Operational Function in Developing Strategy | Report

Improving Business
Performance

TABLE OF CONTENTS
INTRODUCTION................................................................................................................................3
TASK 1.................................................................................................................................................3
TASK 2.................................................................................................................................................3
TASK 3.................................................................................................................................................5
TASK 4...............................................................................................................................................12
............................................................................................................................................................14
TASK 5...............................................................................................................................................14
TASK 6...............................................................................................................................................16
TASK 7...............................................................................................................................................18
CONCLUSION..................................................................................................................................25
REFERENCES...................................................................................................................................26

INTRODUCTION
The role of operational strategy is very critical. This requires business executive to
develop strategic decisions. The role of strategy is very significant in attainment of success by
the business. Through improvement their gap can be reduced between existing as well as desired
performance (Cronin and et.al., 2011). The present report demonstrates the contribution of
operational function in developing and implementing strategy of the organization. It also makes
evaluation of several business situations and make suggestion of improvement for the issue.
Implementation of changes is regarded as complex process in the organization. The present
report would make identification of the manner in which changes are being managed within the
firm. The organization selected for the present study is Asda.
TASK 1
Asda is American owned, British Supermarket retailer. The organization has become the
subsidiary of the American retail corporate giant Walmart. Apart from the core supermarket
retail format the business is engaged in offering wide range of products. This includes financial
services as well as mobile phone company (Douglas and Craig, 2011). The promotions relating
with marketing is being carried out Asda entirely on the basis of price. Asda promote itself under
a slogan that is Save money Live better. The business has huge number of stores across the
globe.
 Mission: Is to become Britain’s best value retailer exceeding customer needs and
expectations always.
 Vision: Is to make goods and services more affordable for everyone.
TASK 2
At international level, the company like Asda has attained huge amount of success. In
comparison with the other retailers it has gained top most position in the market. The products
and services of the organization has become popular within the industry. Beside this strategy of
pricing which is being complied with by the brand acts as major attraction for the customers to
purchase the product (Fifield, 2012). Asda has become representative of globalization. In
accordance with the experts it is essential to praise organization towards improving the standard
of services in the market where it operates. Further the company is renowned brand that makes
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modification within its products as per the requirement of the market. This results in increasing
satisfaction among customers. Looking at the current financial position of Asda, it has faced
3.9% fall in sales which indeed affected the profit of the year. However, this is because of the
fact that Sainsbury has overtook Asda in terms of sales which indeed decreases the demand for
its products and services and resulted in lack of profit. This directly impacted on the market
share of the firm in which it sloped down to a position behind Sainsbury. In all, click and collect
concept has increased the level of customer satisfaction and decreased their complaints. In this
regard, management has committed to invest 21 million in store hours for enhancing customer
services.
Hayes and Wheelwright four stage model assist in evaluating organization based on their
attitude towards their operations. Herein, with the help of this model, researcher is focusing on
evaluating the functioning of Asda on the basis of its operations. Following are the four stages of
cited model:
 Internally neutral: In this stage organization finds difficult to manage its operations
strategically because of constantly changing performance objective within low costs,
increased flexibility, improved quality etc.
 Externally neutral: In this stage, company tend to manage its operations by seeking
against its competitors. It is done by employing varied strategies such as JIT, TQM, BPO
etc. Looking at the functioning of Asda it is exact position that company looks in because
it is suffering from downfall and requires better strategic solutions to boost up the sales or
entire performance of the company.
 Internally Supportive: Under this, company has its operation strategy which is linked
with the overall business strategy. This is to make sure that its operational performance
objectives are aligned with and supportive in nature towards overall corporate objectives.
 Externally supportive: In this, company uses its operational excellence to accomplish the
goals and objectives by setting industry standards so that needs and expectations of
customers can be satisfied.
In present time one of the world's largest retailer is experiencing decline in sales. The
