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Evaluate these two options and recommend which option might be preferred by Morrisons’ shareholders - Edexcel - A-Level Business - Question 1 - 2017 - Paper 2
Question 1
Evaluate these two options and recommend which option might be preferred by Morrisons’ shareholders. Morrisons’ revenue and share price have increased for the first... show full transcript
Worked Solution & Example Answer:Evaluate these two options and recommend which option might be preferred by Morrisons’ shareholders - Edexcel - A-Level Business - Question 1 - 2017 - Paper 2
Step 1
Evaluate the impact of transformational leadership
Answer
David Potts’ transformational leadership could be a driving force behind the recent improvements at Morrisons. By replacing several directors, Potts may have introduced new perspectives and innovative ideas, which would be crucial for implementing his vision effectively. The introduction of strategies such as the ‘I’m cheaper’ campaign can help align the supermarket's offerings with consumer expectations.
However, it's important to note that resistance from previous management may have hampered the implementation of these new strategies, thereby affecting potential outcomes.
Step 2
Counterbalance the improvements with external factors
Answer
While Potts' leadership is crucial, external factors could also account for the improved performance. For example, an increase in consumer confidence has encouraged spending, resulting in a noticeable increase in revenue. Furthermore, lower energy costs have left consumers with greater disposable incomes, indirectly boosting sales at Morrisons.
Therefore, it is vital for shareholders to consider both internal leadership effectiveness and external economic conditions in their evaluation.
Step 3
Make a recommendation for shareholders
Answer
In recommending an option for shareholders, it seems prudent to focus on David Potts' transformational leadership. His proactive changes can reshape Morrisons positively in the long term. However, shareholders should remain cautious and take into account the evolving market conditions that may influence the supermarket's performance. Balancing the focus on innovative strategies with an understanding of external economic factors will likely yield the most favorable outcomes.