ASDA Stores Ltd vs TESCO PLC

This report compares ASDA Stores Ltd. and TESCO PLC, two major UK retailers, analyzing their external environments, organizational structures, and performance. It highlights the impact of factors like political instability, competition, and consumer trends on their operations and profitability.

ASDA Stores Ltd vs TESCO PLC.

Table of Contents
INTRODUCTION.................................................................................................................................4
MAIN BODY.........................................................................................................................................4
1)The external environment..............................................................................................................4
2) Organizational performance..........................................................................................................6
3)Organizational structure.-...............................................................................................................7
4)Comparison of the two companies-...............................................................................................9
CONCLUSION-...................................................................................................................................10
REFERENCES.....................................................................................................................................11

INTRODUCTION
Business and Management refers to managing the different types of operations of the company. It
includes all the methodologies, applications and systems that are used by the companies to satisfy
the changing needs of the targeted customers through developing innovative products. So that,
business can ensure competitive advantage over its competitors.
Asda Stores Ltd. is a retail Supermarket. It belongs to retail industry. It was founded in 19th
February. It's headquarter is in Asda House, South Bank, in West Yorkshire. Founders of the
company are Sir Noel Stockdale, Peter and Fred Asquith. Its main products are general merchandise,
grocery and financial services.
Tesco Plc. Belongs to retail industry. It was founded in 1919 in England, United Kingdom by Jack
Cohen. It's headquarter is in England. Key products of the company are Hypermarket, Convenience
shops, Supermarket etc.
We have chosen Asda Stores Ltd. to compare with Tesco because, both are the largest private
retailing companies of retail sector of United Kingdom. To compare the external environment,
organizational structure, organizational performance of Asda Stores Ltd. with Tesco Plc.
MAIN BODY
1)The external environment.
External environment includes all the forces that are outside the business and affects the
operations of the company. Business cannot control external factors.
PESTLE ANALYSIS-
Asda Stores Ltd :
Political Factors- There are many political factors that are affecting the working of Asda. When
company wants to open any store in any city or country it has to take the permission of local council.
European Union has removed all the trade restrictions for Asda. It has provided an opportunity to the
company to tap the global markets. Government of China has also permitted Asda to import goods
from the country.
Economic Factors- There are various economic factors that can impact the working of Asda. Like,
level of employment, competition in retail industry etc. National factors like, level of employment,
rate of inflation etc. also impacts the operations of company. There are some European factors that
can also affects the company like, policy of government related with investments. Example:

government provides subsidy to farmers due to which company has to keep the cost of supplying
goods lower.
Social Factors- Nowadays, customers are becoming more and more health conscious. So the
demand of organic food is increasing. Asda has to ensure that, it is supplying better quality of
organic food to satisfy the needs of customers. People of U.K. are having engaged life schedule so,
company has to consider this factor in opening and closing timing of the stores.
Technological Factors- Competitors of Asda are using Electronic Commerce as a marketing
strategy for marketing their products. Asda has started investing huge amount of funds for marketing
and distributing its products through online channels.
Legal Factors- Asada has its operations in U.K. So, it has to comply various rules and regulations of
government of the country. Company has to follow the standards of trading, regulations of food
standard authority etc. Company also follows all the laws related with labour protection at
workplace.
Environmental Factors- Consumers are becoming more and more aware regarding environmental
issues and ethical issues. So, company is focussing on recycling the packaging of products.
Tesco Plc :
Political Factors- Tesco has its operations in different countries so, it has to follow various rules and
regulations of the government of those countries. Certain factors that are affecting the working of the
company are political instability, rate of taxation, economic development of the country etc.
Example- Company imports certain goods from countries other than U.K. On which company need
to pay import duty this has increase the price of goods of the company(Pidd, . 2015).
Economic Factors- There are many economic factors like, cost of labour that affects the working
company. Cot of borrowing funds in U.K. also have impact on cost and profits of Tesco.
Unemployment condition impacts the performance of company in domestic as well as global
markets.
Social Factors- Trends of buying goods are changing constantly. Tesco should consider the concern
of consumers regarding obesity. Company is making efforts for satisfying the need of organic food.
Tesco is considering the attitude and beliefs of consumers while marketing and distributing the
goods.

