actual trends and prolonged within the sphere of the probable. The results have produced distinct story lines which when compared to current company features, attitudes, structure and culture highlight, weaknesses or strengths within the company.

Such as:

Luck of awareness in social responsibility issues.

Un-familiarity and resistance to explore with new distribution formats.
Evidence of luck of managerial flexibility and leadership issues
Identification of the current restructuring as an opportunity for learning and positioning within the market
The paper concludes with a discussion and recommendations on the perceived "gaps", which the company could consider as a start of further scope and insights.
Scope and Objectives
The following report's purpose is to illuminate possible future conditions which may affect upon Wm Morrison's business. This will be attempted by employing a technique called scenario planning.
Scenario planning, used first by the military in the 1960s and was soon adopted by the business community, was employed to create awareness and promote understanding of the set of requirements and conditions the future world was posing upon their businesses. With new insights, strategy could be formulated to avoid or take advantage of these probable or improbable hypothetical future environments.
In the same manner I am going to explore some of the relevant forces which, in the opinion of this writer, could have a substantial impact upon the chosen business.
Methodology
The methodology used unfolds in four parts:
Firstly it will set the context, which Wm Morrisons operates, by providing a comprehensive description and analysis of some of the main environmental elements. The PEST framework will be used to provide a meaningful classification of forces acting upon the company.
A quantitative/qualitative process will then follow along side the PEST framework which will reveal the highest impact elements from the broader environmental scanning.
The subsequent part will engage in constructing two probable scenarios out of several possible outcomes derived from the high impact forces identified. In essence they will set focal points, where responses will be considered, thus creating an awareness of issues that might come to pass.
The fourth part of this report will engage with the implications of the scenarios upon the current Wm Morrisons settings, within the organizational behaviour context. In addition there will be some scope on discussion for recommendations.

1 Introduction
The company was founded in 1899 by William Morrison. Over the last 100 years it has grown to become UK's fourth largest supermarket chain. Morrisons strategy is based on doing the basics efficiently, that is on selling mainly food, at low prices, only from large store outlets.
The successive growth forwarded the company to go public in 1967. The company joined the FTSE 100 in April 2001, after a 35 year record of sales and profit growth since 1967,
Morrisons completed the takeover of Safeway in March 2004. Creating effectively the UK's fourth largest supermarket group, with more than 450 stores across the country, serving around10m shoppers per week. The companycurrently employs more than 150,000 members of staff in stores, distribution centers and administration offices.
Safeway Markey share by floor space

Source: IJRDM 2003
Morrison market share by floor space

Source: IJRDM 2003

Post "Merger: Morrison's acquisition of Safeway

Source: IJRDM 2003

It is the UK's 4th largest supermarket chain, with an annual turnover of 14 billion.
It has a 15.6% share in the UK's grocery market and is one of Britain's fastest growing supermarket chains.

Morrison's stores have now a strong geographic spread right across the UK, following the takeover of Safeway as it can be seen in the map above.

The conversion of Safeway stores to the Morrisons format started in August 2004. The operational plan is to convert four stores per week throughout 2005 which translates into 375 converted Morrisons stores by the end of 2005. In addition Morrisons has sold the 114 Safeway Compact stores to Somerfield.

1. 2 Company structural elements
Morrisons has over 20,000 lines range of goods, including both branded and own label products. Around 55% of the volume of all products sold is the company's own brand.
The management of the in-house operations, including fresh fruit, vegetables, fresh food, meat processing and transport is performed by the company it's self.
Wm Morrison Product Limited buys packs and distributes all the fruit and vegetable sold. Meat processing facilities prepare and supply the meet products direct to the butchers within the stores.
In addition the company operates and maintains its own transport fleet.
2 Industry Scanning
The grocery market had a value of 119, 8 bn in 2005, an increase of 4,2% on 2004

UK Grocery Market Performance

Source: IGD Research 2005

Groceries account for almost 13% of all household spending. Food and grocery consumption account for 49p in every 1 of retail spending. Supermarkets and superstores were the largest sector, accounting for 67.6% of sales in 2004, worth 88, 1 bn.
The chart below shows how many stores are within each sector and how much each sector is worth.

