Business analysis of asda

ASDA is the one of the rising name in the United Kingdom when we talk about quality focused retailers. Normally, a customer would say that they prefer ASDA retails because it offers multiple products under one roof. With a product line ranging from toys to general merchandise which includes food, clothing etc. this is not the end. ASDA also has an additional product which is branded as ASDA mobile. This service line really helps ASDA to be communicated to the masses as a sound company with a proper and favorable equity structure which is completely true.

Being a subsidiary of Wal-Mart, one of the leading retail stores of the world, which is based in America, ASDA has gained popularity fast in the United Kingdom consumer market and has recognized itself as an upcoming brand in the Retail store chain. This popularity is justified and completely relevant to the new plan that is being researched, as proposed in this report.

ASDA is currently headquartered in Leeds, West Yorkshire (ASDA team), and operates with a large customer base at the current moment where they are branched out. This situation is being manipulated further to create a bigger consumer base all over the United Kingdom. Currently, there is a chain of retail stores that is already operating in the United Kingdom and is established with more or less same product lines and services. It is named TESCO, which is also an international chain of retail stores with a total of a little over 4500 stores in 14 different countries, and headquartered in United Kingdom. It is currently ranked at number 1 with respect to the retail store chain. This is the main competition that ASDA will be facing as a threat in the market. The competition is tough since both chains have similar product lines and they also share the telecom service as another common element.

Currently, there is an edge that ASDA can use to gain popularity in the masses with the new venture; it is reflected in its slogan ‘Britain’s Lowest Priced Supermarket’ (ASDA Ad). Although this slogan has been given up over time keeping the market economic conditions in view, but the jingle was still alive with the customers, in their mind, until it was re-introduced in 2007, based on the same economic conditions, with a different angle ‘Winner: Britain’s lowest price supermarket award’, this is being used due to the award that it won from ‘The Grocer’ magazine, as the lowest price supermarket for some time now. This shows that the major strength that ASDA has and which it uses to market its products in the United Kingdom is mainly the Price factor that has been the ultimate motivating factor for the public to choose ASDA over other Retail chains. (ASDA Press Centre)

This study is going to explore the feasibility of the market structure if it is able to support the expansion of the organization to earn a more profitable set of operations. It contains different elements to be studied which can help in determining the feasibility for ASDA, the potential profit earnings that can be gathered overtime, in a more realistic manner to avoid the idealistic situational analysis which lacks the critical focus to be implemented in an environment which is dynamic and ever changing. Strategies are backed up by resources and these resources need exploration which this study will look into. As ASDA has a good equity structure, the incorporation will not be a tough task but the sustainability is the main area where this study will focus to see that if the organization is making the right choice in terms of expansion and growth. Every organization has two choices; they can either expand or grow. To diversify into different markets, both aspects are crucially adhered to.

Back ground to the Problem

ASDA had established itself from the initial formation of the company in 1949 as a Dairy Farm store to subsequent acquisition of different stores and outlets with minor changes in the name which currently is an abbreviation of Asquith and Dairies, the first two letters of both names capitalized to make ‘ASDA’. This name came up in 1965 when the original set up acquired Asquith Chain. With time the company, acquired more product lines as a major market offering from ‘MFI’ and ‘Allied’ which dealt in carpets, furniture and flooring. The original Dairy product line was sold off. Later on, ASDA acquired gateway outlets to expand its existence, after which it went public to gather a bigger set of equity structure so that its future endeavors can be financed. This has turned out good for ASDA so far and with the future plans, they plan on expanding it further with Wal-Mart being a parent company. (ASDA Press Centre)

Currently, there are different superstores which have outlets in the United Kingdom. Examples are Tesco, Netto, Sainsbury, Iceland, and some other key players who have express stores. This report has to look into the scenario by the point of view that for a new venture, the market situation has to be seamless and operational in terms of a new venture. The market has to be supportive of the growth plan since the market situation affects the new venture directly. Although the product line is the same, still the competitors would take this as a threat since ASDA will be competing with them over different geographical segments and every single competitor added means that the market share for the existing players will decrease which is not a favorable situation for them, so a tough competition can be expected. However, these are more or less, speculations of the rational mind. The true picture would be portrayed once the tools are used to make the proper assessment of the market and the forces that come in play in such situations. (Porter, 1979)

At the current moment, the situation is that ASDA is one of the emerging retail chains in the United Kingdom. With the current plan, it is planning to surpass the top level retail chains. As every organization plans to grow strategically, ASDA is following the same path as any company would do to achieve higher targets and higher profitability. Increasing the brand preference is the ultimate goal. More efficiently, Brand Resonance is the main concept that they have to achieve in order to capture a bigger market share.