Technological Factors- Tesco has made changes in existing technology to grab new opportunities.
It has installed RFID Technology so that, customer will get better shopping experience. Company
also launch PayQwid App. So that, customer can easily make payment online.
Legal Factors- There are many legal factors that impacts the performance of Tesco. In year 2016,
Company has faced legal action from employees because of gender discrimination.
Environmental Factors- Tesco is using renewable sources of generating electricity. Company has
launch a website called tesco.com so that, customers can easily buy the goods. Company has started
vans to collect the wastage.
2) Organizational performance.
Asda Stores Ltd.-
After the Sainsbury take over its competitor Asda Ltd. the profits of Asda has been fall by
10%. Company focuses on improving the customer experience through continuous innovation in its
products both online and in-store. The merger of Asda that is owned by Wall mart with Sainsbury
has resulted in development of approx 2800 supermarkets. Combined market share of Asda and
Sainsbury in 2017-18 was more than 31%. Group sales has been increased by 9% as compared to
previous year. Operating profit of the group has decreased by 0.2%. Technology is helping the
company to improve its working procedure. During 2017-18, the group has saved £540 million
which is above the company's target. Net debt of the group has decreased by £100 million in 2018.
Company has increase the offering of nutritious food by 18%.
Tesco Plc-
Sales of Tesco Group has increased by 0.6% in fourth quarter of year 2017-18. Due to increase in the
sales of the group, operating profit before other exceptional items has increased by 28.4 which helps
the company to achieve its objectives. Debt and borrowings of Tesco has been reduced by 29.6%.
Company has better performed in food segment. Different stores of Tesco has achieved the growth.
Grocery sales of the company through online platform has increased by 5.1%. Home ware range of
the group has shown growth of 20%. Capital expenditure by the company on various capital assets
has declined as compared to last year. Operating cash flows of the company has increased by 21.7%
it has also improved the profitability of the group. Total amount of capital expenditure in the form of
cash was lower than the last year. Company has successfully buyback its 17 stores against £393 m.

In 2018, company has announced partnership with British Heart Foundation for five years. So that,
company can help in reducing the heart diseases. In 2017-18, company has started training
programme in U.K. to provide training to more than 1000 employees.
Tesco Group utilize 55% of total electricity need from renewable sources. Due to which, it has
achieved reduction in carbon dioxide emission by 13%. This year, Tesco has increase the hourly
wage rate of employees by 10.5%. In October 2017, company has set up a plan to provide their
customers better quality products, to ensure that, no food will be wasted at any stage of supply chain.
Company has achieved improvement by five points in customers recommendation for Tesco brand.
Company is making efforts to reduce its cost of operations. Operating profits has increased by 67
basis from last year. Tesco Bank has achieved growth of 4.1%. Earning per share was 63% more
than last year.
3)Organizational structure.-
Organizational Structure is a system that defines the way in which task are allocated, and
directed for achieving organizational goals. Organizational structure of Asda Stores and Tesco are as
follows-
Organizational Structure of Asda Stores Ltd.-
Illustration 1 Functional Organizational Structure
Source: (Functional Organizational Structure 2017)

Asda is operating in retail sector. Company follows divisional organizational structure. Under each
department different functions are being performed.
Merchandising Department – The staff is responsible for determining what type of products are to
be offered to the customers. Strategic Pricing Manager is responsible for performing research on
demands of products. Placing the orders with suppliers. And developing pricing strategy.
Merchandising department plays an important role in display of goods to maximise the sales.
Distribution and Logistics department- The staff of this department is responsible for managing
the distribution of goods. They ensure that, goods are delivered as per the orders of customers.
Purchasing Manager is responsible for the movement of goods from warehouse to various stores.
Marketing department- Marketing specialist of Asda is responsible for developing marketing
strategies for the products. Marketing department designs and develop marketing plan to attract
targeted customers.
E-Commerce function allows the customers to buy products of the company online. E-Commerce
Manager is responsible for fulfilling online orders of customers, processing of payment etc.
Store Operations Department- The staff is responsible for receiving the goods in the stores. The
department use information technology to execute the whole process effectively(Laudon, 2016).
Organizational Structure of Tesco Plc-