* Adjusted to account for Joint ventures
Source: IGD Research, 2005

Supermarkets/hypermarkets were the dominant distribution channel accounting for 67% of food/beverages/tobacco sales.
The forecast for the UK grocery retail market is that it will continue to grow at an average rate of 2,7% over the next five years and its worth will be 137,1 bn, by 2010. Source :IGD Research 2005
2. 1Competition
Retailers continue to operate in a mature saturated market where growth is difficult and consumers are increasingly demanding and sophisticated.

Advertising expenditure for the top 3 players, Tesco, ASDA and Sainsbury's reached 136 m in 2004. The market is primarily composed of major chains with nationwide outlets.
Tesco improved its turnover by 10.5% in 2004 to 37.1 bn, with profits before tax reaching 2 bn.
J Sainsbury's turnover decreased by 9% in 2004 to 16.6 bn, with profits before tax reaching 254 m.
ASDA (Wal-Mart) increased its turnover by 11.3% in 2004 to 285.2 bn, with net profits reaching 10.3 bn.
Somerfield increased its turnover by 1.1% in 2004 to 5.1 bn; with profits before tax reaching 45.5 m. Morrisons increased its turnover by 145.1% in 2004 to 12.1 bn, with profits before tax reaching 297 m. (Euro Monitor International)
The retail revolution of the 1970 and 1980 resulted in very significant developments. The growth of retailers replaced manufactures dominance position in the supply chain, eliminated many wholesalers and effectively began the trend towards backward integration.
Today the control which the retailers are exercising over the supply chain is best described by Dobson et. al (2003) as a "gatekeeper" for access to the consumer.
A recent examination of the food retail sector by the UK's Competition Commission (Oct 2000), in terms of competitiveness, has revealed that although the evidence of monopolistic behaviour are few, there is a strong tendency of buyer concentration and recommended voluntary regulation.(Cooper, 2003; Dobson et al., 2003).
The very significant growth of the size and market dominance of the largest players with prominent characteristics such as:
Greater store size
Increased retail concentration
Utilization of a range of formats
Has led to a much diminished market position for many manufactures and suppliers and became the basis for many complaints to the office of fair trade (OFT).
In 2003 the Department of Trade and Industry (DTi) decided on passing legislation in a move to enforce the recommendation advised thus the Enterprise Act came into effect which restricts further integration and consolation without prior advice from the department.
The limited opportunities for growth within the industry heighten competition for market share. The very competitive nature of the market is accelerating development resulting in innovative behaviours in order to maintain and increase market share, globalization, concentration and domestic consolidation are all drivers of the level of competition within the UK market.
2. 2 On-line shopping
Comment of Minister Patricia Hewitt:
"... we can help UK industry seize the competitive advantage that e-commerce offers and achieve our goal of making the UK the best place in the world for e-commerce."
TOP RANKED
Sweden
Austria
UK
Ireland
Finland
Norway
Denmark
Iceland
France
Spain
Source: EC report on "sophistication" of public and private services online 8 March, 2005

More specific the continues growing importance e-commerce and of online shopping within the food retail industry raises several questions. One of them is the transfer of loyalty from the offline stores to the online ones. Findings from studies are suggesting that offline loyalty can be transferred and applied to the online loyalty context. Also customers who trust and are loyal towards a given brand are more likely to adopt brand extensions. (IJRDM 3, 36)
In addition Szymanski and Hise (2000) developed a conceptual model of e-satisfaction which a measure which can predict the loyalty transfer rate. The four main factors found to be determinants of e-satisfaction, which the above research supports are:
Merchandizing
Site design
Financial security
Convenience
The problem that smaller retailers brands facing in transferring loyalty to their online operations is dealt by Ucles et al.(2003) who suggests that the two main options are:
Growing the size of the brand or
Build a niche brand
Morrisons being considered a smaller retailer has followed an alternative strategy that of the acquisition of Safeway, but neither of these retailers currently has an on-line presence.
2. 3 CRS Dimensions
Due to the fact that supermarkets are considered the "gatekeepers" of modern food systems; they are consistently at the forefront of debates aimed at driving improvements in the social and environmental dimensions of food systems. Jones et al,( IJRDM 33,12)
Within the last decade corporate social responsibility (CRS) has been gaining momentum across the business community and it is to be seen increasingly high on boardrooms agendas. According to the EU Commission 2002, CRS has gained increasing recognition amongst companies as an important element in new and emerging forms of governance because it helps them to respond to a new overall business environment.
These changes include:
Globalization and the responsibility to address sourcing for services and products in developing countries.
Image, reputation.
Train, recruit high skilled personnel.
Key tool to create and sustain differentiated brand names. Jones et al,( IJRDM 33,12)
The key drivers identified by Ernst & Young (2002) are:
Greater stakeholder awareness of corporate, social and environmental behaviour
Direct stakeholders pressure
Investor pressure
Peer pressure and
An increased sense of social responsibility.
Whooley (2004) suggests that the key CSR issues are often clustered under four headings
Marketplace
Workplace
Environment
Community
In a research conducted in December 2004 by Delloitte Touch? revealed the following results in regards to the format which the top 10 retailers follow in communicating their goals and achievements.

