Business Strategy

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 Table of Contents
Introduction ..................................................................................................................................... 3
Section 1: ........................................................................................................................................ 4
Task 1 .............................................................................................................................................. 4
Task 2 .............................................................................................................................................. 8
Section 2: ...................................................................................................................................... 14
Task 3 ............................................................................................................................................ 14
Task 4 ............................................................................................................................................ 15
Task 5 ............................................................................................................................................ 16
Conclusion .................................................................................................................................... 18
Reference list ................................................................................................................................ 19

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Introduction
One of the main and most significant factors, which have an influence over the overall success
and effectiveness of a company or an organisation, is its business strategy. It is the competence
and efficiency of the business strategy that helps it in achieving not only competitive edge but
also sustainable success. This report is going to discuss about Asda, the famous supermarket
retailer from the UK. It is going to conduct a thorough analysis of the operations and the
effectiveness of the current position, external environmental and internal environment of the
organisation along with its vision, mission and such aspects, which in turn are going to be used
for framing a business strategy for it along with a strategic management plan.

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 Section 1:

Task 1

Applying appropriate frameworks analyse the impact and influence of the macro
environment on Asda and its strategies.
There are a large number of factors in a company’s macro or external environment, which have a
considerable influence over its operations as well as its strategies. However, these impacts and
influences of the macro environment can be evaluated using a number of models and
frameworks. The two common frameworks using which the macro environment impacts and
influences on a company and its strategies can be evaluated are the “Porter’s Five Forces Model”
and the “PESTLE Analysis” (Aziz and El Ebrashi, 2016). These frameworks can also be used in
case of Asda, to find out its macro environmental factors and their impacts and influences on its
strategies, which has been done in the discussions done below.

Carry out an environment audit for the company incorporating PESTLE analysis and
Porters five-force analysis.
Conducting an environmental audit is an important aspect in every business (Abbott, 2015). In
order to conduct the analysis of the external environment of Asda, the following PESTLE
analysis has been conducted -

Political factors Removal of trade barriers in various countries have made it easy for
Asda to expand itself while the World Trade Organisation has made it
possible for the company to expand itself into niches such as China.
However, the Brexit can be acting as quite a threat for the company
until now.
Economic factors Asda has been facing various difficulties in the recent past due to
changes occurring in share prices and exchange rates because of Brexit,
which is a major cause of its deteriorating profit. The generation of
GDP in the country has also reduced (Grundy, 2017). This has been
affecting Asda’s sales.
Social factors The profits and sales of the company have been affected considerably

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 because of social forces. The latest trend in the market and demand for
eco-friendly products and their packaging is the preference of
customers, which Asda has to keep in mind in every decision it makes
regarding products.
Technological factors Factors such as technological advancements and increasing usage of
internet to purchase even daily essentials and groceries have increased.
Focusing on online presence is more significance in Asda in the current
scenario.
Legal factors The UK marketplace is propagated with diverse legal forces such as the
enlargement of emphasis on environmental as well as labour related
legislations in the country, which is another factor affecting Asda.
Environmental Environmental awareness has largely increased in the UK and an
factors environmental approach along with reducing carbon footprints has
become important in Asda.
Table 1: Asda’s PESTLE analysis

(Source: Created by the learner)

Using your previous analysis describe the position occupied by ASDA in the retail market
in the terms of, for example, size, growth, profitability, market standing, product
development, potential.
The organisation Asda Stores Ltd, which is commonly known worldwide as Asda, is a
supermarket retailer in Britain, which is headquartered in West Yorkshire and the parent
company being Walmart. It is a large size company both in terms of employees and in terms of
revenue. During the previous year, the company had total revenue worth 21951.8 million pounds
while the approximate number of workers employed by it in the present scenario is 165000
(Asda.com, 2019). The growth of the company is also considerable in nature. Starting from
growth in terms of sales to rolling out new technologies for helping in making shopping simpler
and easier for customers, the growth of Asda has been remarkable in the past years. The growth
of Asda can also be identified from its proposal to merge with Sainsbury Plc and creation of a
new and dynamic retail business, which is going to accelerate the successful strategy of the
organisation and lower prices.

