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The retail industry in the United Kingdom is very competitive. ASDA, as one of the successful company in the United Kingdom was able to build a goodwill and customer loyalty which was an envy of others. The ASDA brand name had provided them with a competitive advantage and this continued till the latter part of the 1985s.offering quality and service, but stopped offering this resulting in the exodus of its customers. It failed to stock the right products and failed to keep up with the market trends.
ASDA Stores Limited was Associated Dairies & Farm Stores Limited in 1949. Stores mainly based in the North of England, the newly focused food retail group expanded further south in 1989 by buying the large format stores of rival Gateway Superstores for £705 million. This move overstretched the company and it found itself in deep trouble trying to sell too many different products. As a result it was forced to raise money from shareholders in both 1991 and 1993. It revived under the leadership of Archie Norman, who later became a front bench Conservative MP. CEO from 1991, Norman was chairman of the company during the period 1996-1999, and replicated the store on the basis of United States retail giant Wal-Mart, even sending Allan Leighton to Bentonville, Arkansas to assess and photograph the systems and marketing which Wal-Mart had deployed.
In 2005, amid reported concerns within Wal-Mart about a slippage in market share, partially due to a resurgent SainsburyHYPERLINK "http://en.wikipedia.org/wiki/Sainsbury's"'HYPERLINK "http://en.wikipedia.org/wiki/Sainsbury's"s, ASDA's chief executive, Tony de Nunzio left, and was replaced by Andy Bond. In 2005, ASDA expanded into Northern Ireland by purchasing 12 Safeway stores from Morrison's. In November 2008 there were reports that ASDA was to buy Irish retailer Dunne's. In 2009 Wal-Mart 'sold' ASDA for £6.9 billion to their Leeds based investment subsidiary Corinth Services Limited. The deal, which took place in August, was described as part of a "group restructuring" and means ASDA remains under the control of the Wal-Mart, since Corinth are themselves a subsidiary of Wal-Mart.
The analysis of the problems faced by the company which was at the peak of its success in 1995 when it reported a pre tax profit of over one billion will reveal how adverse external factors brought it down to its knees. The purpose of project is to trace the origin and growth of ASDA as a retail giant and concentrate mainly on its activities over the last ten to fifteen years. The ASDA position was steadily developed, along with its profitability. By early 1990s it looked unstoppable as a retailer, as it progressively expanded its product range from clothing to food, furnishings and financial services.
Despite disappointing starts in the United States and Canada, it developed steadily throughout Europe and the Far East. However in a very competitive environment and in an environment of moderate to high uncertainty, ASDA failed to adapt. The literature review looks at the wider context in which ASDA fell out of grace and revival strategies are analysed.
ASDA business strategies
By 1970s corporate strategy had come to mean a complex and meticulously wrought plan based on detailed forecasts of economics and specific markets.However there is no universal definition of strategy. Some writers include the purpose of the organization as part of strategy, while others make firm distinction between the purpose and the actions that then carry out this purpose.
ASDA has specific set of business strategies
Make the business relevant for the 21st centaury
Articulate the strategic for the future
Effect a seamless transition to new leadership in an appropriate time scale.
Develop the management team
Defend the business from an unwelcome take over advance
Organization's internal resources, the external environment within which it operates and the organization's ability to add value to what it does. The resources of an organization include human resource skills, the investment and capital in every part of the organization. It is essential to investigate the distinctive capabilities that will allow the organization to survive and prosper against competition. Environment includes not only the economic and political circumstances but also competitors, customers and suppliers, who may vary in being aggressive to a greater or lesser degree.
Organisations need to develop corporate strategies that are best suited to their strengths and weaknesses. Suggested that corporate strategy is only needed when an organisation faces competitors. That means that if there are no competitive threats, there is no need for strategy. This is rather a narrow view of strategy. Even a monopoly without competitors could need a strategy to defend its position. suggested that the environment is so uncertain, particularly at a global level, that it might be impossible to plan a long term corporate strategy. Examples of such environmental changes include major technological changes and unexpected actions by government.
Government and general public: - generally concerned about the organisation's business meeting relevant legal requirements and it does not harm the environment.