According to the International Institute for Environment and Development (IIED) ..."Wm Morrisons has traditionally had very little to do with the corporate responsibility sector"
Morrisons did not take part in a top initiative named Race to the Top (RTTT) which was set up in 2000 by government, sustainable development, farming, labour, animal welfare and health organizations. The primary aim of the objective was to construct benchmarking capabilities for CSR issues.
According to The Independent (08 Nov 2005), Morrisons faces legal action for sex discrimination which portrays another indication of the shortcomings on the CSR front.
Taking into consideration of all of the above it is logical to suggest that in an ever increasing competing industry such as the food retailing one, headlines such as the above will probably create a negative perception on consumers which can be translated into loss of profit and market share.
2. 4 Health Dimension
Further, according to the BBC and the annual NCC Healthy Competition Report for 2005 , Wm Morrisons came last on the issue of health responsibility.
HEALTH RESPONSIBILITY INDEX
1 The Co-op
2= Marks and Spencer
2= Waitrose
4 Sainsbury's
5 Asda
6 Tesco
7= Iceland
7= Somerfield
9 Morrisons
*Source: NCC Healthy Competition report

Looking deeper at the issue of health some very important facts are emerging, a recent study by the National Audit Office (2005) has revealed that the cost of malnutrition in the country is estimated to be 7,4bn a year.
Now, under the malnutrition headline we can find the ever growing problem of obesity which penetrates deep within the British society, in more detail:
30.000 thousand deaths a year caused by obesity in England alone
Adult obesity has quadrupled in the last 25 years.
22% of British people are obese and three quarters are overweight
Children obesity has tripled in the last 20 years
10% of six year old are obese rising to 17% of 15 year olds( BBC.co.UK)
Food retailers are at the forefront of this "war " and their responsible behaviour and practices are determining in a considerable degree the health of the current and future British generations.
The government currently has no realistic plan to cut obesity, targets set over a decade ago aimed to reduce obesity by 2010 have failed, since then obesity levels have risen dramatically.(The Health of the Nation, White paper, Department of Health 1992)
The implications are quite substantial and the responsibility seems to lie with several stakeholders; government; retailers; manufacturers; consumers. The effect of the above could be that the regulation of the industry in this respect could be intensified in the near future with considerable re-precautions for the businesses with little or no experience and no technical orientation towards health issues.

2. 5 Fair -Trade
In 2002 the BBC reported that the consumer demand in the UK for the fait-trade products had reached an all time high, with sales of such products increasing by 40% over the previous year.
The growing awareness of consumers in regards to the sourcing and production of products from poor countries creates a pressure for retailers such as Wm Morrisons to abide to the code and practices set up by the EU and UK political institutions.
This trend should continue to develop exponentially, into large and medium retailing systems (PriceWaterHouseCoopers 2001)

GDP Growth Economy rose by 0.4% in Q3 2005

GDP quarterly growth (%)

In the past few years the country's economy has been growing at more than four times the pace of the Euro region. However the first signs are appearing that seems to suggest a slowing growth in the economy.
Growth in the third quarter in 2005 is driven by a rise of 0, 7% in the service sector. Other sectors which show potential and strength are:
Business services and finance
Transport
Communications
The Bank of England has forecasted that economic growth is at 2, 5% to 3% for 2005.