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At the same time, the market standing of the company is quite good. It has a remarkable position
in the UK retail supermarket sector. The figure that has been attached below shows a clear
illustration of the market share or standing of Asda in the UK retail supermarket sector with all
the other major players in it -

Figure 1: Figure showing the market standing of Asda in comparison to other supermarket
chains in the UK

(Source: Michalakeas et al., 2015)

It can be seen from the above figure that Asda occupies the second position in the UK retail
supermarket sector after Tesco Plc, thereby understanding that it occupies a significant position
in the marketplace. Coming to the products of Asda, one can see that the company has a large
product base. There are diverse kinds of products sold by the company and the quality of these
products is quite good. The development of this base of products has occurred over the past few
years and the company now consists of a diverse product portfolio. All these factors show that
the potential of Asda is considerable and has scope of further improvements. However, the
limitation or negative factor in the company is its profitability. The profitability of Asda has been
decreasing slightly during the past years. For example, Asda’s net profit in 2016 was 380.5
million pounds, which has decreased to 301.0 million pounds in 2017 (Asda.com, 2019). Thus,
the company requires focusing on the improvement of its profitability.

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Critically analyse the macro environment to determine and inform strategic management
decisions.
Macro environmental factors largely affect a company’s strategic management decisions (Frynas
and Mellahi, 2015). This can be understood from the example of Asda itself. For example, the
social factors such as changing trend of customers preferring eco-friendly products has led Asda
to make strategic management decisions on its product packaging and the sale of more eco-
friendly and organic ones rather than the ones that cause harm to the environment. At the same
time, the increasing need of the company to focus on its online presence and e-commerce, has
led Asda to make strategic management decisions on using e-commerce not only for B2B but
also for B2B along with adopting internet technology for conducting online shopping and
gaining improved market share. Consideration of the environmental factors affecting the
company has made its management in making strategic decisions on reducing its carbon
emissions and focusing on reducing wastes and abolishing activities that harm the environment.
In such a manner, strategic management decisions are taken within Asda based on its macro
environment.

Consider why it is important to carry out external analysis when developing a business
strategy using ASDA as a reference.
According to Bryson (2017), one of the most significant factors, which has to be considered in
the development of a business strategy is the external analysis. This is because from the external
analysis conducted related to a business, relevant information can be gathered regarding it and
helps in finding out whether if there are any sort of opportunities it has for expansion and growth
that they could be exploiting along with reaping its benefits. At the same time, external analysis
helps in the forecast and the prediction of changes that are present in the marketplace and can be
affecting the business. On the other hand, it also helps a business in understanding its
competitive position as well as the evaluation of the performance, the image, the immediate
rivals and such other factors. According to Morden (2016), external analysis also helps a
business in its customer analysis through it can be gaining an understanding on the preferences
and tastes of customers, the segmentation of customers and their unmet needs. All these aspects
in turn help in the formulation of the business strategy.

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For example, Asda can be developing or formulating its business strategy with the means of
external analysis. This is because external analysis will be helping the business in the
exploitation of its opportunities while guarding against its threats. It will also help the business in
understanding the factors that can be having an effect on it as well as gaining understanding of
the customer needs and tastes, all of which are required being considered for its strategy so that it
is effectual in nature and the objectives of the business can be accomplished.

Task 2

Analyse the internal environment and capabilities of Asda using appropriate frameworks.
The internal environment analysis is done periodically by consulting different departments of
Asda. This is a leading retailer organization, which maintains such analysis and functions
accordingly. The internal factors include the functioning and working of each of the members of
the organization. Some of the internal factors and capabilities are discussed blow-

Dealers and suppliers-

This organization is a unique team of dealers and supplies who not only promotes all the
products of the organization in a unique manner but also arranges special training programs for
the sales team to make theme learn how they can achieve the maximum profit out from each of
the product (Haleem and Jehangir, 2017).This organization has a unique supply chain which
increases with course of time due the in the development and implementations of newer
technology.