Purpose of this Research

This research report holds key importance in analyzing the market in which the Retail stores are operating. Since ASDA is planning to establish itself as a chain that is recognized all over United kingdom with a similarity that resembles its main parent company Wal-Mart, there would be small areas that would require focus and an in depth study that has to go in line with the research report in order to establish a conclusion that the retail chain has a feasible and viable presence that can be recognized by the end consumer and possibly preferred in terms of brand. There are existing chains in the market which are established so this might require an in depth study of how the ASDA brand would get the proper recognition and preference over other brands that are already operating in the market.

The purpose of this research revolves around same key objectives that are outlines as under:

Profitability

This research will investigate the possibility and the potential of the ASDA organization to earn and comprehensively grow to earn profits which can be done through different tools and techniques. There can be different techniques used to find out how the potential customers would respond to such an offer. This will be explored through extrapolating the current stores and retail centers which are efficiently performing the business activities in the market environment. Once the potential profits are acquired, they will be gauges against the investment in the market so that a regular accounting report can clearly portray the potential that the market has at the current point of time.

Success ratio

With the investments being put in the venture, the success has to be measured against the monetary flow of capital. The success ratio itself is a qualitative factor. We are looking at the proper development that is being incorporated along with growth. The success of the organization can be gauged on certain predefined criterion which includes number of conversions and sales, quality of staff and the customer services that are being provided by ASDA organization. One other aspect that explains the current term success is the result that will be compiled in reference to the competitors that are currently operating in the market, the same market as the retail store itself is operating in. Once the place (Humphrey, 1970) is decided, there can be a healthy competition between different stores which will include ASDA, but that is a hypothetical model that can be used to predict the future success that can be achieved in the longer run when the report signifies that the growth of this Retail outlet is feasible and profitable.

Growth vs. Development

The core concept of Growth and development (Smith, 1776) is adopted through the economic field and as businesses and organizations are socio economic units, thus their existence can be used to investigate the level of growth and development of the organization. As it is explained, the growth does not necessarily imply that the organization is developing as well. Growth is more of a materialistic aspect which can be translated into having a larger product line and more products on the shelves but development deals with the fact that the organization is qualitatively pursuing profits that are promising sustainability for the organization in the longer run. These are the qualitative and the quantitative aspects of the organizational plan which will be explored as deemed necessary. This will be used to provide substantial evidence to the organization to provide a critical approach towards the growth plan.

Economical aspects

The organizational growth are subject to the economic development in the country which seems to be quite perfect for this organization since United Kingdom has a healthy market and has the potential to be explored by the organizations research group. This report will also provide the same grounds that will fulfill the purpose of the report itself and that of the organization by pointing out avenues where the establishment might not work and at others where it might be successful in the true sense of the word. Economic aspects like gathering resources are always harder and a painstaking task. Economic aspect includes the Macroeconomic environment in which the organization is operating. All the factors that are involved in this environmental study are important for this venture since ASDA is a subsidiary of Wal-Mart and that is based in the United States. While the organizations share their profit and resources, the monetary policies and the foreign exchange rate comes into play. Plus, the portfolio diversification has to be catered to as well since the fiscal policies in both United Kingdom and the United States differ in certain aspects. This study would allow looking into these factors for the organization since to finance the venture; they will have to carry out capital accumulation.

Feasibility

To make this venture possible, a detailed report has to be compiled which requires most of the work in the market to establish a feasibility based on a time line so that the entry of ASDA in the market as a complete retail chain is strategically aligned with a need that people have developed, which will in turn directly benefit the ASDA chain with a start that is backed up by a large number of sales. A good start is always a source of motivation for the organizational employees. While this report explores into the feasibility aspects, the organization’s position can be investigated and possible costs can be gathered to see if the venture is going to turn out profitable.

