Comprehensive Business Strategy Report: Asda Stores Limited Analysis

This report provides a comprehensive analysis of Asda Stores Limited's business strategy. It begins with an introduction to business strategy and its importance. The report then delves into a PESTLE analysis, examining the political, economic, social, technological, legal, and environmental factors impacting Asda. Following this, a SWOT analysis and VRIO model are employed to assess Asda's internal environment, including its strengths, weaknesses, opportunities, and threats, as well as its resources and capabilities. Porter's Five Forces model is applied to evaluate the competitive forces within the industry. Finally, the report synthesizes these analyses to devise strategic planning recommendations for Asda, culminating in a conclusion and a list of references. The analysis highlights the importance of understanding both the macro and micro environments to make informed strategic decisions.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Analysis, impact and influence of macro environment on a specific organisation and its
strategies .....................................................................................................................................1
TASK 2............................................................................................................................................3
P2: Analysis of internal environment and capabilities of an organisation..................................3
TASK 3............................................................................................................................................6
P3: Applying Porter's Five Force Model to evaluate the competitive forces of an organisation6
TASK 4............................................................................................................................................8
P4: Application of theories, concepts and models, interpret and devise strategic planning for
an organisation............................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business Strategy refers to different strategies used by an organisation in order to
establish the goals and objectives, increment of customers force, improve performance and
strengthening the market position. These strategies differ from organisation to organisation or the
environment in which they are working (Brewster, 2017). For instance, a company working in
two different segments may establish different strategies in order to market and position
themselves. In context of this report, a global company used is Asda Stores Limited. Asda is a
British supermarket retailer store headquartered in West Yorkshire. A SWOT analysis, PESTLE
Analysis, Porter Five Force Model, VRIO Model and Ans off matrix will be covered in order to
state the various internal, external, micro and macro factors to implement the right strategy so
that the potential of the firm can be analysed.
TASK 1
P1: Analysis, impact and influence of macro environment on a specific organisation and its
strategies
Asda Stores Limited is a British Supermarket retailers. It was established in year 1949
with the acquisition between supermarket owned by Asquith Family and Associated Dairies
company of Yorkshire. It offers variety of products and services comprising financial and mobile
phone providers. To understand the impact of macro environment factors on the workings of
Asda Stores limited, a PESTLE model will be implied. This model will help in studying all the
macro environmental factor at one.
PESTLE Analysis
It is a framework used to analyse the various macro-environmental factors which can
influence the workings of an organisation. This model is used for environment scanning that can
have an impact on the performance of an organisation. This model will be used to analyse
various factors, namely, Political, Economic, Social, Technological, Legal and Environmental
Factors (Cavusgil and et. al., 2014).
These factors play a significant role in implementation of strategies in Asda Ltd. as these
are factors through which Asda Ltd is able to stand strong in the market. The emphasis of these
factors on Asda can be seen like this:

Political Factors: These are the factors which states the national and international
regulations implemented on Asda Limited. These factors will help in analysis of political reforms
bought up in the country. National, international and EU regulations plays a major role for Asda
as when Brexit was implemented, people lost their job and their spending power reduced and
Asda also lost some of their potential customers. Also, United Kingdom enjoys a stable
government, that means the policies and regulations are not fluctuated too much, which is an
opportunity for Asda as it will help them in implementation of their own policies for the long run
(Chang, 2016).
Economic Factors: It refers to economic policy of the country in which the organisation
is working. Economic factors helps in establishment of various reforms in the organisation, like,
labour policy, minimum wage, working hours and many more. Government as well is trying hard
to take the control of Asda in order to establish the workings through which country can grow
more is a threat to Asda as the government intervention will not give them freedom to work
effectively and efficiently.
Social Factors: These factors refers to the social trends that can have an impact on the
workings of the organisation. One of the biggest social strategy applied by Asda is hiring old
staff. Asda started hiring old people for the job as there are large number of retired people
looking for jobs, will help in increasing brand image of the company.
Technological factors: These factors refers to the technological advancement created by
the company in order to get a competitive advantage in front of the competitors in the country. It
can help in bringing innovation in the business and get profit maximisation out of it. Technology
advancement of Asda includes Online portal and computer aided programs in order to grow as
people are going more tech-friendly and it will help them in getting Asda products more faster
and easily through the portal. It will solves issues like when customers does not have time to go
to store, then, they can simply order the product from Asda website. The threat of Social Factor
is the imitation as any competitor can copy the idea and will take away the market share of Asda
(Chen and Jermias, 2014).
Legal factors: It refers to various legal elements surrounding the organisation. The legal
force comprising the legal factors of United Kingdom, includes the Planning Commission. This
includes laws that may results in delay of workings of an organisation. Asda keep a close eye on
all the regulations of planning commission in order to be safeguard. These factors will help Asda