Quality: - Attracting them relies on the survival and success of the business.
Suppliers: - generally concerned about the prompt payments for the goods and services they supply. Their cooperation is essential in the production and overall business.
Shareholders: - owners of the organisation and generally concerned about the steady income, capital growth and continuation of the business.
Customers:- concerned with receiving goods and services of reasonable
Prevailing environmental factors
Social- People are living longer and the requirement of older people needs to be catered for. The population of women is greater than men and more of them are at work now. They have to be attracted into the stores.
Political- With the proliferation of European Union legislation, the company has act in conformity with them.
Technological- The advancement of technology offers new and better ways of advertising and selling products. The internet now plays a great part in selling products. ASDA has already launched a transactional website to sell their products. The advancement in communication can enable people to work from home.
Economic- The Company has to face competition from new rivals. Increasing costs of raw materials could affect the profits. Rise in the inflation rate and interest rate will have impact on the ability of people to buy and might result in them switching to cheaper suppliers.
Porter's Five Forces analysis
Substitute Products (Low pressure)
The customers has the choice of going to many specialty stores to get their desired products but are not going to find ASDA's low pricing.
Online shopping proves another alternative because it is so different and the customer can gain price advantages because the company does not necessarily have to have a brick and mortar store, passing the savings onto the consumer.
When it comes to this market, there are not many substitutes that offer convenience and low pricing.
The Bargaining Power of Buyers (Low pressure)
Consumer advocate groups have complained about ASDA's pricing techniques.
The individual buyer has little to no pressure on ASDA
Consumer could shop at a competitor who offers comparable products at comparable prices, but the convenience is lost.
Rivalry among Established Companies (Medium Pressure)
Mature industry life cycle.
Target has experienced tremendous growth in their domestic markets and has defined their niche quite effectively.
Bargaining Power of Suppliers (Low to Medium pressure)
ASDA could vertically integrate.
Since ASDA holds so much of the market share, they offer a lot of business to manufacturers and wholesalers. This gives ASDA a lot of power because by ASDA threatening to switch to a different supplier would create a scare tactic to the suppliers.
Potential Competitors (Medium pressure)
ASDA often has an absolute cost advantage over other competitors.
Entry barriers are relatively high, as ASDA has an outstanding distribution systems, locations, brand name, and financial capital to fend off competitors.
Grocers could potentially enter into the retail side.
SWOT analysis for ASDA
Strengths and weakness are based on the internal analysis and opportunities and threats on the external analysis.
Fall in market share.
Recession leading to a fall in demand.
Employ well trained staff.
Bargaining power with suppliers.
Highly regarded quality merchandise.
Large advertising budget.
Established brand name.
Leaders in market and sell a range of other products.
New designs take a long time to reach shelf.
Increase in competition.
Change in trends and lifestyles.
Target all age groups.
Develop new products and business.
Establish good relationship with suppliers.
Information System used at Management level in ASDA
An information system is a collection of hardware, software, data, people and procedures that are designed to generate information that supports the day to day, short range, and long range activities of users in an organization. Information systems generally are classified into five categories.
Execute support systems, transaction processing systems, management information systems, decision support systems, and knowledge work station systems. The following sections present each of these information systems.
There are different types if Information system used in different level of management in ASDA or any other major retailers, below is the diagram of different level of management with different types of system used in each level of Management and the detailed explanation of each level.
Knowledge & Data Worker (Professional)
Operational Manager (Staff)
Execute support system. (ESS)
Executive Support System (ESS) is a reporting tool. That allows you to turn your organization's data into useful summarized reports. These reports are generally used by executive level managers for quick access to reports coming from all company levels and departments such as billing, cost, accounting, staffing, scheduling, and more.
Profit planning:-Profit making is the one of the key factor of the company and for increasing the profit of the company will plan new strategy.
Personnel planning:-Every year for the encouragement of the highly skilled employees there should be some of the some progress will be arranged for the employees which will encourage them for the more effective work.
Product Planning:-Every year in the board meeting there will be decision taken by the comity that which product is best seller and will increase the productivity of the product and compare the same product with their competitor to win the competition.