Costs that will be incurred

Every small activity that the organization carries out, costs a certain amount of capital or money. This cost is normally termed as sunk cost since most of this cost is not recoverable. The expenses would include, marketing costs for advertisement, and the costs for repositioning the brand in the market to create awareness in the masses, also, the costs for expanding the individual facilities and warehousing costs. All these costs can sum up to bigger amount and since it is not recoverable, the organizations can judge the profitability of this investment through this report. (Cost Management)

Significance of this Research

This market research report deals with the basic elements that are considered to be the most prioritized in this case scenario. There are other companies that try to achieve this mark. Every business strategy operates on some benchmarks designed by the top management of the company. These benchmarks are designed by keeping the major activities of the competitors.

Every business is supposed to keep a keen eye on the competitors since that is the main source of getting a hit that might prove fatal and a big blow to the operational potential. A competitor always tries to hit where it hurts the most. For every business strategy in a competing situation, the weakness of the competition is targeted and a contingency plan is always in place for such contingencies.

This research would give the researchers an in depth preview of the market situation which will be either favorable or unfavorable in reference to the company or organization which is planning to grow in the market and to expand in terms of market share, profits and also in the product lines that it will support in the longer run. The concept is also backed by integrating holistic marketing in the company operations (Phillip Kotler, 2008). In this concept the layers of marketing projects the company vision t the masses that are involved at different levels of a business. A business is based on the associations of the suppliers, vendors and the various teams that are directly related to the business in order to either promote the brand name or to focus on its operations to benefit the organization in an y possible manner. These teams can be the marketing creative team, the media groups, the optimization team and other workgroups which are not a part of the organization but they are facilitating the business as a whole. So, on organizational level, we see a collective effort of distinct workgroups to make the business a success.

An idealistic approach is normally used in these cases but the truth is that these idealistic approaches are not practical. They can be used as a model to explain a possible phenomenon in which the key variables are manipulated in controlled environment so the flavor of unpredictability of the market cannot be studied with these models. This is exactly why this research is being conducted to determine what key variables can be influenced or be influenced from. As the saying goes, be innovative or evaporate. If eh influence of the environment proves to be fatal due to the improper projection of facts then evaporation can turn out in a situation which can be hazardous to the sustainability and the liquidity of a business. Despite a bigger retail chain as a parent company, the damage would still be inflicted if improper data is used in this situation.

The use of different concepts and tools will make the researcher and the audience to critically examine the use and the effectiveness of the tools. There are major tools and techniques that can be used to identify certain variables and to see how these effect the overall situation. If these tools are effective in their use, then that can be added as a literary addition in favor or the tools and if they prove to be ineffective then the workability of the tools can be criticized and the limitations can still be defined in a certain geographical market.

These small but crucial areas will be studied and projected as they are with the level of significance that they provide to the business. In the process of this identification, the key areas which will be highlighted can benefit researchers to make processes more seamless in the society and possibly come up with new ideas that would trigger a better function in the society.

Aims and Motivation

As mentioned before, the study revolves around one key player ASDA which is the main target of focus and a feasibility has to be designed if the new plan of growth of the organization can work or not. For the feasibility, there are different aspects that can be explored to find out how the systems are going to work. Just like a new venture, the growth has to be implemented in a calculated manner over a timeline which can produce good results. Drastic changes can affect the workability of the new position of the company. Some of the areas where the feasibility comes into play are:

Technological feasibility

This feasibility is dependent on the technological resources that the company might require before the implementation of the plan. The processes and the flow of data and instructions are to be prioritized and made available so that a shared decision can be made.

Economic feasibility

Te economic factors are direct influencers over a business. These factors are to be studied and counter strategy has to be developed to minimize the negative factors which might affect the business adversely. Economic factors include all policies; government plans and the laws that are in place for different situations have to be kept in mind before the company can go for the implementation of the plan. The best plan would be the one in which the organization aligns its objectives with the government. This feasibility deals with the level of inclination that the company can show towards these economic forces.

