Fundamental Problems in Strategic Management for ASDA

This study explores the fundamental problems related to strategic management in regard to ASDA, including poor inventory management and weak business expansion strategy. It also discusses strategic frameworks such as Porter's Five Forces, value chain analysis, SWOT analysis, and PESTEL analysis.

SIM336 – STATEGIC MANAGEMENT
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Table of Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY...................................................................................................................................2
Fundamental problems related to strategic management in regard to ASDA........................2
Strategic frameworks used in context of fundamental issues in ASDA.................................2
CONCLUSION................................................................................................................................9
RECOMMENDATION...................................................................................................................9
REFERENCES..............................................................................................................................10
BIBLOGRAPHY...........................................................................................................................10
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Executive summary-
The current study is based on ASDA, which is one of the best supermarkets in the United
Kingdom. It have been explained that by taking right judgment and considering appropriate
recommendations, organizations gain competitive edge.
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INTRODUCTION
Strategic management can be defined as continuous procedure of strategic analysis,
implementation, creation and monitoring, utilized by a company with aim to achieve and
effectively maintain a competitive edge within sector in which organizations operated since for
so long. It provides a lot of advantages to a firm, for examples it help to improve awareness of
internal and external environments. The current assignment will be based on ASDA, which is
known as one of the best British supermarkets chains the United Kingdom. Firm while operated
venture in retail sector has developed strategic plans and strategies. This study will explain
fundamental problems relate to strategic management. It will describe porter’s five forces model,
value chain analysis, swot and pestle analysis as strategic models. It will clarify chosen brand
performance in relation to specific tactic and its efficacy. Furthermore, this report will justify
appropriate suggestions for company that they will use to overcome all negative aspects of
issues.
MAIN BODY
Fundamental problems related to strategic management in regard to ASDA
In recent time, each organization has developed strategic plans and tactics while
managing business functions and operations within its industry which make them able to gain all
benefits accessible in the world of business (He, Marginson and Dai, 2019). Due to varied factors
either external or internal, strategies of companies have failed, which is not suitable for growth
and success of ventures. In context of ASDA, lack of management in relation to inventory is one
of the fundamental issues that impact expansion strategy of supermarket in negative manner. It is
really very important for any company to manage overall business activities according to
develop plan. Poor management lead to decreased profit margin, affect brand image and decrease
sales rather than last few years or months. ASDA because of that problem can face a lot of
challenges and difficulties that unable manager to achieve desire outcomes. Weak strategy in
context of business expansion is another basic problem that affect negatively upon success of
company. These two problems supermarket can face, which is important for it to overcome.
Strategic frameworks used in context of fundamental issues in ASDA
PESTEL analysis-
It is the best strategic management approaches can use to determine, examine, organize
and monitor external elements that can have impact on a well known companies like ASDA.
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Political factor-
Tax rates, trade policy, political stability and instability are the few examples of political
element that have an impact on firms. Change in tax rate; put negative effect on ASDA business
expansion strategy, it drives management to reconsider their exist tactic and make it better than
before (Fernández-Rodríguez, García-Fernández and Martínez-Arias, 2020). Due to change in
tax policy, supermarket experience problem under which they have to pay tax on each trading
action, which is quite costly and impact current profitability of its business in negative manner. It
can be said that rise in business tax affect negatively in term of increasing costs of products
production and supply chain management.
Economic factor-
Labour supply & demand, unemployment, growth of population and other components
are included in this category that can affect current plans of any organization. In context of
ASDA, unemployment in one of the economic factors which put negative impact on supermarket
brand expansion strategy (Umkehrer and Vom Berge, 2020). Increased rate of unemployment
with the United Kingdom due to Brexit, put positive impact on expansion strategy of ASDA, it
makes management able to expand their business effectively within region in which firm is
interested to enter. It gives organization change to hire skilled and knowledgeable applicants,
who are capable to work in supermarket and contributes in success of their exit strategy that has
been declared by administration.
Social factor-
Ageing population, healthy lifestyle and celebrity following are the examples of this
factor that are important for organizations to consider. In current era, people change the way they
eat and live because of health issues, which is the main cause of ASDA business expansion
failure. It can put negative impact on above strategy of supermarket negatively. Because of this
factor, company have to give extra focus on current market needs and changes within it, which
consume a lot of time and efforts. In order to identify customer’s lifestyle change reasons,
management feel that they have to develop an appropriate plan, which is important and time
consuming activity.