Economy –

The biggest internal strength is their cash flow, which acts as a ready resource, and as a result,
they can utilize and start any new project (Mussa and Zhi Zhang, 2016). The company is
constantly fighting against their competitors with different inventions and thus they are able to
promote and expand their brand round the world, which gives a very positive part while
analyzing the internal environment.

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Examine what you consider to be the core values of Asda. What influence would these
have on the company’s strategic direction?
Asda is one of the best retailer organizations that always wanted to become the first choice of the
customers. Thus their core values are as follows-

 They are determined to promote best of services to its entire customer.

 They always strive for excellence and thus kept on producing innovate ideas to gain
control over the market.
 Each members of the organization are given equal respect and thus a proper scale of unity
and integrity is maintained all though the entire organization.
These core values have the immense influence in managing the company’s strategy of marketing.
This is because according to the study it is observed that Asdareally give priorities to its
customers. They launch and design products based on the customer requirement. Their managers
study and analyze the market then launch their product. Moreover, it is also seen that the leaders
of this organization maintains consultative leadership styles where they give equal respect and
priority to all its employers. Asda also invest a large sum of money in their research and
development sector with the aim of inventions and promotion towards the market according to
the customer demands. It is observed that the growth of the organization is always raising high
because of the proper organizational behavior that gives importance not only toits customers but
also to its employers. They also offer several reward system toemploys to boost and encourage
their hard working and dedication. Thus, this core value plays a vital role in managing the
strategies and ideologies of Asda.

Is there a vision for the company? Is there a Mission Statement?

Asda is one of the famous and reputed retailer organization that has gain the heart of many
customers. Thus, it always has a mission and vision for the expansion of their organization.
Without a mission and a vision, it is not possible to outrage the competitors and maintain
reputation in this competitive business world. Thus, their mission and vision are as follows-

Mission- Their main mission is to make Asda as one of the best retailer organization in all over
Britain

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Vision- their main vision is to offer excellent service to its customer. They always wanted to
provide all the products that the customer can demand.

With this mission and vision they have always succeeded in their path of achievements.

What are the objectives of Asda now? How do you think the stakeholders in the company
have shaped these objectives?
The main or an objective of Asda at present time is to promote best of goods and services to its
customer at cheaper rate. This organization sells almost all the required and daily products. They
sell at much lower cost in compare to other retailer organizations. At the same, time thy keep a
strong attention towards their product quality. That is the quality of each of its product is never
compromised. Moreover, their main objectives are to reduce the cost of packaging, recycling and
stop wastage of papers. Thus,besides maintain their customer they also pay attention towards it is
the environment.

Stakeholders consider their mission, vision, and objectives to realize the motive of the company.
Thus by studying all about the company a stakeholders can get to know about the every details of
the company.The stakeholders are also very attentive towards the mission and vision of the
organization.They try to settle all the environmental social and political affairs

Carry out an organizational audit using some techniques such as SWOT, value chain
analysis, BCG growth-share matrix, McKinsey 7S.
Organizational audit can be done using SWOT analysis, BCG matrix and even MCkinsey 7s.

SWOT analysis is done by the entire organization periodically by consulting with different
departments. According to the SWOT analysis-

Strength
 The biggest strength of this
organization is their dealers and
suppliers who organize different
training programs or their sales team so
that they can obtain maximum profit
from the products (Hammad,2015).
Weakness
 Asda practice different types of work
culture which sometimes fails
 The attrition rate is so high that they
organization has to spend a large sum
of money for training facilities.
 Technologies must be more developed

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  Another biggest strength is their to design more products that are new.
enough resources of cash with which
they easily start a new project.
 It is seen that the new projects that they
initiate always has good return of
revenue.
 Their brand port polio is good thy can
easily expand their service

Opportunities Threat
 Shortage of skilled labor
 Asda is opening new market as the new  Liability laws are different for different
technology and the government new countries which may hamper the
free trade has provided lot of promotion of the product
opportunity to emerge into new market.
 The new taxation rules has also helped
the company to start a new
market(Blythe and Martin, 2019)
 New customer demands always-new
product, which help the company to
emerge for new markets.