3. 2Inflation

Inflation
Nov: CPI falls to 2.1%, RPI falls to 2.4%

Annual inflation rates - 12 month % change

In Sep 2004, the C.P.I (Consumer Price Index) fell to 1.1%, down from 1.3% in Aug, while R.P.I inflation fell from 3.2% in Aug to 3.1% in Sep. The UK inflation rate has been fluctuating near the lowest end compared to the EU since 2000. The average inflation rate for the enlarged EU 25 in Aug was 2.1% compared with 1.3% in the UK.
The C.P.I annual inflation fell to 2, 1% in November. The most important downward effect was the second successive fall in petrol and diesel prices.
Some of the upward pressures came from alcoholic beverages, meat products and tobacco. It is interesting to note that retailers are continuing to pass on price increases to consumers.

Food Price Inflation vs. General Inflation

Source: ONS, 2005
Shows monthly price change versus same month previous year
4-letter codes refer to specific ONS measures
3. 3 Consumer Expenditure
Strong consumer spending has been one of the most impressive highlights of the country's economy in the recent past, with growth far above of the rest of the economy.
Source: Office for National Statistics

Household consumption expenditure grew by 1.1% at current prices and 0, 5% in volume terms, in the third quarter of 2005. In general 2005 consumer spending experienced a general slow down but slowly rising again as the Bank of England had predicted, with the November sales being the best for several months,

The forecast for consumption growth is that it will be boosted by strong consumer confidence, low interest rates and the robust economic outlook. In 2006 income developments will facilitate a steady rise in private consumption of about 3 per cent. (ONS)

3. 4 Unemployment
Employment has dramatically risen since 1990. Rising 2.5m 1993-2001.Growing labour force (900,000 increase). Unemployment fell from 10.9% to 5.1% (1994-2001). Job creation is better than EU average. (ONS)

Employment
Rate falls to 74.7% in 3 months to Oct 2005

3. 5 Interest Rates
Since November 2003, interest rates have been increased five times in an effort to curb consumer spending. In August 2004 interest rates were increased by 0, 25% to 4, and 75%. Until recently the analysts expected a further 0, 25% increase to ensure inflation remains within its 2% target.
On the other hand the Bank of England is expected to be cautious in raising interest rates in order to avoid on putting too much strain on debt burdened households. It is interesting to mention that total consumer debt rose by 10, 3 bn in August 2004, 0, and 3% weaker than the increase in July. (ONS)

3. 6 Demographics
Until the mid 1990 population growth in the UK was mainly due to natural increase. Since then the net international migration into the UK became an increasingly important driver of population growth.
In between 2001-04 almost 2/3 of the increase in population was due to net migration.

Population
UK population grows to 59.8 million

Natural increase and net migration as components of population change, 1991-2004, UK

In addition in 2003, 20m people in the UK were aged 50 and over. This was a 45% increase over 5 decades. The number is projected to increase by 36% by 2031, at this point 27,2m people will be aged over 50 years of age.

At a Sunday Times Magazine article entitled "Bye, Bye Babies". Its opening argument was:
"A new population crisis is looming. We are turning our backs on parenthood and not producing enough babies. The over-80s are the fastest-growing age group, the under-16s the slowest. In years to come, there won't be enough workers to pay taxes, pensions and society's bills. We may have to work until we're 75."
One of the proposed solutions which the article indicates is increased migration.The above dimension will probably produce various effects such as:
From the employers point of view
Increased focus on retention of elderly workers which seems it will replace the childcare in importance.
Changes in the design of jobs, training and development of personnel
Decreased productivity due to care giving.(The amount estimated in the US is $29 bn a year; ( Met Life study, 1997)
From the employees' point of view:
Increased stress related due to the elder/care requirement.
The increase in time requirements for care (It is estimated that that in the UK one in four employees provide on average more than 11 hours unpaid care per week (Ceridian Report Surviving and thriving in the future world of work )
Changes in our natural and social environment are constantly affecting the types of food products that consumers want and how retailers provide them with their requirements. The changing profile of the consumer base will produce several new market dimensions which the industry and Morrisons in particular have to take into consideration. Some of them will be on the changing consumer tastes and new patterns of consumption.

