The Business Environment Of Asda
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Published: Mon, 5 Dec 2016
ASDA Stores Limited was founded as Associated Dairies & Farm Stores Limited in 1949. ASDA started in Leeds and expanded into one of the largest retailers in UK
the reason for the success of Asda has been their ability to create a basic structure for their own business. In 1999 Asda was taken over by the Wal-Mart family. After the takeover Asda started to see success as sales and profit started rising and also so a bright future but faced competition from other competitors.
ASDA Stores Limited was founded as Associated Dairies & Farm Stores Limited in 1949 in Leeds. The adoption of the ASDA name occurred in 1965 with the merger of the Asquith chain of three supermarkets and Associated Dairies; ASDA is an abbreviation of “Asquith and Dairies”, often capitalized. ASDA became a subsidiary of the American retail giant Wal-Mart, the world’s largest retailer, in 1999, and…
Throughout the UK, Asda has 245 stores, 19 depots, 109,000 colleagues and 2,800 different suppliers. Asda’s customers not only benefit from cheaper prices but receive an unmatchable mix of fresh food, grocery, clothing, home, leisure and entertainment goods. 2. Structure of the market A market structure is the characteristics of the market which determines the behaviour of a firm within a market. Asda superstore operates within an oligoplistic market structure; as there are many firms within the market but only a few dominate. Majority of the goods produced by Asda are homogenous goods to that of their rivals.
Asda will continue to face many trends that will change the market for better or worse. The government may have a major effect on Asda when it comes to changes in government laws such as taxation, price restrictions, and how money is managed. Asda will try to meet all government regulations while pursuing the retail market.
The economic factors is consists of many factors such as inflation, unemployment and interest rates. Inflation rate means increasing level of prices of goods and services. Inflation rate is expressed as a percentage and is presented every month. The national statistics office defines it as an average measure of change in prices of goods and services bought for the purpose of spending by the vast majority of household in the UK. When the inflation rate rises the government will raise interest rates to reduce spending and or reduce interest rates to increase spending when inflation rate is low. Asda is affected by inflation rate when prices of products and services increase and products are cost more, wages of employees don’t increase meaning customers have less money to spend.
Public transport is about how many local buses, taxis and cars there are in the area or next to business. This affects Asda as if there is less transport this will mean there will be fewer customers coming to Asda, so less money will be made by the business. Asda can get its own bus service out if there is less service. The lack of competition is that if Asda’s competitors have the similar product or cheap price would affect the business were as the customer would go to where it is cheaper and better product and Asda will have to compete with the other retailers to keep the customers coming in.
Technological change (TC) is a term used to describe the process of invention, innovation and diffusion of technologies or processes (dictionary.com, 2009). The term is redundant with technological development, technological achievement, and technological advances. In its early days, technology changes illustrated TC with the “linear model of innovation, which has since been largely eliminated and replaced by a model of technological change that requires innovation at all stages of research, development, dissemination and use (Basker, 2009 85).
The price and technology will change the demand and at a rapid pace. An important factor contributing to both price and technology changes is the competition. As changes in competition, the company must adapt and adjust prices and advance their technology as quickly as and hopefully faster than the competitor. If the company were to fall too far behind the progress of competitors, the company would experience a potential loss of earnings and a steep hill to climb in the marketing field. Being able to maintain profitability and high technology goods will ensure that the company is well if the classification is not better than the competition.
Asda will only improve with a new look or pattern. If Asda wants to compete effectively against Tesco and Morrison’s it will be necessary to continue to redefine its new look, carry accessories brand, and continue cutting costs by buying in bulk and selling more. Asda must also continue to invest in the renovation and redesign of stores. By eliminating unnecessary costs, such as renovation and redesign efforts to improve productivity, another law of diminishing marginal productivity will continue to affect its productivity growth. Asda will not only need to upgrade its technology with the latest technologies but also need to adopt best practices in terms of processes and systems to eliminate waste and improve productivity.
Asda knows that the key to success is to have productive employees who are able to work effectively. They found that simple training of their employees is a quick and easy way to ensure they have the knowledge necessary to ensure that they can still be productive. Asda has begun using advanced technology to help further enhance productivity.
The cost structure of Asda is a step above everyone. Types of costs include transaction costs, sunk costs, marginal costs and fixed costs. The cost structure of the enterprise is the ratio of fixed costs into variable costs. Wages and benefits for Asda are still improving; it seems nowadays they know that to have the best workers, they need good benefits to keep them like employee discounts and performance bonuses that are available. The fixed and variable costs that Asda is anything but fixed, they can sell their products at low prices for the simple reason that they buy for the lowest amount possible. Because Asda is one of the largest retailers in the UK, giving them the power to demand low-cost to ensure they have low prices for their products.
In today’s society, what should the largest retailer in the UK, Asda to fear in the business world today? That is the question that many critics of the retail giant like to ask frequently. The market trends of today’s economy means that even companies as large as Asda must be consistent and careful of their competitors, prices, technology, productivity, cost structure, the price and demand, supply and demand analysis, and the impact of government regulations. Asda works hard to balance these elements, while ensuring that they are making profits so they are able to rise in the future.
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