BCG matrix of Asda

BCG matrix helps to study the strategic planning and growth of a particular organization. This
matric defines the market share and market audit and feedback of new products so launched of a
particular organization. Thus, this matric is used to do market audit of Asda. This also helps the
company to observe graphically about their sale and investment. This matric is comprise of four
quadrant and the two axis resembles are X for market share and Y for market growth.

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Star- this represent the fast growing industry where there can be generation of large amount of
cash. However, this needs proper guidance to handle. The organization will mature the star will
became a cash cow (Laffy and Walters, 2016). Asda is maintaining good marketing strategy and
they have many opportunities for emerging into new markets.

Cash cow- cash cow is the product where the business normally strives for. Although ADA
position for cash cow is good enough to sustain the market field (Quix, and van der Kind, 2016).

Question mark- In spite of producing customer based products the company faces major loss.

Dogs – this mainly used to observe the overall growth of the company in spite of using large
revenue. Asda faces major losses as they are neither able to generate cash nor able to acquired
cash.

McKinsey 7S

According to the Mckinsey 7s model-

Structure – It has proper hierarchal organizational structure.

Strategy – It normally maintains 7ps marketing mix mx strategy, which has proven very
effective

Staffs- It has almost 165000 numbers of customers who are highly dedicated towards their work

Style- They maintain consultative leadership styles (Woolley, 2017)

Skills- They needs to improve their technological skills

Systems- They maintains a proper and uniform system all through their organization (Hayes,
2018).

Shared values- all the cores value, mission and vision are well interconnected to have proper
success

Critically evaluate the internal environment to assess strengths and weaknesses of an

organization’s internal capabilities, structure and skill set.
Below given is the chart, which will depict the strength and weakness of the organization-

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Features Strength Weakness
Internal capabilities  All the team members  Such a large
works in unity. hierarchical
 Proper reward system organizational
is generated for the behavior sometimes
employers so that the become difficult to
employers work freely maintain
 Dealers and suppliers
arrange special training
to increase the over all
sale.
Structure  It follows a unique  This sometimes leads
organizational to chaos during critical
structure where condition as the
consultative leadership leaders’ waste time by
styles are maintained taking decisions from
and thus equal respect the members.
and priorities are given
to all its members.
Skill set  Their innovative ideas  Technological skills
by the advanced needs to be enhanced
research and
development sector is
really best (Sajidet al.,
2019)

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 Section 2:

Task 3

Applying Porter’s Five Forces models evaluate the competitive forces of the retail market
sector for Asda.
As discussed by E. Dobbs (2014), one of the most noteworthy tools using which the competitive
position and rivalry of an organisation can be evaluated is the Porter’s five forces model. Asda’s
competitive forces prevailing in the retail sector within which it operates have been analysed
with the Porter’s five forces model in the following points -

 Threat of new market entries - It can be observed that threats that Asda has from new
entries in the marketplace is considerably low. It is because considerable capital
investment would be required for a new establishment in the supermarket sector of UK
and the time needed by it for footing with a company such as Asda is going to be quite
difficult.
 Threat of substitute goods - Since Asda operates in the supermarket sector, the threats
that it faces from substitutes are quite substantial in nature. This is because customers can
be easily availing similar products from other supermarkets without payment of any extra
costs.
 Bargaining power of purchasers - Since substitutes are high and several supermarket
chains are available in the marketplace, the bargaining power that purchasers have
considerable impact on Asda.
 Bargaining power of suppliers - The bargaining power of suppliers, however, is low.
This is because Asda is quite a large company and purchase from suppliers in bulk
amounts and losing out trade with the company is going to be a loss for the suppliers
themselves.
 Existing competition or rivalry between competitors - Rivalry is considerably intense in
the UK retail supermarket sector (Kirby-Hawkins et al., 2018). The main competitors of
Asda include Tesco, Sainsbury’s, Aldi, Morrison’s, The Co-Operative and Waitrose, each
of which are considerable threats for it.