Tesco is following Hierarchical Organizational Structure. Due to large size of the company.
Board of directors of Tesco consists of ten members. And Executive Committee consist of eleven
members. Tesco Board consists of Audit Committee, Nominations Committee, Disclosure
Committee, Remuneration Committee and Corporate Social Responsibility Committee.
Regional Manager- Regional Manager of Tesco is responsible for determining the tasks of all the
stores manager in different areas where the stores of the company are located. So that, all the
operations like delivery of goods are performed effectively and smoothly(Behrangrad, 2015).
Store Manager- The stores Manager of Tesco is responsible for preparing budgets and identify the
daily requirements of various stores of the company. Store Manager supports the employees in
identifying the current market trends, in implementing the policies and practises of the company.
Manager also maintains the safety of the stores.
Illustration 2 Tesco Organizational Structure
Source: (Tesco organizational structure, 2016)

Food Trading Manager is responsible for looking the activities of fresh food segment and Ambient
food segment of the company.
Non- Food Trading Manager is responsible for looking the operations of Electrical Section and
Clothing segment of the company(Hammer, 2015).
Personnel Manager- Personnel Manager of Tesco is responsible for activities related to human
resource of the company. They are responsible to perform the human resource management
functions like, directing, coordinating the efforts of employees.
4)Comparison of the two companies-
Heading Asda Stores Ltd. Tesco
Organizational Structure Company follows divisional
organizational structure. Each
division is divided into various
functions. Like, Merchandising
Department, Distribution and
logistics, Marketing department,
Store operations department etc.
The company follows
Hierarchical organizational
structure. It includes functions
of regional manager, stores
manager, personnel manager
etc.
Organization performance Profits of Asda reduces by 105
after the acquisition of company
by Sainsbury. Total market
share of the group is more than
31%. Sales of the company has
increased by 9% from previous
year.
Sales has been increased by
0.6% from previous year. Debt
of company has been reduced
by 29.6%. operating profit
increased by 21.7%. Earning per
share was 63% more than the
previous year.
Threat to company from new
entrants
Company protects itself from
new entrants by innovating new
products for customers. So that,
cost per unit decrease and it
gains competitive advantage
over other competitors.
Tesco is competing with
competitors by increasing its
customer base. Through
development of strategy of low
price. And by reducing the cost
of production.
Suppliers bargaining power Company is tackling the It is tackling the suppliers by

suppliers by introducing new
designs of products . And by
maintaining strong supply chain
management(Roeser, 2015).
developing committed
suppliers.
Buyers bargaining power It is tackling the buyers by
creating a large base of buyers.
And also through launching
innovative products.
Tesco is focussing on
development of marketing
strategy so that, it can attract
potential customers(Sadgrove,
2016).
Threat of substitutes Company is protecting its
products from substitutes by
increasing the cost of switching
of customers.
Company is focussing on
becoming service oriented not
only on product oriented.
CONCLUSION
The above Report has described the organizational structure of Asda and Tesco. It has also explained
the PESTLE analysis of both the companies. Further, the Report has described the financial and non-
financial performance of the companies. Various factors like political instability, laws, rules and
regulations by government has affected the working of both the organizations. Firms has also been
involved in designing the products according to the belief, attitude and thoughts of consumers. This
has supported both the organizations in growing. Both the organizations have faced intense
competition from the other firms. This affected their profitability aspects. It has also increased the
operational cost of both the enterprises.
It has also been analysed from the report that both the organizations have also faced threat
from the substitute products. For analysing and evaluating the substitutes threat both the firms have
been involved in the marketing analysis and research. They have set the prices of the products
according to the bargaining power of consumers. This has supported both the enterprises in
expanding their market share. It has also assisted them in growing and expanding their market share.

The companies have also engaged in providing quality products to the consumers. This has helped
them in increasing the brand image.

