Strategies for managing the aforementioned risks differ greatly. We will start by developing strategies for mitigating “easier” ones and progress towards risks that are harder to deal with.
As already mentioned, potential threats concerning various “scandals” and affairs have hitherto been nicely dealt with by the Morissons. However, these kinds of events, while most often quite irrelevant and easily attenuated, can deliver a serious blow, or possibly completely obliterate even the sturdiest companies, depending on the seriousness of the event. Tesco, for example, suffered numerable repercussions amid the horsemeat scandal (Fletcher, 2013), that reportedly costed Tesco £300 million. Although this situation has its particularities, namely Britain’s aversion towards eating horse meat, scandals involving Morissons- animal cruelty and false advertising- are by no means trivial. What’s more, they are very likely to appear in the future. It is justified to think that whichever kind of insurance is completely out of question in the case of the risk mentioned in this paragraph. However, we think that proper reaction coming from the marketing department and especially the emerging SEO ( Search Engine Optimization) and related techniques could virtually annulate the consequences of scandals.
Dealing with this problem is mainly PR experts’ task. Of course, most of the time the bad publicity would imply to some more serious problem. In the example of animal welfare scandal that we’ve mentioned, the problem isn’t necessarily restricted to the particular farm from which the footage originate. It could possibly raise questions like: “ How widespread this problem is? Is this their usual practice?” or “These products are carelessly sold all over Britain. How bad are they healthwise?”, or even “What is the level of consciousness about this problem in the company itself? If higher management is aware of it and continues with the same policy, how can we expect of them to be ethical concerning other products? Do they also turn a blind eye when they come across the same problems regarding dairy products etc?”.
One of the best ways to deal with bad publicity is to act quickly. One survey (Baer, n.d.) assessed that half of the complainers expected a response within 60 minutes. Even when the matter is still unclear, it is advisable to at least leave some message. Also, being honest and straightforward, and apologizing is a good way for a company to retain at least some reputation.
The next best way to attenuate bad news is to bury the unwanted content with fresh and positive content. This way, the company could actually decrease the possibility of bad news appearing on the first page of search results. It cannot be accentuated enough how this is important as 95 percent of internet users only inspect the first page, while 75 percent choose the first five search results (Sickler, 2017). One of the most popular ways to do this is to set up a lot of profiles on social media to share the content that could downplay the value of bad news. The other way is SEO- search engine optimization which improves the visibility of the content. These are not the usual PR techniques and can only be executed by a team of experts.
Next in line is the cybersecurity. Of course, a team of cybersecurity experts always comes at hand during these situations. However, they are not always enough. Like in the Target case, it can happen so that the slow communication between departments is one of the main hindrances to solving a problem. One author (Graham, 2014) suggests that “normal” patterns of behavior of all employees should be first assessed. This could be done by an all-encompassing survey that would identify types of behavior that are typical for a specific position. Of course, not all positions in a company should be given the same attention. For example, it is much less probable for maintenance staff to even have access to HR data, as they are not even in the same building. Secondly, a system could be devised that detects suspicious behavior- logging onto the company server in a peculiar time, or accessing files that aren’t usually accessed by an employee. This, in turn, necessitates complex machine learning and statistical analysis software, or, in other words, more experts.
While with the formerly mentioned scandals are impossible to ensure against, this isn’t the case with the cybersecurity. There is now a quickly emerging field of cyber-insurance, used to protect individuals and companies against Internet-based risks. The cyber-insurance is still developing and some improvements are still yet to be made. For example, difficulties emerge when calculating damage related to the cyber-attack, while there still isn’t a universally acclaimed classification regarding this type of events. This would most surely negatively affect the level of premium payable. However, extremely large-scale cybersecurity breaches, although extremely risky, are highly unlikely, which would influence the insurance premium, and make the decision to insure against these kinds of attacks even more desirable.
We’ve seen that the Morrisons’ problem with cybersecurity, namely the 2014 case, was inextricably linked with staff loyalty. This is, however, a separate problem, and though we’ve already devised some strategies that could be used to preclude another employee to get hold of sensitive information, there still are some important improvements to be elaborated on . Staff loyalty is, virtually , a problem par excellence of the HR sector, as it is mainly an internal difficulty. One of the main tasks of proper human resource management is work supervision, and, before all, adequate screening of the staff. Detailed psychological profiles, at least of the individuals who could have access to sensitive information, could prove to be crucial in resolving this problem.
While the former problems concern mainly specific departments and can be solved with intervention involving only them, the solving of the next problem would most surely cause changes to numerous departments. This is the case with dealing with competition, namely Aldi, on which we elaborated earlier. The main issue here are the prices, at the expense of which Morrisons retain higher quality. However, due to the reasons mentioned, at least at some point in the future, it will be necessary to consider the effect of lowering prices. This would probably mean finding new suppliers while retaining the necessary standards of products, developing efficient distribution with newly formed business partners. On the other hand, one of the strongest points of Morrisons’ business is the quality of their products. Marketing sector should pay close attention to this group, as they are likely to turn to other alternatives if they become suspicious about the quality. Diversification, in terms of products and prices, is the key point of this paragraph. Infrastructure changes would also be inevitable. The first reason is diversification- additional space for more reasonably priced products, while the second is responding to the policy of other supermarket chains. The Morrisons already lost a convenience store battle to Tesco (“Morrisons: Five Mistakes”, 2015). Of course, infrastructure changes and expansion, and lowering of the prices would cause serious disturbances in overall income, but, if Morrisons is to stay competitive in the next few decades, these changes would be inevitable.
Morrisons wasn’t only late in the convenience store game. It entered online fresh food offering business 14 years after Tesco (“Morrisons: Five Mistakes”, 2015). Taking the fact that UK online food market is only set to grow, it would be wise to develop a stable online shopping platform that would be heavily advertised, in order to stay competitive.
Captive insurance seems like a good solution to the competition risk, especially due to the current financial situation which is fairly satisfying for the Morrisons. In other words, this problem could be mitigated, at least to some extent, by investing in a captive insurance firm. This way, Morrisons could attain a more acceptable agreement, or, in other words, attain the best levels of premium payable. Allowing other companies to “rent” services from its captive insurance firm could even provide Morrisons with additional profit.
Infrastructure would also be one of the key points in Brexit situation. Warehouse spacing is the main issue here, and with a constant rise in warehousing prices (Giles, 2017), it could be smart for Morrisons to start buying as soon as possible. In other words, a strong contingency plan should be developed to impede consequences of various shortages that are likely to occur when customs policy changes, which brings us to another problem- customs declaration for all goods that cross the border. This means that business operating software would need to be updated, while also constant adaptation will be inevitable as the UK still hasn’t come up with definite requirements (Giles, 2017). There is also the question of overall prices surging in the UK. This could be apprehended, at least to some extent, with a pre-negotiated agreement to extend an existing loan- in other words, with standby loan (a form of CAT bonds). As these types of agreement don’t affect the income statement and the state of liability books, at least not before its activation, it can be a better choice than insurance, or CAT bonds, especially due to other adversities that we’ve mentioned so far. Those adversities are more likely to happen and therefore necessitate a more urgent response.
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