Technology factor-
Advancement of technologies is an excellent technology force that put positive impact on
venture expansion tactic of ASDA and allows them to drive its sales even better. For example,
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ASDA in order to gain attention of new buyers towards purchase, used range of digital marketing
platforms and tools, which is quite beneficial for company in term of maximizing consumer base,
generate more brand awareness at international level and reach at top position. With Facebook,
Twitter, Instagram and other social media platforms, supermarket can advertise business and
their products in market where firm expand as it help to beat competitors and gain competitive
advantages effectively and efficiently (Ibrahim and Wang, 2019).
Environmental factor-
Green economy, hazardous waste, organic products and carbon footprint are essential
point, which companies in any industry have to focus. Consumer and government concern for
environment safety, drive ASDA manager to reconsider current strategy as it positive impact on
it. People wants that company have to reduce carbon foot print, which is very useful and
beneficial for its growth and business strategy as well. It leads to build strong brand image in
market and permit management to reach at global level, where local people are seeking to buy
quality products in exchange of money. Firm obtained this opportunity and operate in
environmentally friendly manner, by reducing plastic packaging.
Legal factor-
Rules and regulations of nation in which ASDA operate and will plan to enter put
negative impact on current venture activity. For example, Change in Equality Act 2010 force
supermarket to make some key modification within existing employment relate tactic. Due to
this factor, management experience more pressure in term of conducting deep analysis about
exist terms and conditions of above act. This activity takes a lot of time and requires hard work,
which is not possible to do within short term period, in mid of business expansion strategy. Firm
because of this component redeveloped employment policies by considering benefits for all
applicants either new or existing one.
SWOT analysis-
This model is used to identify strengths, weaknesses, threats and changes accessible in
retail industry in context of ASDA. It allows developing further business strategy and managing
each operation in effective manner.
Strengths-
Skilled applicants are one of the biggest strength of ASDA, which make it capable to
operate its business within retail sector for longer period of time (Sevillano, 2017). With this
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strength supermarket, can give tough competition to their rivals, which is actually significant to
do. Talented workers are able to serve their services and delivery quality products to target
market, which in return increase sales, profit margin and customer’s base of supermarket even
better.
Popularity of ASDA within sector is another strength that permit brand to expand
business in profitable market where firm can earn more.
Weaknesses-
Poor inventory management and strategy are two different weaknesses of ASDA that put
negative impact on expansion action taken by top authority and CEO of supermarket
(ROBINSON and Oriade, 2020). It can be said that because to lack of effective strategy and
inventory management, firm could not be able to enter into Russian market. It affects overall
effectiveness of current plan and management activities in negative manner. Without managing
inventory practice, company would not get success and obtain desire results. These weak points
need improvement and techniques that can help to defeat all negative influence.
Opportunities-
Expansion into other nations is the excellent chance that ASDA can grab to increase
profitability and productivity. Supermarket can plan to expand their business operations into
highly profitable countries like Russia and China, because it to gain more visibility. By
increasing presence in market company can drive more buyers towards purchase of grocery
products.
Furthermore, technology advancement is another opportunity firm can obtain with above
one, which makes them strong to sustain at global level along with national. With this chance,
supermarket can promote business all over the world before expansion. It helps a lot in term of
marketing and increasing productivity.
Threat-
TESCO, ALDI, Morrison’s and Primark are the main competitors of ASDA. By using the
latest technologies, expanding business and developing strategic management plans,
supermarkets increase level of competition that can threaten chosen brand and force manager to
do something that is much better than all above organizations. Intense competition between
existing players brings challenges in front of selected supermarket as it lead to strategic
management change and decrease productivity of venture.
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Value chain analysis-
It is another strategic model like above ones that can be used in regard to ASDA in order
to examine their activities and identify competitive changes.
Primary activities-
Inbound logistics-
It includes all practices that have been conducted by management to grow business even
better and increase operations efficiency more than competitors. ASDA face problems because
of ineffective relations with suppliers of goods. Firm has failed to manage its effective
interaction with this stakeholder that can hinders delivery of items to retail outlets and then to
target customers. At the same time it also put negative impact on brand image in market and
creates so many challenges while getting success of business expansion.