REFERENCES
Books and Journals-
Behrangrad, M., 2015. A review of demand side management business models in the electricity
market. Renewable and Sustainable Energy Reviews. 47. pp.270-283.
Chaffey, D. 2015. Digital business and e-commerce management. London: Pearson Education
Limited.
Hammer, M. 2015. What is business process management?. In Handbook on business process
management 1 (pp. 3-16). Springer, Berlin, Heidelberg.
Laudon, K.C. and Laudon, J.P. 2016. Management information system. Pearson Education India.
Linnenluecke, M.K. 2017. Resilience in business and management research: A review of influential
publications and a research agenda. International Journal of Management Reviews. 19(1). pp.4-30.
Mellahi, K. and Harris, L.C. 2016. Response rates in business and management research: An
overview of current practice and suggestions for future direction. British Journal of Management.
27(2). pp.426-437.
Pidd, M. and Broadbent, J. 2015. Business and management studies in the 2014 Research Excellence
Framework. British Journal of Management. 26(4). pp.569-581.
Rahimi, F., Møller, C. and Hvam, L. 2016. Business process management and IT management: The
missing integration. International Journal of Information Management. 36(1). pp.142-154.
Roeser, T. and Kern, E.M. 2015. Surveys in business process management–a literature review.
Business Process Management Journal. 21(3). pp.692-718.
Rosemann, M. and Brocke, J.V. 2015. Handbook on Business Process Management 2: Strategic
Alignment, Governance, People and Culture. Springer.
Sadgrove, K. 2016. The complete guide to business risk management. Routledge.
Stiles, P. and Uhl, A. 2016. Meta management. A Handbook of Business Transformation
Management Methodology, p.13.
Online-
Functional Organizational Structure 2017. [Online] Available Through:
<https://globalnpsolutions.com/2015/11/functional-orgonal-structure/>
Tesco organizational structure. 2016. [Online] Available Through: <https://research-
methodology.net/tesco-organizational-structure/>

Storey, D.J., 2016. Understanding the small business sector. Routledge.
Smith, L.C. and Wong, M.A. Eds., 2016. Reference and Information Services: An Introduction: An
Introduction. ABC-CLIO.
Doh, J., McGuire, S. and Ozaki, T., 2015. The Journal of World Business Special Issue: Global
governance and international nonmarket strategies: Introduction to the special issue. Journal of
World Business. 50(2).pp.256-261.
Mason, C., Botelho, T. and Harrison, R., 2016. The transformation of the business angel market:
empirical evidence and research implications. Venture Capital. 18(4). pp.321-344.
Kotler, P. and Armstrong, G., 2015. Principles of Marketing-Global Edition. Pearson.
Baker, M.J., 2016. What is marketing?. In The Marketing Book(pp. 25-42). Routledge.
Jackson, G. and Ahuja, V., 2016. Dawn of the digital age and the evolution of the marketing mix.
Journal of Direct, Data and Digital Marketing Practice.17(3). pp.170-186.
Ahmed, S. and Rahman, M., 2015. The effects of marketing mix on consumer satisfaction: A
literature review from Islamic perspective. Turkish Journal of Islamic Economics.2(1).pp.17-30.
Abril, C. and Rodriguez-Cánovas, B., 2016. Marketing mix effects on private labels brand equity.
European journal of management and business economics.25(3).pp.168-175.
Išoraitė, M., 2016. Marketing mix theoretical aspects. International journal of research
granthaalayah. pp.2394-3629
Wu, Y.L. and Li, E.Y., 2018. Marketing mix, customer value, and customer loyalty in social
commerce: A stimulus-organism-response perspective. Internet Research. 28(1).pp.74-104.
Wirtz, J. and Lovelock, C., 2016. Services marketing. World Scientific Publishing Company.
Serrat, O., 2017. Marketing in the public sector. In Knowledge Solutions (pp. 111-118). Springer,
Singapore.
Gummesson, E., 2017. From relationship marketing to total relationship marketing and beyond.
Journal of Services Marketing, 31(1), pp.16-19.