in opening a new store in any region. Also, Asda is facing difficulties in this segment as the firm
was accused of tax ignorance which can diminish the market position of the firm. Also, there is
an allegation on Asda that they are taking up the share of small farmers and shopkeepers because
of their lowest price strategy which is a threat to their organisation (Goffee and Scase, 2015).
Environmental Factors: It includes analysis of several factors and standards that are
related with environmental safety which an organisation must consider while dealing in market.
Asda tries to limit the carbon emission in their stores as their stores are eco-friendly. Asda is also
trying to work with their manufactures in order to emit less carbon and more organic products
and services. All these factors will help Asda to grow more and gain the trust of their customers.
The analysis of these factors helps in understanding certain factors, like, Asda is having
an issue as they are taking the market share of small retailers, also, there is a saying in United
Kingdom, that, large scale industries have low quality product is also one of the issue they need
to overcome. But, the factors enjoyed by Asda include the market share and the potential of
expanding their business.
TASK 2
P2: Analysis of internal environment and capabilities of an organisation
In order to analyse the internal factors and capabilities that can lead to selection of right
strategy for Asda Limited two models will be implemented, namely, SWOT Analysis and VRIO
Model. These models will help in assisting various capabilities and how to implement in the
workplace.
SWOT Analysis
SWOT Analysis refers to analysis of various Strengths, Weaknesses, Opportunities and
Threats (Jeston, 2014). Strengths and Weaknesses of an organisation are derived from the
internal analysis of an organisation, whereas, Opportunities and Threats are identified from the
external analysis of an organisation. This analysis will help Asda in knowing their various
strengths and weaknesses.
Strengths Weaknesses
 Asda enjoys a good reputation in the
market as it is a popular brand.
 Asda comparatively have low cost of
 The profit share of Asda is low because
of their “lowest price campaign”.
 Asda does not small retail outlets, like,

their products.
 Asda have a knowledge of what a
consumer want and provide it to them.
 The system of Asda is updated
regularly and have all the information
required.
their subsidiary have.
 Low management in the stores of Asda
as there are long queues in the stores of
Asda (Jocovic and et. al., 2014).
Opportunities Threats
 Wide range of geographical access
because of plenty of stores located
around the country.
 Asda competitive advantage of quality
products at lowest price.
 Tie up with Walmart.
 Asda's e-commerce portal.
 High level of competition in the market
from the competitors.
 Large amount of land and resources are
used to manage a vast store of Asda.
These are the factors that will help in strategic implementation of Asda's strategies by
using internal and external analysis.
VRIO Model
This is a model used to analyse the various strategies that can be used in identifying a
firm's strategies at a huge scale. This model answers four type of questions, including, Value,
Rarity, imitability and the organization. This model can be used by Asda in order to analyse
various internal factors that can be used in the identification and implementation of a strategy
(Klettner, Clarke and Boersma, 2014). The VRIO model suggests:
Factors Value Rarity Imitability Organized Result
Manage and
Regulatory
legal issues
Yes - Cannot be
copied by
competitors
Yes Not a critical
factor
Distribution
and logistics
Yes - Difficult to
imitate by
competitors
- Long term
competitive
advantage