Operations-
With this analysis, it can be identified that ASDA effectively and successfully satisfied
their customers by providing products according to his or her needs. Instead of plastics
packaging, supermarket accordant to government rules and focusing on buyers concern, has been
used paper for packing goods as it help to save environment from being polluted or harmful
aspects such as land, water and air pollution. But it can be said that lack of inventory
management can put negative impact on operations management.
Outbound logistics-
Inventory management is an outbound logistic that affect business success and reputation
of ASDA in retail market in front of suppliers and customers. Due to poor inventory
management, supermarket could not be able to manage their outbound activities systematically.
Mismanagement in inventory can impact schedule of organization operations and disturb its
outbound practice, which is not appropriate for their expansion strategy. It is a procedure of
ordering, managing and using firm’s inventory.
Marketing and sales-
ASDA can use all digital marketing sources and techniques, which makes supermarket
capable to reach at target market and identify potential buyer’s needs successfully within short
duration. It activity provide a lot of benefits to firm in term of gaining competitive edge and
generating more revenue. Furthermore, chosen brand is able to provide after sales services,
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because it is really very important to do. Supermarket is capable to build a strong workforce who
can serve excellent services to each customer.
Services-
ASDA can cater pre and post sale services that play significant role in developing loyalty
and trust of consumers (McIntyre, Srinivasan and Chintakananda, 2020). Today’s buyer
considers these activities offered by company as essential promotional and advertisement
activities. These services help supermarket a lot in term of building strong brand image and
improving their reputation even better. It can aid strengthen efficiency of organization to expand
business within Russian retail market.
Secondary activities-
Organization infrastructure-
Infrastructure of ASDA is quite effective and supportive as it helps management to
manage all legal matters in systematic and ethical manner. Legal adviser of company is able to
provide appropriate solutions. Moreover, finance department of supermarket effectively
managed their accountabilities and play vital role in company by managing accounts. This unit is
capable to conduct workplace analysis to determine money related needs of other business
functions like marketing, supply chain and HRM.
Human resource management-
HR manager in ASDA hire skilled and experienced workers based on his or her abilities
and level of talent, which provide benefits to supermarket in term of achieving set aims and
objectives. This activity allows company to expand business in target market where each buyer
wants to buy quality and healthy food products from well known brands just like ASDA. Human
resource department reduce stress level upon applicants and motivate them to perform
effectively.
Technology development-
It can be analysed, that ASDA and its management is enable to use advanced
technologies, which in return improve marketing practices of supermarket and enhance inventory
administration activities systematically (Wang and et.al., 2019). When firm integrate technology
within distribution, supply, production and another activities, manager could get advantage for
example it help to satisfy people by delivering items to them on time. Use of technology in each
activity can save time and efforts.
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Procurement-
It includes receiving products from suppliers and then selling to target customers via
supermarket as physical stores. All the equipments in supermarket are available that can help
management to deliver goods on time, but due to above discussed problems overall effectiveness
of operation can be affected and restrict company to achieve goals.
Porter five forces model-
It is one of the simplest and easiest strategic frameworks that have been used in context
of several companies in order to assess and evaluate competitive power & position of an
organization. This model is frequently utilized to determine a sector’s structure to identify
business tactic.
Bargaining power of consumers-
Buyers of ASDA are its important stakeholder, who is able to cater benefits by increasing
sales of organization after each purchase in exchange of money. The degree of this force is high
because, customers are able to put pressure on firm in regard to change pricing structure and
improve quality of goods according to his or her expectations that is quite good and helpful. But
require a lot of efforts to do. Furthermore, it can be analysed that in retail industry customers
have many alternative options, which increase their bargaining power rather than before.
Bargaining power of suppliers-
As compare to buyers, number of suppliers within retail industry is a lot which let their
bargaining power a weak force (Sheldon, 2018). For example, ASDA have a range of options in
term of suppliers who seeks to work with brand for longer period of time. So it can be said that it
makes degree of this force low. With accessible option, supermarket could not allow suppliers to
put negative impact of price structure of supply chain. With less control over prices, suppliers
would not harm image of brand and support firm to manage inventory management process.
Threat of new entrances-
Market entry in sector where ASDA operated operations is quite tough, as it require huge
capital investment that is not possible for every supermarket to do. Furthermore, it is also very
difficult for new companies to beat well known supermarkets like Sainsbury, TESCO,
Morrison’s etc. in retail industry. From this discussion, it has been identified that degree of this
force is low as it strengthen organization to sustain for long and develop plan to expand business
in new market. It also gives supermarket change to retain buyer and attract new one as well.