Operational Planning:-What is the requirement of the business and what new criteria that are required that will be decided by the committee for the further progress of the company on the basis of the annual report.
Decision support system (DSS)
Decision Support System is used at the middle level of management to make co operate decision on the bases of the data. It uses low volume of data. It makes use of several analytical models like what-if analysis, sensitivity analysis, goal seeking analysis, optimization analysis.
Capital Investment:-The system helps to make decision using pass year records of how much money to invest. Results are mostly accurate as the processed data is quite relevant.
Annual Budget:-Every year before the new financial year start company looks after the economical and financial condition of the company and to maintain the profit company decides different criteria which helps them to keep going.
Management Information Support (MIS)
Management Information System is the function level that deals with the middle level manager its uses high volume of input data for the simple model processing which gives summary reports as output
Control Cost Analysis:-After the cost analysis is also necessary to keep control on cost so by keeping in mind this all the above stated cost company has to now decide how they can control all this above stated cost to reduce the cost.
Cost Analysis:-All the expenses and the related cost are calculated that will help to forecast the annual expenses of the company which is also a part of the financial condition of the company. Following are the different cost that company has to keep in mind while they are doing the cost analysis for ASDA
Legal taxes and IT costs
Maintenance and storage cost
Sales Region Analysis:-At this stage there will be a calculation of the specific products and items that have sold throughout the year and on the basis of that overall idea about the product analysis can be done and new product can be launched.
Knowledge work station (KWS)
This is the system which has the design specification input which leads for the modelling processing so that the output would be design and graphic done by the technical staff which has to develop more and more efficient product for the ASDA, who provide more performance in different technical aspect area of the business.
Managerial workstation:-The manager's style of workstation is usually the largest, but it's not only meant for managers. They work well for people who need a large work space and the ability to hold small meetings with some privacy.
Engineering Workstation:-This is the level at which all the technical type of work has been carried out by the company.
Transaction processing system (TPS)
Transaction processing system is used by the operational level. It is set up to carry out day to day transaction. It can be defined as an "A computer based system which perform and record daily routine transactions necessary to the conduct of the business.
Customer Record keeping:-This system helps in keeping track of the record of the customer details through their loyalty card, which will then used to send them latest promotion.
Training and Development:-These systems are mostly used in the Human Resource Department to provide proper training to the staff, which can then provide excellent customer service to the customer.
Employee Record keeping:-Employee record system will maintain all the record of the employee on their own and this will help to the company to keep track of the employee that which employee is working in which branch or area of the country and it can also keep track of their holidays and absentees, performance.
I.S. Used at the Till:-This system carries out all the daily sales transaction of the store. Each item it scans helps in keeping record of the sold out stocks, through which the store manager can order necessary items required in the store which are sold out.
Business ethics can be defined as "the moral values which are used to govern the business behaviour and restrains companies in the results of interest to the shareholders."
Business ethics is considered to be right or wrong acceptable or unacceptable behaviour within the organization. When we apply to ASDA responses to many of the most important social, environmental and ethical challenges they face are contained in their 100 Plan A commitments which were launched in 2007 and set sustainability targets for 2012.
When we go more on it, the Plan A explain how they do business and extend their social and environmental commitments. Extending their social and environmental commitments across the 5 Plan
Health and Wellbeing
Promote active lifestyles for their customers and employees.ethics issues does not really differ from general ethics but it is applicable in business as well just like in the normal society like not saying the truth or been dishonest it is considered to be not good or not proper and even to be unethical so this is all applicable in any business organization to the stake holders, employees, customers, competitors, stockholders and shareholders
Send no operational and construction Waste to landfill and increase waste
Recycling from 2 million items a year to 15 million.
Ensure vulnerable raw materials come from sources that don't contribute to deforestation
Help their clothing suppliers to pay a fair living wage starting in Pakistan, Maldives, Bangladesh, India and Sri Lanka.
Remain committed to making our UK and Irish operations carbon neutral
By 2012 and reduce their energy use 25% per square foot by 2015.