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Devise appropriate strategies to improve the competitive edge and market position of Asda
based on the outcomes of your analysis.
Based on the analysis of the Porter’s five forces, one can be identifying that there are
considerable impact of the competitors, purchasers’ bargaining power and substitute goods on
Asda and its operations. However, for improving its market position and competitive edge, the
following strategies will be appropriate for it -

 The company must be focusing on lowering its prices while ensuring good quality
products, which will help it in dealing with the competition in the marketplace.
 The threats of substitutes can be overcome through product differentiation, which Asda
can improve through increasing product quality and enlarging the number of brands
whose products it sells.
 Purchasers’ bargaining power to be tackled with making smart concessions for
customers, enhancing loyalty programs, and putting relationship first rather than price.

Task 4

Applying a range of theories, concepts and models, interpret and devise strategic planning
for Asda.

Ansoff matrix is used to study the strategies of Asda. This matrix consist of four quadrants which
includes –
Market penetration- this can be defined as the selling of new existing products to its existing
customer. Asda normally increase their revenue by selling their products but in this case to its
fixed number of customer (Zentes et al., 2011).

Market development- this strategy implies when new products are launched into the existing
market. Thus, Asda always prefers to innovate and launch new products to its present market.

Product development- this strategy mainly develop when the existing products are sell to it’s
the new market. This is done by online shopping sites and efficient suppliers which are present in
Asda as a result they can easily their product in distant land (Tănase, 2011).

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Diversification- this is the part where both the products and markets are not constant and thus
it’s very difficult to bring diversification into existing business. Thus, Asda needs to improve a
lot in this sector.

Produce a strategic management plan for Asda that has tangible and tactical strategic
priorities and objectives.
According to the ansoff matrix, it is evident that Asda in spite of having all the strategies placed
carefully in the competitive still it has few areas where the company must work hard. The
competitors are rising hard with their revolutionary innovation thus Asda has to keep their
performance up always to get the best position among retail organization. Thus, the plans can be
as follows-

 At first they must check whether thy have enough budget to sustain the cost of any new
projects in the present market scenario
 Asda must open portal site where the customers can drop their orders for groceries and
can track the order during delivery.
 Then company must develop their technical department by recruiting major expertise n
the IT field who can develop more important software to analyze the present market
scenario before launching any product.
 Next, they must implement better strategy to increase their market share globally.
 Finally, they must plan to open more retail stores to promote more sell for the future
business. The store must contain every required product, which are great demands of its
regular premium customer (Frynas and Mellahi, 2015).

Task 5

Using the results of your analyses from assignments 1 and 2 create an outline strategic plan
for Asda
Analyzing assignment 1 and 2 a five strategic plans can be prepared which the company can
perform in the future for better prospects. They are-

 At first, this company must prepare several advertising strategy to promote and publicize
its product across the world. From the above study, it is evident that Asda must introduce

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 their promotion even through online sites. They must also include certain exciting
discounts to its customers. Promotion will help the customers to an updated news of its
new products (Scottet al., 2018).
 They must design their retail landscapes in a better way to avoid the monotony and keep
the people attracted for coming in their new stores.
 They must also appoint several consultancies to update their management strategy and
new IT professionals and dedicated staffs to enhance the management quality of the
organizations.
Thus, it is expected that with these few strategic plans the company will be able to achieve its
success in the net year five year plan.

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Conclusion
Therefore, from all such discussions, one can find out that Asda has a significant position in the
UK retail market sector and holds a considerable share with strong mission and vision. However,
there are a significant number of factors, which end up affecting the organisation as well as its
operations such as the external environmental factors, its internal threats and weaknesses as well
as the intensive rivalry in the market, based on which the strategic management plan has been
developed for the organisation. Through the means of this strategic plan, Asda will be able to
overcome to set valid strategic objectives and directions along with taking tactical actions and in
such a manner the business strategy of any organisation can be developed in an effectual manner.

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