Population
20.0 million aged 50 and over

Age composition of the older population, UK

4 PEST Framework-Environmental Scanning of Wm Morrisons PLC

Enterprise Act (2003) and the effects on competition within the industry.

Pressure groups, unions, charities campaigners which contribute to the redefinition of the political agenda.

Integration of Safeway.

The UK's government's fiscal and monetary policy

Consumer spending and confidence

The impact upon shareholders expectations, from measurement inconsistencies within Morrison's organization

Tesco's dominance

Price wars

Store development as a critical element in retail competition

Sainsbury's recovery

The future of ASDA

The increasing consumer's awareness on health eating

Various stakeholders increasing awareness on issues of Corporate Social Responsibility (CSR)

Population growth and its changing structure

Changes in consumer behaviour

Technological

Food innovation; new technologies prompting the development of new products

Increasing automation and the importance of information technology which improve industry performance.

Internet applications.

4. 1 A qualitative/quantitative method to ascertain the importance of relevant impact forces identified within the PEST framework

Categorization
According to the
PEST analysis Relevant Impact Forces
Quantifying technique:
Importance x Strength= Morrison's sensitivity to impact forces.

1 Enterprise Act (2003) and the effects on competition within the industry.
2 Pressure groups, unions, charities campaigners which contribute to the redefinition of the political agenda. 2 x 3 = 6

4 x 5 = 20
Economical 1 Integration of Safeway.

2 The UK's government's fiscal and monetary policy

3 Consumer spending and confidence

4 The impact upon shareholders expectations, from measurement inconsistencies within Morrison's organization

5 Tesco's dominance

6 Price wars

7 Store development as a critical element in retail competition

8 Sainsbury's recovery

9 The future of ASDA
5 x 4 = 20

3 x 4 = 12

3 x 5 = 15

3 x 3 = 9

3 x 4 = 12

5 x 4 = 20

4 x 4 = 16

3 x 4 =12

3 x 4 = 12

Social 10 The increasing consumer's awareness on health eating

11 Various stakeholders increasing awareness on issues of Corporate Social Responsibility (CSR)

12 Population growth and its changing structure

13 Consumer behaviour

5 x 5 = 25

5 x 5 = 25

5 x 5 = 25

4 x 5 = 20
Technological 3 Food innovation; new technologies prompting the development of new products

4 Increasing automation and the importance of information technology and its effect on industry performance.

5 Internet applications 4 x 5 = 20

4 x 4 = 16

4 x 5 = 20
Notes:
1 Methodology: Two attributes are considered, that of current importance and current strength of the force's impact. A numerical scale of 1 trough 5 is used. 1 being less important and weak in comparison to 5 being very important and very strong, multiplied together provides the degree of Morrison's sensitivity to the force examined.

2 Due to the high rate of change in the company's environment; the current values are likely to differentiate in the near future.

The above technique has revealed the values by order of sensitivity, for the following issues:

The increasing consumer's awareness on health eating

Various stakeholders increasing awareness on issues of Corporate Social Responsibility (CSR)

Population growth and its changing structure
Pressure groups, unions, charities campaigners which contribute to the redefinition of the political agenda
Food innovation; new technologies prompting the development of new products

Increasing automation and the importance of information technology and its effect on industry performance.

Changes in consumer behaviour

In the following section the above forces will be used to form the basis of the two probable scenarios for Wm Morrison's future environment.