Operational feasibility

The operations of a business are dependent of the basic concept of SWOT analysis. All operations are governed and planned by analyzing these variables. (Humphrey, 1970). The organization operates internally with the strengths and weaknesses that it possesses in certain areas. The core competencies are always amplified but the weaknesses are also tried to be minimized in order to avoid a hostile attack over the organization’s weakness by other competitors operating in the market.

Schedule feasibility

For every single project or venture, a timeline is of utmost importance because if a project does not follow a timeline, the activities will not be consistently spread over a period of time. It is the consistency that renders a project successful or otherwise. Consistent operations to establish a smooth set of functions is important because the activities can be traced back to the pre defined timeline. The schedule feasibility deals with the idea that the group of activities designed to perform a certain venture have to be spread out evenly over a considerable time line which can ensure the working of the successful project.(Williamson, 2000)

These are some main areas where the main focus would be along with other tools that will be used to analyze the market situations and the profitability clause by extrapolating the key analysis of the market. Finally, the ability of the organization to compete with the players in the market will be examined to present a complete scenario analysis.

Scope and Limitation

The scope of this dissertation is governed by the fact that an organization is planning to achieve a better market standing among other organizations which are involved in the same business. The research will envelop the whole situation that includes the factors and variables that are affecting the business through the environment, the customers, and the equity and capital structures needed for this study. A detailed overview will cover most of the possibilities of the study, however, the scope of the study is not limited to one organization only, and it would also include the competitors’ measures and strategies that might be used to cover most of the topic. The details will be populated so that the study can be used for other companies that are operating in the same market in order to achieve an organizational objective. The study would be able to explore into the facts and the logic that the situation holds within the situation which is unwrapped to singularly study the effect of the variables in an independent environment. The pluri vocality of events can cause some noise in the study of elements so a careful method would be used to identify the variables in this natural experiment and studied through the tools and techniques that will be recruited to critically analyze the market and its significant effects.

As the study progresses, the number of variables to be studied will increase and with this increase there is a chance that the information may be garbled to a certain bit. The study of these variables are still based on some pre identified models and studies that are conducted before this study is being compiled. The timeline will define the trends of the market and the models and tools will depict the rational behavior and the responses that are genuine and related to the argument here, whether negative or positive. The results will be compiled on the basis of existing studies and the trend analysis, thus there is a possibility that the study might produce some results which cannot be practically implemented or viewed. The behavior analysis is not being included in this study, in order to make the study comprehendible and focused. The behavior analysis is a completely different study. The results for certain areas, might be still be extrapolated on the basis of trends that follow and on the basis of a rationale decision making capacity that every organization has. The most dominant strategy making structure will be presented, or as deemed fit and suitable for the true nature of the study.

Summary

The study was chosen to highlight some key areas that govern organizational decisions like growth and expansion in a limited market. While there are existing strong organizations that are already on the top, there is a possibility that the upcoming organization might face a big competitive force and also the environmental force of the suppliers and the customers which might affect the whole market with one variable planning to grow in the market. The existing players on the top would take this as a threat. From a researcher’s point of view, the possibilities can be endless. However, the competitive forces of the competitors will be one of the most important areas to be studied since they are expected to affect the upcoming organization, ASDA directly. The express store chain is a venture that can be pursued effectively in the market but this study is more directed towards the determination of success and failure of this growth plan.

The nature of the research is inductive, and will be more emphasized in the start with qualitative analysis and later on; the quantitative aspect will be studied. To keep the study in a proper validated format, different tools will be used to analyze the situation qualitatively and quantitatively. It is important that a realist approach should be exercised and the results will be compiled based on this approach since there are a lot of angles to look at any given situation. This study is more likely to investigate a list of forces that can cause uncomfortable situations for ASDA and the effect of these forces on the competitors as well.

In the future chapters, we will be looking at the possible methodology that will be used and the tools that can be incorporated to develop a study which is directed towards the collection of genuine and relative facts. In this chapter, however, the basic idea that the topic of study proposed was examined for any possible layers of meaning that might create a misunderstanding in the study of the topic.