Leadership Effective Yes Cannot be
imitated
- Strong
competitive
advantage
Supply chain Yes - Cannot be
imitated
Yes Critical factor
To establish the abilities of Asda, following strategies will be evaluated through VRIO
Model:
Valuable: It refers to the abilities which are effective and can help Asda in achieving their goals
and objectives (Laudon and Traver, 2016). The following abilities are valuable to Asda: Manage and regulatory legal issues: This is the ability of Asda in order to manage and
regulate the issues effectively whenever encountered. Though, this quality is not suitable
to gain a competitive advantage but is effective. Distribution and Logistics: This ability as well be an advantage for Asda as it will help
them in supplying and distributing the products and services effectively in their channel. Leadership: Asda has seen some efficient leadership styles which suggests that the Asda
has seen the implementation of various policies which is beneficial. So, this serves as a
benefit to Asda and a competitive advantage.
 Supply Chain: It refers to channel of operations performed by an organisation in order to
move a product from suppliers to the customers. It serves as a efficient factor as the time
taken by Asda to provide customers with the product is remotely less.
Rarity: It refers to a feature which is unique and distinguish the product from that of competitors
and help in increasing the market share. Asda have very less features that can be sum up as a
rarity. One of those feature is:
 Leadership: the style of leadership displayed by the leaders of the organisation in order to
attain competitive advantage is one thing that distinguishes the firm from others. As Asda
has seen plenty of leaders and their leadership style, which helps in assessment of things
which work for Asda (Lawton, 2017).
Imitability: It refers to the accessibility of competitors to create a same product as of firm in
order to take away the market share. This is done by the competitors as there products are not
able to gain the consumers. The features of Asda that cannot be imitated by the competitors are:

 Distribution and Logistics: This is the feature that can be imitated by the competitors as
it will help them in organising their resources and products in a way Asda do as their
distribution and logistics which helps them in minimising their costs (Scholes, 2015).
Organized: It refers to the potential of the organization in order to take out the most of the
resources . These factors help in identification of the elements that will help the Asda in creating
and making most of the multiple resources available to them. Some of the organized factors that
Asda is making most of include: Manage and Regulatory Legal Issues: It suggests that at this factor, Asda is making
most of their resources, by making sure that they are not part of any legal issue and if
they are encountered with any legal issue, they know how to overcome with it.
 Supply chain: Asda is very organized in this sector as they have full control on the
supply chain of their products as they are aware till the time product does not reach to
their final user, that is, customers (Peng, 2017).
TASK 3
P3: Applying Porter's Five Force Model to evaluate the competitive forces of an organisation
Porter's Five Force Model
This model was given by Michael Porter in the year 1979 to identify the factors that helps
in identifying a relationship between a company and their competitor, customers, suppliers and
the industry. This model helps in the establishment of strengths of an organisation and how it can
be used to stand strong in the market. Asda is the second largest supply chain market in United
Kingdom and the implication of Porter's Five Force Model on the organisation will be like:
Illustration 1