5 Scenarios Section

5 .1 Consolidation and the empowered consumer
It is envisioned that the structure and composition of the UK population has changed dramatically the overwhelming wave of economic immigrants and the rapid ageing of the current population are reshaping the population landscape. The changes on tastes and variety on products and services are posing a different set of requirements upon the food industry. The middle age segment is the predominant one which the industry is targeting heavily. The process is instigating new promotional activities, means & formats of supply and design of products that will satisfy the increasingly diverse consumer profiles.
Satisfaction of today's consumer is not an easy task, increased awareness on environmental issues, ethical trading and other CSR dimensions has increased exponentially which translates into the exercise of political muscle through non-government organizations. The ever increasing educated consumer is pushing for an increasing regulated framework for the industry and its activities. Government is reacting to the pressures by passing legislation thus increasing the costs within the industry and possibly reducing profit margins as well.
The food retailing industry will then develop a different set of characteristics. Major retailers have completed the process of backward integration of their supply chain in a considerable degree. Along side the rising expectations and changes in social activity of the consumers which increases selectivity, reduces customer loyalty, and diminishes traditional modes of shopping. All these developments enchase the product development and innovation within the market and increases competition in terms of product differentiation, but more importantly in terms of distribution formats. The delivery/internet format will enhance price competitiveness as the customer realizes the opportunity for greater transparency. The major retailers have grown even bigger and dominate the market completely other retailers have created market niches which they operate effectively with higher profit margins and lower customer base.
The UK is named number one in the EU in terms of obesity and malnutrition, the debate is engulfing the food industry and in particular the retailers which have been seen as the number one responsible stakeholder after the increased consolidation of their supply chain. Plans for reduction of obesity set in the past by the government have failed, thus creating an even greater pressure to regulate the industry. The Department of Health, Department of Trade and Industry (Dti), Food Standard Agency and the Department for Environment, Food and Rural Affairs (Defta) in a move to show commitment to the ever growing consumer dissatisfaction, adopt the recommended guidelines of the National Consumer Council for regulation, independently benchmarking and "best" practices. This creates further pressures for the retailers to conform and push forward for healthier and safer products, the ones with considerable experience and a proven track record are well ahead and reaping the benefits of early positioning.
5 .2 Implications and discussion
The diversification of the consumer base which must be perceived as an external pressure, needs to be addressed by a conscious shift of the managerial attention to planned organizational change(Senior, 2002). Morrisons originates from the north part of England and currently expanding in the rest of the UK, some of the challenges posed in today's structure and culture are based on the diverse consumer profile that different geographical segments within the UK market exhibit. This is a good exercise which can be used as a learning mechanism for future reference. This should include modification of the behavioural patterns of the members of the organization and the improvement of the ability to cope with changes in the environment in terms of consumer diversification (ACAS, 2001).
An organization can only perform effectively through interactions with the broader external environment of which is part. The structure and functioning of the organization must reflect the nature of the environment in which it is operating (Mullins 2005). The scenario stipulates a possible future where consumers are highly aware of the implications of doing business within the food retail industry thus effectively changing the requirements or demands posed upon it. Morrison's culture and practices are currently scoring very low in terms of social responsibility. The inconsistencies arising from such behaviour will have detrimental effects in this scenario. By implication these "gaps" will be punished by consumer, society and government in terms of market share, reputation and fines. In addition having in mind Cloke's and Goldsmith's (2002) work, who advocate that "culture of an organization develops over time and may not be easy to change" can lead us to the conclusion that the lack of ability which the company exhibits will create a "snowball effect" which will effectively place the chain in a disadvantageous position in this probable future, compared to its competitors who are currently practicing effectively social responsibility structural and cultural change elements.
The company has to change even further to meet its future with success and the structure of the business is one of the main priorities. Lord Forte cited in Mullins (1986) refers to the human aspect within the context of structure, being one of the most important dimensions. The current set up of Morrisons is heavily coloured by the autocratic, predominant figure of Sir Ken Morrison who is running the company for the last 49 years. In this future environment flexibility and innovative behaviour are predominantly characteristics of the successful players. The limited and inflexible behaviour exhibited by the company's senior management in terms of governance and leadership, if continued will probably produce the opposite effects which the scenario is requiring and describing. The mission of the company is to deliver basics efficiently at low cost only from large stores, comes in contradiction to the wave of changes which requires, new distribution formats and foresees diminishing consumer loyalty. The name of the game is flexible behaviour in terms of structure and culture but Morrisons seems oblivious.
5. 3 Technological diffusion and internationalisation.
This scenario envisions a future were the young workforce in the UK is declining rapidly creating a need for the food industry to increase its focus on strategies designed to retain and support old workers. There will be great competition for talent at the top end of the youth market. With a shrinking workforce, business will be radically re-engineering work in order to unlock productivity.
The childcare issue in coming second in importance to the elder care one, employers are faced with an increasing overburden personal in terms of responsibilities. The "sandwich generation" is caught in the demographic trap, they are the ones squeezed between the responsibilities for young children and elderly parents. Employers will include the eldercare needs of employees in their work/life strategies.
The industry will again develop different characteristics. Buyer power will concentrate in the hands of the major retail players. The emergent of national and international conglomerates is prevailing. These retailers have grown their market share by directly targeting the smaller ones. Sustained concentration and consolidation will continue both in the home market and beyond. In addition food manufactures concentrate with even faster rates than retailers. In reaction many of the smaller, supply chain participants will be looking towards a more regulated framework which could come in the form of a code of practice or even stricter planning regulations. While the financial performance of the main retailers indicates the increasingly difficult home market conditions, the trend towards global buyer alliances suggests the mounting significance of globalization.
The consumer is increasingly price conscious with technology helping on the transparency and comparison of goods and services. The role of technology will continue to increase and it is playing an important role in competitive positioning. In today's world everyday commodity food products and bought and sold using new technologies thus making them more price sensitive. The best place-retailers will be those able to provide both competitive priced home deliveries for commodity items and the most enjoyable shopping experience. The effects of technology and internet in particular has moved retailers into joining global purchasing networks in an attempt to maximise economies of scale and protect operating margins.