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Threat of substitute products or services-
In grocery market there are some goods offered by local stores and suppliers directly to
customers like fresh fruits, vegetables etc. that affect customers base of ASDA negatively.
Degree of this element is low as it gives change to people switch to another grocery provider
who can sell fresh items. It put negative impact on business growth and success of chosen
supermarket. It also affects expansion strategy of company negatively.
Competitive rivalry between existing companies in retail industry-
Competition between all well known supermarkets of UK retail industry is high because
they all are able to give each other tough competition. It can impact expansion and current
strategy management strategy of ASDA negatively and drive manager to redevelop their plans
that help to gain competitive advantages.
CONCLUSION
From above analysis, it has been concluded that ASDA with suitable and appropriate
actions, get success in business expansion as declared strategy. By applying all above models
like Porter, PESTLE framework, SWOT and other framework, it has been identified that there
are varied elements puts negative and positive impact on business strategy of supermarket. With
effective strategies and approaches, organization effectively overcomes problems and negative
impacts. Furthermore, it has been summarized that by following above suggestions and options,
company gained competitive advantages and achieved all objectives & aims successfully.
Management gained benefits after making improvements within business expansion strategy by
managing inventory practices in systematic manner. Firm excellently retained their existing
customers and attracted new one with purchase for longer period of time. By analysing overall
situation and then taking right decision, supermarket gives tough competition to its competitors
and obtained benefits in term of increased sale, profitability and revenue.
RECOMMENDATION
1. ASDA always satisfied their customers and allow them to share their point of view with
company, which is actually very necessary for brand as it help to know people opinion
about brand and its products. Supermarket along with current practices and approaches,
consider new one as well, which are also beneficial for business. Organization must
improve inventory management practice because it impacts entire efficiency of venture
and its operations. For that, they should hire highly experienced manager who is able to
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manage everything according to plan and allows firm to get desires outcomes with more
benefits.
2. Before developing expansion strategy, company should conduct deep investigation about
new market, buyers and suppliers as it make help to manage inventory process easily.
Furthermore, supermarket must also improve their relationship with suppliers because
they allow company to delivery all products at stores and then workers sell it to
consumers.
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REFERENCES
Book and Journals
Fernández-Rodríguez, E., García-Fernández, R. and Martínez-Arias, A., 2020. Business and
institutional determinants of Effective Tax Rate in emerging economies. Economic
Modelling.
He, G., Marginson, D. and Dai, X., 2019. Do voluntary disclosures of product and business
expansion plans impact analyst coverage and forecasts?. Accounting and Business
Research. 49(7). pp.785-817.
Ibrahim, N.F. and Wang, X., 2019. Decoding the sentiment dynamics of online retailing
customers: Time series analysis of social media. Computers in Human Behavior. 96.
pp.32-45.
McIntyre, D.P., Srinivasan, A. and Chintakananda, A., 2020. The persistence of platforms: The
role of network, platform, and complementor attributes. Long Range Planning. p.101987.
ROBINSON, P. and Oriade, A., 2020. 7 Supply Chains, Logistics and the Service
Experience. Managing Hospitality Experiences, p.85.
Sevillano, L.M., 2017. From the margins: Filipina skilled migrants tell their stories: a thesis
presented in partial fulfilment of the requirements for the degree of Master of Arts in
Psychology at Massey University, Albany, New Zealand (Doctoral dissertation, Massey
University).
Sheldon, I., 2018. Industrial organization of the food industry. The Routledge Handbook of
Agricultural Economics, p.50.
Umkehrer, M. and Vom Berge, P., 2020. Evaluating the minimum-wage exemption of the long-
term unemployed in Germany. ILR Review. 73(5). pp.1095-1118.
Wang, Y and et.al., 2019. Life cycle cost-benefit analysis of refrigerant replacement based on
experience from a supermarket project. Energy. 187. p.115918.
Online
ASDA CHANGE MANAGEMENT AND OPERATIONAL ISSUES. 2019. [Online]. Available
Through: <https://peachyessay.com/sample-essay/asda-change-management-and-
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BIBLOGRAPHY
https://peachyessay.com/sample-essay/asda-change-management-and-operational-issues/
https://retail.economictimes.indiatimes.com/news/industry/asda-faces-tougher-trading-
conditions-after-sainsburys-dream-dies/69370248
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