organization's stock price is in sluggish. Such kind of is not expected in case of brand that has
been leader in the retail segment. Poor performance has lead to development of several issues
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within the company. This has results in gaining critical attention in the business environment.
Such has resulted in influencing the financial performance of Asda to a greater extent. While
carrying out research three operational issues were identified which are as follows: Operational complexity: The Company like Asda is experiencing greater amount of
wastage. This is because of the use of inaccurate amount of ingredients while producing
the products that are required to be offered to customers. Such kind of complexity in the
products increases confusion among the customers (Hultman, Katsikeas and Robson,
2011). In addition to this the firm has increased the product range but it has deviated from
the products which were offered initially. This has lead to decreasing the satisfaction
among customers. Further it has resulted in causing several issues relating with internal
operations. Further it has increased the waiting of the people at stores. Poor management: The Company like Asda to a greater extent is suffering from poor
management that has resulted from ineffective financial performance. Majority of the
employees from the firm has given resignation because of arising controversies. There is
weak nature demonstrated in the strategic decision making which is due to lack of skilled
personnel (Leonidou, Palihawadana and Theodosiou, 2011). At management level, Asda
is required to make appointment of people who can pay attention towards operational
issues. Thus there is greater need of people who can bring innovations as well as
advancements.
 Absence of consistency at global level: Apart of attainment of success in immense
number of markets the organization is experiencing issue in relation to lack of
consistency in the global operations. There is no uniformity in the progress of firm and
activities. For example, the different scandal of the firm in the industry affects the image
of the brand to a significant level.
TASK 3
It has been clear that Asda is suffering from three operational issues. This includes poor
management, lack of consistency in global operations as well as operational complexity. For the
purpose of resolving the determined issues the organization needs to adopt three changes which
have been enumerated in the manner below:
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 Issues relating with operational complexity: The issue can be resolved by reducing the
size of number of product ranges. Further by reducing the level of segmentation in the
product the issue can be addressed to a greater extent. The clients may not get confused
and can buy the product in accordance with their need. Poor management: The problem associated with poor management can be addressed by
recruiting skilled personnel (Morgan, Katsikeas and Vorhies, 2012). There is greater
requirement of the people who can look at several operational issues. This is results in
generation of more ideas in relation with innovation. Further it is effective in
strengthening strategic decision making of the firm. Lack of consistency at global operations: Such issue can be resolved by the development
of more consistent global standards. The progress as well as procedure of firm need be
used in uniform manner.
Investment appraisal methods
The changes above can be evaluated with the assistance of several investment appraisal
tool which are enumerated as under: Net present value: In accordance with the views of Papadopoulos and Heslop (2014) it
has been examined that net present value is regarded as discounted cash flow approach
that assist in appraising and selecting the options relating with project. It is present value
of net cash flow minus initial cash outflow. This method is effective as it takes time value
of money into consideration. Payback period: As per the views of Varadarajan (2010) it has been determined that
payback period is defined as the number of years that are taken by project to recover the
amount of initial investment. This techniques is very easy to understand and can assist in
making analysis of the project in an effective manner. However it can be critically
assessed that this method does not consider time value of money into account. Performance matrix: In accordance with the views of Zeithaml, Bitner and Gremler,
(2010) it has been determined that role of performance matrix is effective in examining
the performance of specific project as well as behavior of organization. It offers greater
assistance to wide number of stakeholder needs that ranges from customers, shareholders
to personnel. There is presence of various parameters that assist in assessing the
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employee’s performance. This involves safety, time, cost, scope, actions, resources as
well as quality. But it has been gained that when the value of information is measured
through mathematical technique it reflects that experts of even performance metrics
select measures that possess less value. Safe criteria: In accordance with the views of Czuchry and Yasin, (2012) it has been
determined that safe criteria can be used for the purpose of assessing the performance of
specific project. This can implemented on the employees performance as well.
The main purpose behind making use of different methods available is that each approach
possess its own criteria for analyzing effectiveness of changes required within the functioning of
the company. Herein, proposed changes are measured on the monetary and non-monetary
prospects in which investment appraisal techniques such as net present value and payback period
assist in showcasing the financial reliability of changes while on the other hand, performance
matrix and safe criteria assist in showing the non-financial abilities of changes in the cited
company.
Implementation of techniques
Cash Flows for Asda:
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Net present value:
Project 1:
Project 2:
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