5. 4 Implications and discussion
Morrisons is currently employing more than 150,000 employees making it one of the biggest employers' in the country. Any change in regards to the workforce is by implication enormous. The characteristics of the process are both dynamic and reciprocal in the sense that people modify the working of the formal organization, but their behaviour is also influenced by it (Stewart, 1999). Under this scenario the company must consciously develop and influence several variables which will deliver the productivity required for the company to be successful in the possible environment. From revision of HR, retention and reward policies to empowerment, delegation, training and development practices. The company has to successfully provide support to the much stressed and overburdened employees with a flexible structural design. As Drucker (1999) reminds us "There are only organizations, each of which has distinct strengths, distinct limitations and specific applications...as such a given organization structure fits certain tasks in certain conditions and at certain times". Currently the company seems to be struggling with issues of restructuring their supply chain and streamlining operations with an almost total disregard of anything else which leads to the assumption of limited managerial scope and short attention span which could lead to further repercussions within this future scenario.
The increasingly competitive food retailing environment is pressuring Morrisons to compete even harder. Globalization and the increasing complexity which pervades the market are pushing the company to forge global alliances which will ensure its competitiveness and growth. In order to compete effectively the company will require decentralizing some aspects of its operations due to increase in size, the geographical separation of different parts of the organization and the need to extend its activities and services to remote areas. This could provide several advantages, decision making closer to the operational level of work, improved responsiveness to customer service, opportunities for training and development in management and enhanced motivation and morale of stuff.
It terms of the technological dimension Morrisons is by no mean an "early adopter", of internet commerce applications thus losing out in an increasingly popular supply format. Again the persistence on a particular supply format is restricting the company to adopt and introduce new innovative ways of doing business. it is this particular cultural characteristic which fails the company in the perceived scenario. By not investing in communication and information technology it loses valuable time and lessons thus weakens its position in the market.

6 Conclusions
This report was set out to investigate some of the possible future environments build upon a handful of key impact forces identified for Wm Morrisons. The results revealed some aspects of the operating environment which if not attended today, could possibly create highly adverse conditions for the business in the near future.
In more detail, the changing structure and composition of the population has revealed the highly degree of sensitivity that a business such as Wm Morrisons exhibits both internally in terms of employees but also in terms of its customer base. It reveals that the battle for tomorrow's market share begins with actions or inactions taken today.
Another element highlighted by the process is the unique opportunity for the company to take advantage of the major restructuring which is currently undergoing by using the lessons learned from the other big players in the industry it can avoid pitfalls and move forward at a faster pace.
In addition, the fact that it is starting to get exposed to a more diverse and sophisticated consumer can induce the necessary skills and attitudes which will carry the company into even more diverse environments described by the scenarios.
But the first signs are not encouraging; the company is making a lot of mistakes and having in mind that decisions are interdependent meaning that current decisions constrain future one it could lead the company to become a mediocre performer leading subsequently to market share loss or even a buy out.
The report, in the opinion of the writer has succeeded in its stated objective; all three stages have been exhibited and followed with a result of several focal points/impact forces being highlighted and examined further. This report has not considering global conditions which could synthesize an even more complicated and dynamic environment for scenarios to be played out.

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