(Source- Porter's Five Forces, 2019)
Competitive Rivalry: The market in which Asda is operating have multiple number of
existing competitors who performs with their maximum potential to take away the market share
of Asda. Currently, competitors of Asda includes Tesco, Sainsbury, Morrisons who provide
differentiated products in order to become a market leader. The strategy followed by Asda to get
a competitive advantage includes “lowest Price Strategy” in which they provide products at the
minimum price possible to take away the maximum market share.
Threat of New Entrants: Already there are so many competitors for the firm who will
enter in this industry, so, the new entrant need to have the most innovative and creative
technology to face the existing companies. Other than that, this industry requires huge capital
and infrastructure in order to survive which any new firm will think twice to invest. Also,to new
entrants to survive they need knowledge of market and products. So, Asda will not face lot of
competition from any new firm from the time being (Spender, 2014).
Buyer Power: Customers are treated as the whole and soul of any organisation and any
firm in order to grow need to have a strong customer base which can only be achieve by quality
products at lower prices. Customers in this sector, compare prices of different supermarkets
before making the buying decision. Customers of Asda enjoys good quality of products, lower
prices then that of competitors, variety in homogeneous products and better customer services,
which makes Asda unique and differentiated in front of their competitors.
Supplier Power: Every organisation working in any industry need to have a strong
relationship with their suppliers in order to grow more. Asda have more than 500 suppliers
working for them which gives them freedom to choose and meet with the needs of customers
effectively and efficiently. Suppliers of Asda do enjoy some power as they can switch whenever
they are provided with the better prices.
Threat of Substitute: Anybody who can provide the same product to the customer as
provided by Asda is the substitute of Asda. It includes various groceries stores, convenience
stores or off license shops which can provide any homogeneous products with quality and lower
prices (Veit and et. al., 2014).
From the above analysis, managers and leaders of Asda can use this information to
provide customers with better quality and create better strategies in order to gain the market
share.

TASK 4
P4: Application of theories, concepts and models, interpret and devise strategic planning for an
organisation
To analyse the various concepts, theories, models and strategic planning Ansoff Matrix
will be established. This model works as a guidelines for the management of an organisation in
order to implement an effective strategy. This model gives an overview of the activities that an
organisation needs to increase in order to grow. Ansoff matrix study four types of strategies:
Market Penetration, Market Development, Product Expansion and Diversification (Wheelen and
et. al., 2017). Market Penetration: This strategy suggest to introduce the existing products in the
market to increase the market share of an organisation. In context of Asda Limited this
strategy will help them in increasing their market share as customers are already aware of
the products. Market Development: In this segment, firms tries to introduce themselves in the new
segment through their existing products in order to capture more market share. In Asda,
there are plenty of segments through which Asda can expand their products, like, they
can work on launching their own label of clothes. Product Expansion: In this segment, company tries to create more products in the same
segment they are operating in. This segment can help the Asda to target more people of
the same segment they are already working in order to grow and establish themselves.
 Diversification: In this segment, an organisation tries to create new products and services
in the new segments in order to diversify themselves in the new segments and more
market share. Asda can try to establish themselves in this segment but it will increase
their market risk and they need two cover two different market segment at the same time,
vis, Market Development and Product Expansion.
Asda limited is trying to establish themselves in the market through the market
penetration segment as it will help them in achieving more goals and objectives as they already
have enough knowledge about their products & services and also understand the segments they
are working in, so, it will help them in maximising their profit ratio and their market share.
Development of Strategic Management Plan with strategies, objectives and tactics

The development of management plan prepared by the leaders and managers of Asda
Limited to establish the various strategies to their stakeholders include:
Aim To provide better quality of products to the customers at the lowest price
possible.
Vision To fulfil the needs of the market and have the most largest product mix
in entire space.
Mission To become the best retail outlet in Britain and provide products that will
always better than the expectations of customers.
Values To treat every individual, quality and customer service with respect.
Strategies and
Tactics
The most famous and used strategy of Asda includes “lowest price
strategy”. It suggests to create a product that will have a better quality
and will be available at the lowest quality possible.
CONCLUSION
From the above strategy it can be concluded that the strategies plays a significant role for
the establishment of an organisation in the market. The strategy implementation is derived with
the help of various analysis and models which include SWOT, PESTLE, Porter's Five Force
Model and Ansoff Matrix. These models are then prepared and analysed by the managers and
leaders of an organisation in order to understand which strategy will be suitable to implement
and will help in maximisation of profits and getting the major market share. The strategies are
derived so that they can enhance their performance to grow and develop in the business
environment.

REFERENCES
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